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DRAXIS Reports Continuing Revenue Growth for Second Quarter.

First half results on track to meet guidance for 2005

MISSISSAUGA, ON, Aug. 11 /PRNewswire-FirstCall/ -- DRAXIS Health Inc. (TSX: DAX; Nasdaq: DRAX) reported financial results for the second quarter and the first six months ended June 30, 2005. All amounts are expressed in US dollars.
 Highlights

 - Revenues for the second quarter were $20.5 million, up 22% from
 $16.7 million in the second quarter 2004; revenues for the first
 six months were $43.3 million, up 40% over the first half of 2004.

 - Net income for the second quarter 2005 was $2.4 million, up
 $0.1 million from second quarter 2004; net income for the first
 six months of 2005 was $5.6 million, 55% ahead of the $3.7 million
 in the first half of 2004.

 - Basic and diluted EPS for the second quarter 2005 was 6 cents,
 consistent with the second quarter of 2004; basic EPS for the
 first half 2005 was 14 cents, versus 9 cents for first half 2004.

 - Operating income for the second quarter 2005 was $2.6 million and
 for the second quarter 2004 was $2.8 million; operating income for
 the first six months of 2005 was $7.1 million, up 67% from
 $4.3 million in the first half of 2004.

 - Net cash flows from operating activities were positive
 $1.3 million for the second quarter and $2.9 million for the first
 half 2005, compared to net cash outflows of $1.5 million and $1.6
 for the same periods respectively in 2004.




"Key results for the first half of 2005 are well above last year and the Company is on track to meet our guidance for 2005 for revenues, earnings and operating cash flows," said Dr. Martin Barkin, President and CEO of DRAXIS Health. "During the second quarter the Company made significant progress laying important groundwork for future growth and improved performance. We changed the leadership of our radiopharmaceuticals business unit as Jean-Pierre Robert assumed the presidency of that business on May 9, 2005 and the transfer of leadership has been smooth. He has initiated a full review of the current business, including product development, and this will be communicated later in the second half. In our contract manufacturing business we grew revenues by 30% and 56% in the second quarter and first half, respectively. The start-up of our second lyophilizer was achieved during the second quarter but since commercial production started late in the quarter it has not yet materially contributed to revenue growth. We have also undertaken an extensive production process improvement and optimization program in this business to better manage current and future growth, particularly in areas such as supply chain management, documentation control processes and continuous improvement initiatives. These activities have resulted in some short-term pressure on SG&A expenses but we are committed to these important investments in our people and processes in order to achieve long term performance in this segment."
 FINANCIAL HIGHLIGHTS
 (in thousands of U.S. dollars except share related data and in
 accordance with U.S. GAAP)
 -------------------------------------------------------------------------
 For the Three Month Periods For the Six Month Periods
 Ended June 30, Ended June 30,
 2005 2004 2005 2004
 (unaudited) (unaudited) (unaudited) (unaudited)
 --------------------------- -------------------------
 REVENUES
 $19,176 $14,927 Product sales $39,682 $27,136
 1,295 1,786 Royalty and licensing 3,634 3,713
 -------------------------------------------------------------------------
 $20,471 $16,713 $43,316 $30,849
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Research and development
 $552 $545 expense $1,119 $1,006

 $7,204 $5,678 Product Gross Margin $14,650 $9,916
 37.6% 38.0% Product Gross Margin % 36.9% 36.5%

 $2,594 $2,825 Operating income $7,134 $4,276
 12.7% 16.9% Operating Margin % 16.5% 13.9%

 Cash and cash
 $7,989 $7,126 equivalents $7,989 $7,126

 $0 $4,965 Total debt $0 $4,965

 Cash flows from (used
 in) operating
 $1,295 ($1,537) activities $2,901 ($1,568)
 Cash flows used in
 (1,256) (1,219) investing activities (2,197) (1,864)
 -------------------------------------------------------------------------
 $39 ($2,756) $704 ($3,432)
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Net income (loss)
 from continuing
 $2,353 $2,264 operations $5,648 $3,652
 from discontinued
 - (21) operations - (30)
 -------------------------------------------------------------------------
 $2,353 $2,243 $5,648 $3,622
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Basic income per share
 from continuing
 $0.06 $0.06 operations $0.14 $0.09
 from discontinued
 - - operations - -
 -------------------------------------------------------------------------
 $0.06 $0.06 $0.14 $0.09
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------




Subsequent to the end of the second quarter, on July 27, 2005 the NASDAQ Stock Market(R) announced that DRAXIS Health Inc. has been included as a founding member of the new NASDAQ Health Care Index . The NASDAQ Health Care Index is a market value weighted index that contains NASDAQ listed companies classified, according to the FTSE(TM) Global Classification System as "Health", "Pharmaceutical" or "Biotechnology".
 Segment Highlights from Management's Discussion and Analysis

 Contract Manufacturing

 - Product sales revenues of $14.6 million for the second quarter and
 $30.4 million for the first half of 2005 represented increases of 30%
 and 56% respectively over the same periods of 2004; almost all of the
 revenue growth in the second quarter and first half of 2005 is related
 to sterile products, both injectable and topical creams and ointments.

 - Product gross margin percentage of 30% for the second quarter 2005
 compared to 26% for the second quarter of 2004. The increase is
 related to volume growth, principally of higher margined sterile
 products, which was made possible by increasing the capacity for
 manufacturing sterile products through the introduction of additional
 production labour.

 - Operating income was $2.2 million for the second quarter 2005 compared
 to $1.6 million for the second quarter of 2004. The Company increased
 autoclave capacity in 2004 which is critical in reducing bottlenecks
 and further increasing sterile capacity. Improved capacity utilization
 has directly resulted in higher margins through substantially improved
 absorption of overhead costs.

 - DRAXIS Pharma commenced commercial production of freeze-dried sterile
 products during the second quarter 2005 upon the final validation of
 the recently installed second lyophilizer unit.

 - During the quarter, the contract manufacturing operations embarked on
 key process improvement initiatives aimed at increasing the efficiency
 of the division's operations from production planning all the way
 through the product release and shipment process.

 Radiopharmaceuticals

 - Product sales were $4.7 million for the second quarter 2005,
 representing a 10% increase over the second quarter 2004. The increase
 is related to higher volumes resulting from greater U.S. market
 penetration, primarily increased sales of radioiodine products,
 including sodium iodide I-131.

 - Product gross margin percentage was a strong 60% for the second
 quarter 2005, consistent with 61% for the second quarter 2004, driven
 by the continued contribution of radioiodine products. For the
 six-month period ended June 30, 2005 product gross margin of 60% was
 consistent with that of the same period in 2004.

 - Operating income in the second quarter 2005 of $1.0 million increased
 slightly compared to $0.9 million in second quarter 2004.

 - During the second quarter Mr. Jean-Pierre Robert was appointed as the
 new president of the division, reporting to the Chief Executive
 Officer, effective May 9, 2005. Mr. Robert also serves as a member of
 the DRAXIS executive management group.

 Interim Financial Report




This release includes by reference the second quarter interim financial report incorporating the full Management's Discussion & Analysis (MD&A) as well as financial statements prepared in accordance with U.S. GAAP. The interim report, including the MD&A and financial statements, has been filed with applicable Canadian and U.S. securities regulatory authorities, is accessible on the Company's website at http://www.draxis.com/ in the Investor Relations section under Financial Reports, through the SEDAR and EDGAR databases and is available upon request by contacting DRAXIS Investor Relations at 1-877-441-1984.

Conference Call

DRAXIS has scheduled a conference call to discuss second quarter 2005 financial results at 10:30 a.m. (ET) on August 11, 2005. This call can be accessed by dialing 1(800) 822-4794 and using Access Code 6633146, and will also be webcast live with access through the Company's website at http://www.draxis.com/. The conference call will also be available in archived format on the Company's website for 30 days following the conference call.

About DRAXIS Health Inc.

DRAXIS Health is a specialty pharmaceutical company providing products in three categories. Sterile products include liquid and freeze-dried (lyophilized) injectables plus sterile ointments and creams. Non-sterile products are produced as solid oral and semi-solid dosage forms. Radiopharmaceuticals are used for both therapeutic and diagnostic molecular imaging applications. Pharmaceutical contract manufacturing services are provided through the DRAXIS Pharma division and radiopharmaceuticals are developed, produced, and sold through the DRAXIMAGE division. DRAXIS Health employs over 500 staff in its Montreal facility.

For additional information please visit http://www.draxis.com/.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from such statements or from any future results or performance implied thereby. Factors which could cause the Company's results or performance to differ from current expectations include, but are not limited to: the achievement of desired clinical trial results related to the Company's pipeline products; timely regulatory approval of the Company's products; the ability to comply with regulatory requirements applicable to the manufacture and marketing of the Company's products; the Company's ability to obtain and enforce effective patents; the non- infringement of third party patents or proprietary rights by the Company and its products; factors beyond our control which could cause interruptions in our operations; reimbursement policies related to health care; the establishment and maintenance of strategic collaborative and commercial relationships; the Company's dependence on a small number of key customers; the disclosure of confidential information by our collaborators, employees or consultants; the preservation of healthy working relationships with the Company's union and employees; the Company's ability to grow the business; the fluctuation of our financial results and exchange and interest rate fluctuations; the adaptation to changing technologies; the loss of key personnel; the avoidance of product liability claims; the loss incurred if current lawsuits against us succeed; the volatility of the price of our common shares; and market acceptance of the Company's products. For additional information with respect to certain of these and other factors, reference should be made to the Company's most recent Form 20-F filed with the United States Securities and Exchange Commission (available on EDGAR at http://www.sec.gov/) and with Canadian securities regulators (available on SEDAR at http://www.sedar.com/). Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 DRAXIS HEALTH INC.
 Consolidated Statements of Operations
 In Accordance with U.S. GAAP
 -------------------------------------------------------------------------
 (in thousands of U.S. dollars except share related data)
 (unaudited)


 For the Three Month Periods For the Six Month Periods
 Ended June 30, Ended June 30,
 ------------------------- -------------------------
 2005 2004 2005 2004
 ----------- ----------- ----------- -----------
 REVENUES
 $ 19,176 $ 14,927 Product sales $ 39,682 $ 27,136
 Royalty and
 1,295 1,786 licensing 3,634 3,713
 -------------------------------------------------------------------------
 20,471 16,713 43,316 30,849
 -------------------------------------------------------------------------
 EXPENSES
 Cost of goods sold,
 excluding
 depreciation and
 11,972 9,249 amortization 25,032 17,220
 Selling, general
 4,233 2,983 and administration 7,873 6,275
 Research and
 552 545 development 1,119 1,006
 Depreciation and
 1,120 1,111 amortization 2,158 2,072
 -------------------------------------------------------------------------
 17,877 13,888 36,182 26,573
 -------------------------------------------------------------------------
 2,594 2,825 Operating income 7,134 4,276
 92 (60) Financing expense, net 50 (185)
 - - Other income - 96
 -------------------------------------------------------------------------
 2,686 2,765 Income before undernoted 7,184 4,187
 (333) (501) Income taxes (1,536) (531)
 - - Minority interest - (4)
 -------------------------------------------------------------------------
 Income from continuing
 2,353 2,264 operations 5,648 3,652
 Loss from discontinued
 - (21) operations, net of taxes - (30)
 -------------------------------------------------------------------------
 $ 2,353 $ 2,243 Net income $ 5,648 $ 3,622
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Basic income (loss)
 per share
 -----------------------
 from continuing
 $ 0.06 $ 0.06 operations $ 0.14 $ 0.09
 from discontinued
 - - operations - -
 -------------------------------------------------------------------------
 $ 0.06 $ 0.06 $ 0.14 $ 0.09
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Diluted income (loss)
 per share
 ---------------------
 from continuing
 $ 0.06 $ 0.05 operations $ 0.13 $ 0.09
 from discontinued
 - - operations - -
 -------------------------------------------------------------------------
 $ 0.06 $ 0.05 $ 0.13 $ 0.09
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 Weighted-average number
 of shares outstanding
 41,510,656 40,122,684 - basic 41,327,771 38,829,944
 42,457,776 41,240,489 - diluted 42,305,243 40,009,482
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 See the accompanying notes to the Consolidated Financial Statements.
 These interim financial statements should be read in conjunction with the
 annual Consolidated Financial Statements.



 DRAXIS HEALTH INC.
 Consolidated Balance Sheets
 In Accordance with U.S. GAAP
 -------------------------------------------------------------------------
 (in thousands of U.S. dollars except share related data)
 (unaudited)

 June 30, December 31,
 2005 2004
 ------------ ------------
 ASSETS (audited)
 Current assets
 Cash and cash equivalents $ 7,989 $ 5,926
 Restricted cash 424 428
 Accounts receivable 16,332 13,724
 Inventories (Note 3) 8,313 10,158
 Prepaid expenses 1,743 830
 Deferred income taxes, net 5,832 4,121
 -------------------------------------------------------------------------
 Total current assets 40,633 35,187

 Property, plant and equipment, net 43,301 43,857
 Goodwill 716 728
 Intangible assets, net 501 737
 Other assets 570 604
 Deferred income taxes, net 4,480 7,672
 -------------------------------------------------------------------------
 Total assets $ 90,201 $ 88,785
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 LIABILITIES
 Current liabilities
 Accounts payable and accrued liabilities $ 7,761 $ 10,436
 Current portion of deferred revenues 3,621 3,676
 Customer deposits 620 628
 -------------------------------------------------------------------------
 Total current liabilities 12,002 14,740

 Deferred revenues 2,476 4,125
 -------------------------------------------------------------------------
 Total liabilities $ 14,478 $ 18,865
 -------------------------------------------------------------------------

 SHAREHOLDERS' EQUITY
 Common stock, without par value of unlimited
 shares authorized $ 77,306 $ 75,840
 Additional paid-in capital 15,546 15,546
 Warrants (Note 4 (c)) 916 916
 Deficit (21,917) (27,565)
 Accumulated other comprehensive income 3,872 5,183
 -------------------------------------------------------------------------
 Total shareholders' equity 75,723 69,920
 -------------------------------------------------------------------------
 Total liabilities and shareholders' equity $ 90,201 $ 88,785
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 See the accompanying notes to the Consolidated Financial Statements.
 These interim financial statements should be read in conjunction with the
 annual Consolidated Financial Statements.



 DRAXIS HEALTH INC.
 Consolidated Statements of Changes in Equity and Comprehensive Income
 (Loss)
 In Accordance with U.S. GAAP
 -------------------------------------------------------------------------
 (in thousands of U.S. dollars except share related data)
 (unaudited)

 For the Three Month Periods For the Six Month Periods
 Ended June 30, Ended June 30,
 ------------------------- -------------------------
 2005 2004 2005 2004
 ----------- ----------- ----------- -----------
 Common Stock (Number
 of Shares)
 Balance, beginning of
 41,304,388 37,755,245 period 41,015,326 37,297,817
 Issuance of common
 - 3,053,436 shares - 3,053,436
 295,416 36,312 Exercise of options 584,478 438,844
 Exercise of
 employee
 - - participation shares - 54,896
 -------------------------------------------------------------------------
 Balance, end of
 41,599,804 40,844,993 period 41,599,804 40,844,993
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 Common Stock
 $ 76,598 $ 62,552 Balance, beginning of
 period $ 75,840 $ 61,175
 Issuance of common
 - 12,867 shares - 12,867
 708 68 Exercise of options 1,466 1,241
 Exercise of employee
 participation
 - - shares - 204
 -------------------------------------------------------------------------
 Balance, end of
 $ 77,306 $ 75,487 period $ 77,306 $ 75,487
 -------------------------------------------------------------------------
 Additional Paid In
 Capital
 Balance, beginning of
 $ 15,546 $ 15,546 period $ 15,546 $ 15,667
 - - Stock compensation - (121)
 -------------------------------------------------------------------------
 Balance, end of
 $ 15,546 $ 15,546 period $ 15,546 $ 15,546
 -------------------------------------------------------------------------
 Warrants
 Balance, beginning of
 $ 916 $ - period $ 916 $ -
 - 916 Issuance of warrants - 916
 -------------------------------------------------------------------------
 Balance, end of
 $ 916 $ 916 period $ 916 $ 916
 -------------------------------------------------------------------------
 Employee Participation
 Shares
 Balance, beginning of
 $ - $ - period $ - $ 86
 Exercise of employee
 participation
 - - shares - (86)
 -------------------------------------------------------------------------
 Balance, end of
 $ - $ - period $ - $ -
 -------------------------------------------------------------------------
 Employee Participation
 Shares-Loans
 Receivable
 Balance, beginning of
 $ - $ - period $ - $ (86)
 Exercise of employee
 participation
 - - shares - 86
 -------------------------------------------------------------------------
 Balance, end of
 $ - $ - period $ - $ -
 -------------------------------------------------------------------------
 Deficit
 $ (24,270) $ (34,102) Balance, beginning of
 period $ (27,565) $ (35,481)
 2,353 2,243 Net income 5,648 3,622
 -------------------------------------------------------------------------
 Balance, end of
 $ (21,917) $ (31,859) period $ (21,917) $ (31,859)
 -------------------------------------------------------------------------
 Accumulated Other
 Comprehensive
 Income (Loss)
 Balance, beginning of
 $ 4,927 $ (308) period $ 5,183 $ 286
 Other comprehensive
 (1,055) (1,263) loss (1,311) (1,857)
 -------------------------------------------------------------------------
 Balance, end of
 3,872 (1,571) period 3,872 (1,571)
 -------------------------------------------------------------------------
 Total shareholders'
 $ 75,723 $ 58,519 equity $ 75,723 $ 58,519
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 Comprehensive Income
 (Loss)
 Foreign currency
 translation
 $ (1,055) $ (1,263) adjustments $ (1,311) $ (1,857)
 -------------------------------------------------------------------------
 Other comprehensive
 (1,055) (1,263) loss (1,311) (1,857)
 2,353 2,243 Net income 5,648 3,622
 -------------------------------------------------------------------------
 Total comprehensive
 $ 1,298 $ 980 income $ 4,337 $ 1,765
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 See the accompanying notes to the Consolidated Financial Statements.
 These interim financial statements should be read in conjunction with the
 annual Consolidated Financial Statements.



 DRAXIS HEALTH INC.
 Consolidated Statements of Cash Flows
 In Accordance with U.S. GAAP
 -------------------------------------------------------------------------
 (in thousands of U.S. dollars)
 (unaudited)

 For the Three Month Periods For the Six Month Periods
 Ended June 30, Ended June 30,
 ------------------------- -------------------------
 2005 2004 2005 2004
 ------------------------- -------------------------
 CASH FLOWS FROM (USED IN)
 OPERATING ACTIVITIES
 Net income from continuing
 $ 2,353 $ 2,264 operations $ 5,648 $ 3,652
 Adjustments to reconcile net
 income from continuing
 operations to net cash from
 (used in) operating
 activities
 Amortization of deferred
 (952) (1,304) revenues (2,002) (2,622)
 Depreciation and other
 1,120 1,111 amortization 2,158 2,072
 - - Stock compensation - 83
 228 (164) Deferred income taxes 1,215 (237)
 - - Minority interest - 4
 122 26 Other 383 382
 Changes in operating assets and
 liabilities
 (1,822) (1,595) Accounts receivable (2,452) (2,250)
 677 (1,195) Inventories 1,680 (2,323)
 (310) (551) Income taxes (347) (433)
 (905) (746) Prepaid expenses (1,111) (936)
 Accounts payable and accrued
 734 517 liabilities (2,575) 842
 Current portion of deferred
 50 100 revenues 304 198
 -------------------------------------------------------------------------
 Net cash from (used in)
 operating activities of
 1,295 (1,537) continuing operations 2,901 (1,568)
 -------------------------------------------------------------------------
 CASH FLOWS FROM (USED IN)
 INVESTING ACTIVITIES
 Expenditures for property,
 (1,218) (1,219) plant and equipment (2,012) (1,810)
 (38) - Increase in intangible assets (185) (150)
 Proceeds from disposition of
 - - product right - 96
 -------------------------------------------------------------------------
 Net cash from (used in)
 investing activities of
 (1,256) (1,219) continuing operations (2,197) (1,864)
 -------------------------------------------------------------------------
 CASH FLOWS FROM (USED IN)
 FINANCING ACTIVITIES
 - 4,965 Proceeds from long-term debt - 4,965
 - (9,795) Repayment of long-term debt - (10,036)
 (Decrease) increase from
 19 (17) customer deposits, net 2 -
 708 68 Exercise of options 1,466 1,241
 Issuance of common shares
 and warrants, net of related
 - 13,385 expenses - 13,385
 Repurchase of common shares
 by subsidiary from minority
 - (9,557) interest - (9,557)
 -------------------------------------------------------------------------
 Net cash from (used in) financing
 activities of continuing
 727 (951) operations 1,468 (2)
 -------------------------------------------------------------------------
 Effect of foreign exchange
 rate changes on cash and cash
 (119) 324 equivalents (109) 40
 -------------------------------------------------------------------------
 Net cash from (used in)
 647 (3,383) continuing operations 2,063 (3,394)
 Net cash used in discontinued
 - (30) operations - (43)
 -------------------------------------------------------------------------
 Net increase (decrease) in
 647 (3,413) cash and cash equivalents 2,063 (3,437)
 Cash and cash equivalents,
 7,342 10,539 beginning of period 5,926 10,563
 -------------------------------------------------------------------------
 $ 7,989 $ 7,126 Cash and cash equivalents,
 end of period $ 7,989 $ 7,126
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Additional Information
 $ - $ 70 Interest paid $ - $ 140
 $ 208 $ 686 Income taxes paid $ 436 $ 840

 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 See the accompanying notes to the Consolidated Financial Statements.
 These interim financial statements should be read in conjunction with the
 annual Consolidated Financial Statements



 DRAXIS HEALTH INC.
 Notes to the Consolidated Financial Statements
 In Accordance with U.S. GAAP
 -------------------------------------------------------------------------
 (in thousands of U.S. dollars except share related data)
 (unaudited)

 1. Significant Accounting Policies

 These consolidated financial statements have been prepared in
 accordance with U.S. generally accepted accounting principles
 ("GAAP").

 The functional currency of the Company is the Canadian dollar however
 its reporting currency is the U.S. dollar. For the current and prior
 periods, the financial statements of the Company's operations whose
 reporting currency is other than the U.S. dollar are translated from
 such reporting currency to U.S. dollars using the current rate
 method. Under the current rate method, assets and liabilities are
 translated at the exchange rates in effect at the balance sheet date.
 Revenues and expenses, including gains and losses on foreign exchange
 transactions, are translated at average rates for the period. The
 resulting unrealized translation gains and losses on the Company's
 net investment in these operations, including long-term intercompany
 advances, are accumulated in a separate component of shareholders'
 equity, described in the consolidated balance sheets as accumulated
 other comprehensive income.

 The disclosures contained in these unaudited interim consolidated
 financial statements do not include all requirements of GAAP for
 annual financial statements. The unaudited interim consolidated
 financial statements should be read in conjunction with the audited
 consolidated financial statements for the year ended December 31,
 2004.

 The unaudited interim consolidated financial statements are based
 upon accounting principles consistent with those used and described
 in the audited consolidated financial statements for the year ended
 December 31, 2004, other than as noted herein.

 The unaudited interim consolidated financial statements reflect all
 adjustments, consisting only of normal recurring adjustments, which
 are, in the opinion of management, necessary to present fairly the
 financial position of the Company as at June 30, 2005 and the results
 of operations and cash flows for the three month and six month
 periods ended June 30, 2005 and 2004.

 Operating results for the three and six month periods ended June 30,
 2005 are not necessarily indicative of the results that may be
 expected for the year ending December 31, 2005.

 2. Acquisition of Minority Interest

 On April 22, 2004, the Company completed the acquisition of the 32.7%
 interest in the Company's manufacturing subsidiary, DRAXIS Pharma
 Inc. ("DPI"), that was previously owned by SGF Sante Inc. ("SGF").
 The $9.6 million (CDN$13.0 million) cash acquisition has been
 accounted for by the purchase method of accounting and allocated to
 identifiable assets and liabilities based on their estimated fair
 values as follows:

 Minority interest $3,992
 Property, plant and equipment 6,785
 Deferred income tax liability (1,220)
 --------------------------------------------
 Total purchase price $9,557
 --------------------------------------------
 --------------------------------------------

 The purchase price paid to SGF was subject to contingent payment
 obligations which expired on April 22, 2005 with no further payment
 required.

 3. Inventories
 June 30, December 31,
 2005 2004
 ---------- ----------
 (audited)
 Raw materials $ 4,065 $ 5,491
 Work-in-process 1,931 1,501
 Finished goods 2,317 3,166
 -------------------------------------------------------------------------
 $ 8,313 $ 10,158
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 4. Shareholders' Equity

 (a) Stock Option Plan

 The following is a summary of common shares issuable pursuant to
 outstanding stock options:

 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 -------------------- --------------------
 2005 2004 2005 2004
 -------------------- --------------------

 2,789,170 2,752,877 Balance, beginning of period 2,753,232 3,097,942
 Increase (decrease) resulting
 from:
 - - Approved for issuance - -
 110,000 20,000 Granted 435,000 145,000
 (295,416) (38,812) Exercised (584,478) (438,844)
 - (3,666) Cancelled - (71,999)
 - - Expired - (1,700)
 -------------------------------------------------------------------------
 2,603,754 2,730,399 Balance, end of period 2,603,754 2,730,399
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 1,309,309 1,643,398 Exercisable at June 30 1,309,309 1,643,398
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Weighted-average exercise
 price of options:
 CDN$3.86 CDN$3.26 Outstanding, end of period CDN$3.86 CDN$3.26
 CDN$3.54 CDN$3.34 Exercisable, end of period CDN$3.54 CDN$3.34
 CDN$6.05 CDN$5.56 Granted CDN$5.81 CDN$4.47
 CDN$2.97 CDN$2.03 Exercised CDN$3.08 CDN$3.73
 - CDN$3.07 Cancelled and Expired - CDN$3.03

 Range of exercise price of
 2005 2004 options: 2005 2004
 CDN$6.05 CDN$5.56 Granted CDN$5.73 CDN$4.30
 - $6.05 - $5.56
 CDN$2.19 CDN$1.78 Exercised CDN$2.19 CDN$1.63
 - $3.66 - $3.64 - $5.41 - $4.40
 - CDN$2.64 Cancelled and Expired - CDN$2.63
 - $3.43 - $3.66
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 The following table summarizes information about stock options
 outstanding at June 30, 2005:

 Options Outstanding Options Exercisable
 -------------------------------------------------------------------------
 Weighted-
 Average
 Remaining Weighted- Weighted-
 Contractual Average Number Average
 Range of Exercise Number Life Exercise Exercis- Exercise
 Prices Outstanding (in years) Price able Price
 -------------------------------------------------------------------------
 CDN$2.01 - $2.50 574,995 5.86 CDN$2.35 141,383 CDN$2.35
 CDN$2.51 - $3.00 100,833 3.37 $2.81 75,833 $2.87
 CDN$3.01 - $3.50 360,000 1.27 $3.27 333,333 $3.27
 CDN$3.51 - $4.00 637,926 1.44 $3.76 582,093 $3.77
 CDN$4.01 - $4.50 220,000 2.64 $4.25 136,667 $4.22
 CDN$4.51 - $5.00 200,000 4.87 $4.70 - -
 CDN$5.01 - $6.17 510,000 5.08 $5.77 40,000 $5.27
 -------------------------------------------------------------------------
 2,603,754 3.56 CDN$3.86 1,309,309 CDN$3.54
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 (b) Stock-based Compensation Costs

 The following outlines the impact and assumptions used as if the
 compensation cost for the Company's stock options was determined
 using the fair value based method of accounting.

 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 ----------------------- -----------------------
 2005 2004 2005 2004
 ----------- ----------- ----------- -----------
 $ 2,353 $ 2,243 Net income as reported $ 5,648 $ 3,622
 (207) (166) Pro forma impact (408) (333)
 -------------------------------------------------------------------------
 $ 2,146 $ 2,077 Pro forma net income $ 5,240 $ 3,289
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 $ 0.06 $ 0.06 Basic net income per
 share, as reported $ 0.14 $ 0.09
 (0.01) (0.01) Pro forma impact per share (0.01) (0.01)
 -------------------------------------------------------------------------
 Pro forma net income per
 $ 0.05 $ 0.05 share (Basic) $ 0.13 $ 0.08
 Pro forma net income per
 $ 0.05 $ 0.05 share (Diluted) $ 0.12 $ 0.08
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 0.0% 0.0% Dividend yield 0.0% 0.0%
 59% 61% Expected volatility 59%-60% 60%-62%
 3.5% 4.0% Risk-free interest rate 3.5-4.0% 4.0%
 5-10 yrs 5 yrs Expected option life 5-10 yrs 5 yrs
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 (c) Common Share Offering

 On April 22, 2004, the Company closed its offering of 3,053,436 units
 at a price of $4.82 (CDN$6.55) per unit for proceeds, net of related
 expenses, of $13,385 (CDN$18,213). Each unit consisted of one common
 share of the Company and one-half of one share purchase warrant. Each
 whole warrant entitles the holder to acquire one common share of the
 Company at a price of CDN$8.50 at any time prior to April 24, 2006.
 Included as a component of shareholders' equity is $916, which
 represents the fair value of the warrants issued. The fair value of
 the warrant was determined based on the price of the offering.

 5. Segmented Information

 Industry Segmentation

 For purposes of decision-making and assessing performance, management
 considers that it operates in three segments: Radiopharmaceuticals,
 Manufacturing, and Corporate and Other. Executive management assesses
 the performance of each segment based on segment income before
 financing expense, income taxes and minority interest. The accounting
 policies used to determine segmented results and measure segmented
 assets are the same as those described in the summary of significant
 accounting policies.


 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 -------------------- --------------------
 2005 2004 2005 2004
 --------- --------- --------- ---------
 PRODUCT SALES REVENUES
 $ 4,737 $ 4,296 Radiopharmaceuticals $ 9,471 $ 8,628
 14,591 11,206 Manufacturing 30,442 19,569
 (152) (575) Corporate and Other (231) (1,061)
 -------------------------------------------------------------------------
 $ 19,176 $ 14,927 $ 39,682 $ 27,136
 -------------------------------------------------------------------------
 ROYALTY AND LICENSING REVENUES
 $ - $ - Radiopharmaceuticals $ - $ -
 - - Manufacturing - -
 1,295 1,786 Corporate and Other 3,634 3,713
 -------------------------------------------------------------------------
 $ 1,295 $ 1,786 $ 3,634 $ 3,713
 -------------------------------------------------------------------------
 TOTAL REVENUES
 $ 4,737 $ 4,296 Radiopharmaceuticals $ 9,471 $ 8,628
 14,591 11,206 Manufacturing 30,442 19,569
 1,143 1,211 Corporate and Other 3,403 2,652
 -------------------------------------------------------------------------
 $ 20,471 $ 16,713 $ 43,316 $ 30,849
 -------------------------------------------------------------------------
 PRODUCT GROSS MARGIN
 $ 2,851 $ 2,606 Radiopharmaceuticals $ 5,648 $ 5,140
 4,419 2,899 Manufacturing 9,019 4,672
 (66) 173 Corporate and Other (17) 104
 -------------------------------------------------------------------------
 $ 7,204 $ 5,678 $ 14,650 $ 9,916
 -------------------------------------------------------------------------
 SELLING, GENERAL AND
 ADMINISTRATION EXPENSE
 $ 1,003 $ 938 Radiopharmaceuticals $ 2,139 $ 1,777
 1,411 692 Manufacturing 2,260 1,538
 1,819 1,353 Corporate and Other 3,474 2,960
 -------------------------------------------------------------------------
 $ 4,233 $ 2,983 $ 7,873 $ 6,275
 -------------------------------------------------------------------------
 RESEARCH AND DEVELOPMENT
 EXPENSE
 $ 552 $ 545 Radiopharmaceuticals $ 1,119 $ 1,006
 - - Manufacturing - -
 - - Corporate and Other - -
 -------------------------------------------------------------------------
 $ 552 $ 545 $ 1,119 $ 1,006
 -------------------------------------------------------------------------
 SEGMENT INCOME (LOSS)
 $ 1,296 $ 1,123 Radiopharmaceuticals $ 2,390 $ 2,357
 3,008 2,207 Manufacturing 6,759 3,134
 (590) 606 Corporate and Other 143 857
 -------------------------------------------------------------------------
 $ 3,714 $ 3,936 $ 9,292 $ 6,348
 -------------------------------------------------------------------------
 DEPRECIATION AND AMORTIZATION
 $ 249 $ 223 Radiopharmaceuticals $ 494 $ 450
 773 626 Manufacturing 1,454 1,092
 98 262 Corporate and Other 210 530
 -------------------------------------------------------------------------
 $ 1,120 $ 1,111 $ 2,158 $ 2,072
 -------------------------------------------------------------------------
 OPERATING INCOME (LOSS)
 $ 1,047 $ 900 Radiopharmaceuticals $ 1,896 $ 1,907
 2,235 1,581 Manufacturing 5,305 2,042
 (688) 344 Corporate and Other (67) 327
 -------------------------------------------------------------------------
 $ 2,594 $ 2,825 $ 7,134 $ 4,276
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------


 June December
 30, 2005 31, 2004
 IDENTIFIABLE ASSETS (audited)
 --------------------
 Radiopharmaceuticals $ 12,660 $ 12,354
 Manufacturing 49,863 50,103
 Corporate and Other 27,678 26,328
 ----------------------------------------------------
 $ 90,201 $ 88,785
 ----------------------------------------------------
 ----------------------------------------------------


 Geographic Segmentation

 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 -------------------- --------------------
 2005 2004 REVENUES(1) 2005 2004
 --------- --------- --------- ---------
 $ 9,228 $ 7,127 Canada $ 20,582 $ 13,713
 11,071 9,538 United States 22,438 16,978
 172 48 Other 296 158
 -------------------------------------------------------------------------
 $ 20,471 $ 16,713 $ 43,316 $ 30,849
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------
 (1) Revenues are attributable to countries based upon the location of
 the customer.


 LONG-LIVED ASSETS
 Substantially all of the Company's Property, plant
 and equipment, Goodwill and Intangible assets are
 located in Canada.

 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 -------------------- --------------------
 EXPENDITURES FOR PROPERTY,
 2005 2004 PLANT AND EQUIPMENT 2005 2004
 --------- --------- --------- ---------
 $ 242 $ 430 Radiopharmaceuticals $ 286 $ 639
 950 787 Manufacturing 1,689 1,158
 26 2 Corporate and Other 37 13
 -------------------------------------------------------------------------
 $ 1,218 $ 1,219 $ 2,012 $ 1,810
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------


 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 -------------------- --------------------
 PRODUCT SALES REVENUES BY MAJOR
 2005 2004 PRODUCT GROUPS 2005 2004
 --------- --------- --------- ---------
 $ 4,737 $ 4,296 Radiopharmaceuticals $ 9,471 $ 8,628
 11,188 8,173 Manufacturing - Sterile 22,525 13,890
 3,403 3,033 Manufacturing - Non Sterile 7,917 5,679
 247 65 Corporate and Other 413 66
 (399) (640) Intercompany eliminations (644) (1,127)
 -------------------------------------------------------------------------
 $ 19,176 $ 14,927 $ 39,682 $ 27,136
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 6. Contingency

 In July 2005, a claim was filed before the Ontario Superior Court of
 Justice against the Company together with other defendants alleging
 that Permax(R), a drug that the Company distributed in Canada for a
 third-party manufacturer prior to July 2003, causes
 "compulsive/obsessive behaviour, including pathological gambling".
 The plaintiff is seeking to have this action certified as a class
 action. The Company believes this claim against it is without merit
 and intends to vigorously defend this proceeding and any motion for
 certification.

 7. Reconciliation of Results Reported in Accordance with U.S. GAAP to
 Canadian GAAP

 The major differences between U.S. and Canadian GAAP which affect net
 income are summarized in the following table with an explanation of
 the adjustments.

 For the Three Month For the Six Month
 Periods Periods
 Ended June 30, Ended June 30,
 -------------------- --------------------

 2005 2004 2005 2004
 --------- --------- --------- ---------
 Net income as reported under
 $ 2,353 $ 2,243 U.S. GAAP $ 5,648 $ 3,622
 -------------------------------------------------------------------------

 Continuing operations
 ---------------------
 Intangible assets -
 (104) 25 Radiopharmaceuticals segment (i) (51) (60)
 Intangible assets - Corporate
 (518) (518) and Other segment (i) (1,035) (1,035)
 (207) (139) Stock-based compensation (ii) (408) (279)
 -------------------------------------------------------------------------
 (829) (632) (1,494) (1,374)
 -------------------------------------------------------------------------
 $ 1,524 $ 1,611 Net income under Canadian GAAP $ 4,154 $ 2,248
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 Basic income per share
 $ 0.04 $ 0.04 Canadian GAAP $ 0.10 $ 0.06
 $ 0.06 $ 0.06 U.S. GAAP $ 0.14 $ 0.09
 Diluted income per share
 $ 0.04 $ 0.04 Canadian GAAP $ 0.10 $ 0.06
 $ 0.06 $ 0.05 U.S. GAAP $ 0.13 $ 0.09
 -------------------------------------------------------------------------
 -------------------------------------------------------------------------

 (i) Intangible Assets - Continuing Operations
 Amortization expense associated with continuing operations
 under U.S. GAAP differs from Canadian GAAP due to the
 differential treatment of the excess of the purchase cost over
 the fair value of the assets acquired in conjunction with the
 1996 acquisition of Deprenyl Animal Health, Inc., which was
 treated as acquired research and development, and the portion
 of the 1997 acquisition cost of the Company's
 radiopharmaceutical business assigned to acquired research and
 development.

 (ii) Stock-Based Compensation
 Under Canadian GAAP, the Company, in the first quarter of 2004,
 adopted retroactively with restatement of 2002 and 2003
 results, the application of the fair value based method for
 measuring the compensation cost of employee stock options
 granted in 2002 and beyond. Under U.S. GAAP, the Company has
 elected to adopt the optional recognition provision for its
 stock options plans and hence the cost of employee stock
 options is disclosed in the note to the financial statements as
 pro forma earnings and per share information. The difference
 between U.S. and Canadian GAAP applicable to stock-based
 compensation applies only to the Corporate and Other segment.

 (iii) Research and Development
 Under Canadian GAAP, investment tax credits on research and
 development are deducted from research and development expense.
 Under U.S. GAAP, investment tax credits are recorded as a
 reduction of the income tax expense. As a result, there is no
 impact in the reconciliation of net income from U.S. to
 Canadian GAAP.

 8. Comparative Information

 The Company has reclassified certain prior period's information to
 conform with the current presentation format.



CONTACT: Investor Relations: Jerry Ormiston, DRAXIS Health Inc., Phone: 1-877-441-1984; John Nesbett, The Investor Relations Group, Phone: (212) 825-3210
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