QLT Inc. (NASDAQ:QLTI) (TSX:QLT) ("QLT" or the "Company") is a
biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. The
Company reported financial results today for the third quarter
ended September 30, 2015. Unless otherwise specified, all amounts
are reported in U.S. dollars and in accordance with U.S. GAAP.
2015 THIRD QUARTER FINANCIAL RESULTS
Operating Expenses/Income
Research and Development ("R&D") Expenses
During the third quarter of 2015, R&D expenses were $2.1
million compared to $2.8 million for the same period in 2014. The
$0.7 million (25%) decrease was primarily due to (i) higher costs
incurred in 2014 related to certain toxicity studies, which were
substantially completed by August 2014, and (ii) lower salary and
overhead costs in 2015 related to R&D headcount attrition and
downsizing of our leased laboratory and office space. These cost
decreases were offset by costs incurred in the third quarter of
2015 related to the commencement of our natural history study and
start-up activities for the QLT091001 pivotal trial.
Selling, General and Administrative ("SG&A") Expenses
During the third quarter of 2015, SG&A expenses were $3.2
million compared to $2.4 million for the same period in 2014. The
$0.8 million (33%) increase in SG&A expenses was primarily due
to consulting and advisory fees of $2.2 million incurred during the
third quarter of 2015 related to our pursuit of a proposed merger
with InSite Vision Incorporated ("InSite"), as described below, and
other potential strategic transactions, including the $45 million
investment in Aralez Pharmaceuticals plc, and subsequent
distribution of the Aralez shares to QLT shareholders. In
comparison, during the third quarter of 2014, we incurred $1.2
million of consulting and advisory fees related to our pursuit of a
merger with Auxilium Pharmaceuticals, Inc. ("Auxilium"), which was
terminated on October 8, 2014.
Termination Fee
In accordance with the termination provisions of the Merger
Agreement with InSite, as described below, on September 15, 2015
InSite paid QLT a $2.7 million termination fee (the "Termination
Fee").
Operating Loss and Net Loss per Share
The operating loss for the third quarter of 2015 was $2.7
million compared to $5.4 million for the same period in 2014. The
net $2.7 million decrease in operating losses was primarily due to
the receipt of the Termination Fee.
Net loss per common share was $0.05 in the third quarter of 2015
compared to $0.10 for the same quarter in 2014. The improvement in
earnings per share was due to the same factors described above.
Cash and Cash Equivalents
As at September 30, 2015, the Company's consolidated cash and
cash equivalents were $147.1 million compared to $155.9 million at
December 31, 2014. The $8.8 million decrease in cash was primarily
due to $9.9 million of funds used in operating activities and $7.1
million of consulting and advisory fees paid in connection with the
Company's strategic review, including the proposed merger with
InSite and other strategic transactions noted above. These cash
decreases were partially offset by $5.5 million of proceeds
received from stock option exercises and the receipt of the $2.7
million Termination Fee described above.
TERMINATION OF MERGER AGREEMENT WITH INSITE
On September 15, 2015, InSite terminated the Agreement and Plan
of Merger (as amended and restated on August 26, 2015, the "Merger
Agreement") between QLT and InSite. The Merger Agreement
contemplated a business combination whereby InSite would have
become an indirect wholly-owned subsidiary of QLT and InSite
stockholders would have received QLT common shares based on an
exchange ratio equal to 0.078 of a QLT common share per InSite
common share, subject to a collar mechanism. InSite terminated the
Merger Agreement after receiving a competing proposal (as amended,
the "Sun Proposal") from Sun Pharmaceuticals Industries Ltd.
("Sun"), which InSite's board of directors determined to be
superior to the proposed merger with QLT.
Upon termination of the Merger Agreement, InSite paid QLT the
$2.7 million Termination Fee described above, $5.7 million of
principal owed under the secured line of credit (the "Secured
Note") that QLT granted to InSite on June 8, 2015 in connection
with the proposed merger, and $0.1 million of related interest
owing.
Following the termination of the Merger Agreement with InSite,
QLT is continuing to identify, evaluate and review its strategic
and business options in parallel with the ongoing development of
its synthetic retinoid – QLT091001.
SYNTHETIC RETINOID UPDATE
The Company is continuing discussions with the European
regulatory authorities regarding the potential submission in 2016
of a Marketing Authorization Application ("MAA") for conditional
approval of QLT091001 in the EU. Conditional approval, if granted,
would be made subject to specified conditions, including that the
Company complete and have favorable safety and efficacy data from
additional studies, including one or more pivotal trials of
QLT091001 for Inherited Retinal Disease caused by retinal pigment
epithelium protein 65 ("RPE65") (autosomal recessive) and
lecithin:retinol acyltransferase ("LRAT") mutations
("IRD"). In this regard, the Company has continued pivotal
trial start-up activities, including engaging a global contract
research organization ("CRO"), with the goal of initiating a
pivotal trial in the first half of 2016.
During the second half of 2015, the Company also initiated a
retrospective, uncontrolled, multicenter, case history study to
determine the natural history of visual function in subjects with
Inherited Retinal Disease phenotypically diagnosed as LCA or RP
caused by autosomal recessive mutations in RPE65 or LRAT. The goal
of the natural history study is to compare visual outcomes in
patients treated with QLT091001, relative to the treatment of naïve
patients, in order to assess the extent to which QLT091001 may
improve or prolong visual function. We believe this data may be
used to support the Company's potential application for conditional
approval. The results of the natural history study are
expected to be available for review with representatives of the
European Medicines Agency by the end of the first quarter of
2016.
Passive Foreign Investment Company
The Company believes that it was classified as a Passive Foreign
Investment Company ("PFIC") for 2008 through 2014, and that it may
be classified as a PFIC in 2015, which could have adverse tax
consequences for U.S. shareholders. Please refer to our 2014 Annual
Report on Form 10-K for additional information.
QLT Inc. - Financial
Highlights |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
In accordance with United States
generally accepted accounting principles |
(Unaudited) |
|
Three months
ended |
Nine months
ended |
|
September
30, |
September
30, |
(In thousands of U.S. dollars
except share and per share information) |
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Expenses |
|
|
|
|
Research and development |
$ 2,142 |
$ 2,792 |
$ 7,754 |
$ 11,684 |
Selling, general and
administrative |
3,166 |
2,388 |
13,939 |
8,642 |
Depreciation |
141 |
222 |
508 |
680 |
Restructuring charges |
-- |
-- |
-- |
744 |
Termination
fee |
(2,667) |
-- |
(2,667) |
-- |
|
2,782 |
5,402 |
19,534 |
21,750 |
|
|
|
|
|
Operating loss |
(2,782) |
(5,402) |
(19,534) |
(21,750) |
Other (expense) income |
|
|
|
|
Net foreign exchange (losses)
gains |
(43) |
-- |
(5) |
(74) |
Interest income |
152 |
27 |
235 |
80 |
Fair value change in contingent
consideration |
-- |
-- |
-- |
1,466 |
Other |
(6) |
17 |
(8) |
115 |
|
103 |
44 |
222 |
1,587 |
|
|
|
|
|
Loss from continuing operations
before income taxes |
(2,679) |
(5,358) |
(19,312) |
(20,163) |
(Provision for) recovery of
income taxes |
(3) |
432 |
(17) |
194 |
Loss from continuing
operations |
(2,682) |
(4,926) |
(19,329) |
(19,969) |
Loss from discontinued
operations, net of income taxes |
-- |
(6) |
-- |
(63) |
Net loss and
comprehensive loss |
$ (2,682) |
$ (4,932) |
$ (19,329) |
$ (20,032) |
|
|
|
|
|
Basic and diluted net loss per common
share |
|
|
|
|
Continuing operations |
$ (0.05) |
$ (0.10) |
$ (0.37) |
$ (0.39) |
Discontinued
operations |
-- |
(0.00) |
-- |
(0.00) |
Net
loss per common share |
$ (0.05) |
$ (0.10) |
$ (0.37) |
$ (0.39) |
|
|
|
|
|
Weighted average number of common
shares outstanding (thousands) |
|
|
|
|
Basic and diluted |
52,829 |
51,151 |
51,949 |
51,105 |
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
(In thousands of U.S. dollars) |
September 30,
2015 |
December 31, 2014 |
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 147,068 |
$ 155,908 |
Accounts receivable, net of
allowances for doubtful accounts |
266 |
363 |
Income taxes receivable |
14 |
47 |
Prepaid and other |
391 |
1,053 |
Total current assets |
147,739 |
157,371 |
|
|
|
Accounts receivable |
2,000 |
2,000 |
Property, plant and
equipment |
473 |
1,000 |
Total assets |
$ 150,212 |
$ 160,371 |
|
|
|
LIABILITIES |
|
|
Current liabilities |
|
|
Accounts payable |
$ 3,269 |
$ 1,943 |
Accrued liabilities |
1,570 |
1,528 |
Total current
liabilities |
4,839 |
3,471 |
Uncertain tax position
liabilities |
352 |
388 |
Total liabilities |
5,191 |
3,859 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Share capital |
|
|
Authorized |
|
|
500,000,000
common shares without par value |
|
|
5,000,000 first
preference shares without par value, issuable in series |
|
|
Issued and outstanding common
shares |
$ 475,333 |
$ 467,034 |
September 30,
2015 – 52,829,398 shares |
|
|
December 31, 2014
– 51,199,922 shares |
|
|
Additional paid-in capital |
97,377 |
97,838 |
Accumulated deficit |
(530,658) |
(511,329) |
Accumulated other
comprehensive income |
102,969 |
102,969 |
Total shareholders'
equity |
145,021 |
156,512 |
Total shareholders' equity and
liabilities |
$ 150,212 |
$ 160,371 |
|
|
|
About QLT
QLT is a biotechnology company dedicated to the development and
commercialization of innovative ocular products that address the
unmet medical needs of patients and clinicians worldwide. We are
focused on developing our synthetic retinoid program for the
treatment of certain inherited retinal diseases.
QLT's head office is based in Vancouver, Canada and the Company
is publicly traded on NASDAQ Stock Market (symbol: QLTI) and the
Toronto Stock Exchange (symbol: QLT). For more information about
the Company's products and developments, please visit our web site
at www.qltinc.com.
Visudyne® is a registered trademark of Novartis AG
Certain statements in this press release constitute
"forward-looking statements" of QLT within the meaning of the
Private Securities Litigation Reform Act of 1995 and constitute
"forward-looking information" within the meaning of applicable
Canadian securities laws. Forward-looking statements include, but
are not limited to statements concerning the proposed investment in
Aralez Pharmaceuticals plc ("Aralez") and the subsequent
distribution of the Aralez ordinary shares (or cash in lieu) to QLT
shareholders (the "Aralez Distribution"), the potential issuance of
convertible notes (the "Convertible Notes") by QLT as a mechanism
to return capital to QLT shareholders, the potential private
placement and the availability of certain liquidity events for
shareholders under these transactions, including any effect the
transactions may have on QLT and the QLT shares, and the future
potential of Aralez; statements concerning our synthetic retinoid
program, including our timing, ability and plans to apply for
conditional approval in the EU, commence our pivotal trial and
receive results from our natural history study; statements
concerning our PFIC status; and statements which contain language
such as: "assuming," "prospects," "goal," "future," "projects,"
"potential," "believes," "expects," "hopes," and "outlook."
Forward-looking statements are predictions only which involve known
and unknown risks, uncertainties and other factors that may cause
actual results to be materially different from those expressed in
such statements. Many such risks, uncertainties and other factors
are taken into account as part of our assumptions underlying these
forward-looking statements and include, among others, the
following: the Company's future operating results are uncertain and
likely to fluctuate; currency fluctuations; the risk that the
proposed return of capital in the form of the Aralez Distribution
of Aralez shares or cash may not occur; the risk that the proposed
issuance of Convertible Notes and private placement may not
occur; the risk that we may not receive any or as much
additional contingent consideration as we might expect under our
agreements with respect to the sale of Visudyne® and the punctal
plug delivery system technology; the risk that we will be treated
as a PFIC in 2015 and future years; the risk that the Company will
determine it is not feasible to submit a Marketing Authorization
Application ("MAA") for conditional approval with the European
Medicines Agency (the "EMA") based upon existing clinical data, the
natural history study data or other reasons and the impact of this
outcome on the Company's potential plans to commence a pivotal
trial for QLT091001; the risk that the EMA denies any conditional
approval and the MAA we may submit; risks and uncertainties
concerning the impact that QLT's success or failure in pursuing
various future strategic initiatives will have on the market price
of our securities; risks resulting from the potential loss of key
personnel; uncertainties relating to our development plans, timing
and results of the clinical development and commercialization of
our products and technologies, including pivotal clinical trials;
assumptions related to continued enrollment trends, efforts and
success, and the associated costs of these programs; outcomes for
our clinical trials may not be favorable or may be less favorable
than interim/preliminary results and/or previous trials; there may
be varying interpretations of data produced by one or more of our
clinical trials; risks and uncertainties associated with the safety
and effectiveness of our technology; the timing, expense and
uncertainty associated with the regulatory approval process for
products to advance through development stages; risks and
uncertainties related to the scope, validity, and enforceability of
our intellectual property rights and the impact of patents and
other intellectual property of third parties; and general economic
conditions and other factors described in detail in QLT's Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and other
filings with the U.S. Securities and Exchange Commission and
Canadian securities regulatory authorities. Forward-looking
statements are based on the current expectations of QLT and QLT
does not assume any obligation to update such information to
reflect later events or developments except as required by law.
This press release also contains "forward looking information"
that constitutes "financial outlooks" within the meaning of
applicable Canadian securities laws. This information is provided
to give investors general guidance on management's current
expectations of certain factors affecting our business, including
our financial results. Given the uncertainties, assumptions and
risk factors associated with this type of information, including
those described above, investors are cautioned that the information
may not be appropriate for other purposes.
CONTACT: QLT Inc. Contacts:
Investor & Media Relations
Andrea Rabney or David Pitts
Argot Partners
212-600-1902
andrea@argotpartners.com
david@argotpartners.com
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