UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 25, 2016
QLT Inc.
(Exact Name of
Registrant as specified in its charter)
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British Columbia, Canada |
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000-17082 |
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N/A |
(State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
887 Great Northern Way, Suite 250, Vancouver, B.C.
Canada, V5T 4T5
(Address
of principal executive offices)
Registrants telephone number, including area code: (604) 707-7000
Not Applicable
(Registrants name or former address, if change since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events.
On February 25, 2016, QLT Inc. (the Company) reported its financial results for the fourth quarter and year ended
December 31, 2015. The full text of the press release announcing such results is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Such information shall not be deemed filed for
purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in
such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Number |
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Description |
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99.1 |
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Press Release dated February 25, 2016 |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
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QLT INC. |
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By: |
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/s/ W. Glen Ibbott |
Name: |
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W. Glen Ibbott |
Title: |
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Senior Vice President, Finance and Chief Financial Officer |
Date: February 25, 2016
3
Exhibit Index
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Number |
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Description |
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99.1 |
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Press Release dated February 25, 2016 |
4
Exhibit 99.1
News release
QLT ANNOUNCES 2015 FOURTH QUARTER AND YEAR END RESULTS
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For Immediate Release |
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February 25, 2016 |
VANCOUVER, CANADA 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 fourth quarter and
year ended December 31, 2015. Unless otherwise specified, all amounts are reported in U.S. dollars and in accordance with U.S. GAAP.
2015 FOURTH
QUARTER AND YEAR END FINANCIAL RESULTS
Operating Expenses/Income
Research and Development (R&D) Expenses
During the fourth quarter of 2015, R&D expenditures were $2.0 million compared to $2.1 million for the same period in 2014. The net
$0.1 million (5%) decrease was primarily due to lower salary and overhead costs incurred in 2015 related to R&D headcount attrition and downsizing of our lease space. These savings were partially offset by costs related to: (i)
advancing start-up activities for our Phase III QLT091001 pivotal trial towards our goal of initiation in the third quarter of 2016, and (ii) commencement of our natural history study of visual function in subjects with Inherited Retinal Disease
phenotypically diagnosed as Leber Congenital Amaurosis or Retinitis Pigmentosa caused by autosomal recessive LRAT or RPE65 mutations (the Natural History Study).
During the year ended December 31, 2015, R&D expenditures were $9.8 million compared to $13.8 million for the same period in 2014. The net
$4.0 million (29%) decrease was primarily due to: (i) higher costs incurred in 2014 related to the completion of certain synthetic retinoid related studies and start-up activities for our Phase III QLT091001 pivotal trial, and (ii) lower salary and
overhead costs associated with R&D headcount attrition, the foreign exchange impact of the weakening Canadian dollar, and downsizing of our lease space. These savings were partially offset by 2015 costs related to: (i) the transfer and
outsourcing of our analytical and bio-analytical testing functions to third party contract research organizations, (ii) our Natural History Study, and (iii) the accelerated vesting of certain outstanding stock options and restricted stock units on
June 7, 2015 in connection with our proposed merger with InSite Vision Incorporated (the InSite Merger), which was terminated on September 15, 2015, and certain other strategic transactions.
Selling, General and Administrative (SG&A) Expenses
During the fourth quarter of 2015, SG&A expenses were $1.7 million compared to $8.1 million for the same period in 2014. The net $6.4
million (79%) decrease in SG&A expenses was primarily due to: (i) a $5.7 million fee (the Breakup-Fee) paid to Credit Suisse, our former financial advisor, in October 2014 in connection with the termination of our proposed
merger with Auxilium Pharmaceuticals, Inc. (the Auxilium Merger), (ii) lower overall operating costs related to the downsizing of our lease space and the weakening Canadian dollar, and (iii) lower directors fees related to the
October 2014 disbanding of the Executive Transition Committee of the Board of Directors and the corresponding appointment of Dr. Geoffrey Cox as Interim Chief Executive Officer of the Company.
During the year ended December 31, 2015, SG&A expenses were $15.7 million compared to $16.8 million for the same period in 2014. The net
$1.1 million (7%) decrease was primarily due to a $1.6 million decrease in transaction and consulting fees incurred in connection with our exploration and pursuit of certain strategic alternatives in each respective year, including the proposed
InSite Merger in 2015 and proposed Auxilium Merger in 2014. Furthermore,
1
2015 SG&A expenses were positively impacted by a decrease in directors fees and overall operating costs related to the downsizing of our lease space and the weakening Canadian dollar.
These savings were substantially offset by higher stock based compensation expense associated with the accelerated vesting of certain stock options and restricted stock units as described above and a decrease in the amount of overhead expenses
allocated to our R&D programs due to R&D headcount attrition.
Termination Fees
On September 15, 2015, InSite paid QLT a $2.7 million termination fee (the InSite Termination Fee) pursuant to the termination
provisions of the June 8, 2015 merger agreement between QLT and InSite. Similarly, on October 9, 2014, Auxilium Pharmaceuticals Inc. (Auxilium) paid QLT a $28.4 million termination fee (the Auxilium Termination Fee) pursuant
to the termination provisions of the June 25, 2014 merger agreement between QLT and Auxilium.
Operating Loss and Net Loss per Share
During the fourth quarter of 2015, the operating loss was $3.8 million ($0.06 per share) compared to operating income of $17.9 million ($0.31
per share) for the same period in 2014. The $21.7 million increase in net loss was primarily due to the October 2014 receipt of the Auxilium Termination Fee, which was offset by the payment of the Breakup Fee to Credit Suisse in the same period.
During the year ended December 31, 2015, the operating loss was $23.3 million ($0.44 per share) compared to $3.8 million ($0.08 per
share) for the same period in 2014. The $19.5 million increase in operating loss was primarily due to the receipt of the $28.4 million Auxilium Termination Fee in 2014, which was significantly larger than the $2.7 million InSite Termination Fee
received in 2015. The negative variance resulting from these termination fees was partially offset by a general decline in operating expenses in 2015.
Cash and Cash Equivalents
As at
December 31, 2015, the Companys consolidated cash balance was $141.8 million compared to $155.9 million at December 31, 2014. The $14.1 million decrease in cash was primarily due to $13.4 million of funds used in operating activities
and $8.7 million of consulting and transaction fees paid in connection with the Companys strategic activities. These cash outflows were partially offset by $5.5 million of proceeds received from stock option exercises and the receipt of the
$2.7 million InSite Termination Fee as described above.
On February 5, 2016, we completed a $45.0 million cash investment in Aralez
Pharmaceuticals, Inc. (Aralez) and received 7,200,000 common shares of Aralez (the Aralez Shares) at a purchase price of US$6.25 per Aralez Share. We intend to effect a special distribution of these Aralez Shares to our
shareholders on or around March 22, 2016 (the Aralez Distribution) as part of a reorganization of QLTs share capital pursuant to a court-approved statutory plan of arrangement. The Aralez Distribution will be payable, at the
election of each shareholder, in either Aralez Shares or cash, subject to proration as may be necessary to reflect a maximum cash component of $15.0 million. The entitlement of each QLT shareholder to a portion of the Aralez Shares (or cash in lieu
thereof, subject to proration) is 0.13629 per QLT common share held, based on the 7,200,000 Aralez Shares acquired divided by the 52,829,398 QLT shares outstanding on February 16, 2016, the designated record date for the Aralez Distribution.
Passive Foreign Investment Company
The
Company believes that it was classified as a Passive Foreign Investment Company (PFIC) for 2008 through 2015, and that it may be classified as a PFIC in 2016, which could have adverse tax consequences for U.S. shareholders. Please refer
to our 2015 Annual Report on Form 10-K for additional information.
2
QLT Inc. - Financial Highlights
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
In accordance with United States generally accepted accounting principles
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Three months ended |
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Twelve months ended |
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December 31, |
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December 31, |
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(In thousands of U.S. dollars except share and per share information) |
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2015 |
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2014 |
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2015 |
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2014 |
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Expenses |
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Research and development |
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$ |
2,036 |
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$ |
2,119 |
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$ |
9,790 |
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$ |
13,803 |
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Selling, general and administrative |
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1,707 |
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8,149 |
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15,646 |
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16,791 |
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Depreciation |
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68 |
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211 |
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576 |
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891 |
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Restructuring charges |
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744 |
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Termination fee |
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(28,400 |
) |
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(2,667 |
) |
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(28,400 |
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3,811 |
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(17,921 |
) |
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23,345 |
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3,829 |
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Operating (loss) income |
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(3,811 |
) |
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17,921 |
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(23,345 |
) |
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(3,829 |
) |
Other income (expense) |
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Net foreign exchange (losses) gains |
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37 |
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12 |
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32 |
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(62 |
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Interest income |
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42 |
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33 |
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277 |
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113 |
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Fair value change in contingent consideration |
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(2,000 |
) |
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(534 |
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Other |
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57 |
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49 |
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115 |
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136 |
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(1,955 |
) |
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358 |
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(368 |
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(Loss) income from continuing operations before income taxes |
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(3,675 |
) |
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15,966 |
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(22,987 |
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(4,197 |
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(Provision for) recovery of income taxes |
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(5 |
) |
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(2 |
) |
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(22 |
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192 |
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(Loss) income from continuing operations |
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(3,680 |
) |
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15,964 |
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(23,009 |
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(4,005 |
) |
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Loss from discontinued operations, net of income taxes |
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(3 |
) |
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(66 |
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Net (loss) income and comprehensive (loss) income |
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$ |
(3,680 |
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$ |
15,961 |
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$ |
(23,009 |
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$ |
(4,071 |
) |
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Basic and diluted net (loss) income per common share |
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Continuing operations |
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$ |
(0.06 |
) |
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$ |
0.31 |
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$ |
(0.44 |
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$ |
(0.08 |
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Discontinued operations |
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(0.00 |
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(0.00 |
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Net (loss) income per common share |
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$ |
(0.06 |
) |
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$ |
0.31 |
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$ |
(0.44 |
) |
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$ |
(0.08 |
) |
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Weighted average number of common shares outstanding (thousands) 1 |
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Basic |
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52,829 |
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51,191 |
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52,169 |
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51,126 |
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Diluted |
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52,829 |
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51,220 |
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52,169 |
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51,126 |
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(1) |
During the three months ended December 31, 2014, the Companys restricted stock units had
a dilutive impact. However, the dilutive impact did not change the income per common share value, as basic and diluted net income per common share were calculated as $0.31. |
3
CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands of U.S. dollars) |
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December 31, 2015 |
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December 31, 2014 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
141,824 |
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$ |
155,908 |
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Accounts receivable, net of allowances for doubtful accounts |
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287 |
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363 |
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Income taxes receivable |
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14 |
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47 |
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Prepaid and other |
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611 |
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1,053 |
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Total current assets |
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142,736 |
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157,371 |
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Accounts receivable |
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2,000 |
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2,000 |
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Property, plant and equipment |
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430 |
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1,000 |
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Total assets |
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$ |
145,166 |
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$ |
160,371 |
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LIABILITIES |
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Current liabilities |
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Accounts payable |
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$ |
1,656 |
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$ |
1,943 |
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Accrued liabilities |
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1,827 |
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1,528 |
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Total current liabilities |
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3,483 |
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3,471 |
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Uncertain tax position liabilities |
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342 |
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388 |
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Total liabilities |
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3,825 |
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|
3,859 |
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SHAREHOLDERS EQUITY |
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Share capital |
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Authorized |
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500,000,000 common shares without par value |
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5,000,000 first preference shares without par value, issuable in series |
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Issued and outstanding common shares |
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$ |
475,333 |
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$ |
467,034 |
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December 31, 2015 52,829,398 shares |
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December 31, 2014 51,199,922 shares |
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Additional paid-in capital |
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|
97,377 |
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|
97,838 |
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Accumulated deficit |
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|
(534,338 |
) |
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|
(511,329 |
) |
Accumulated other comprehensive income |
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|
102,969 |
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102,969 |
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Total shareholders equity |
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141,341 |
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|
156,512 |
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Total shareholders equity and liabilities |
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$ |
145,166 |
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$ |
160,371 |
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4
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.
QLTs 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 Companys products and developments, please visit our web site at www.qltinc.com.
QLT Inc. Contacts:
Investor & Media Relations
Andrea Rabney or David Pitts
Argot Partners
212-600-1902
andrea@argotpartners.com
david@argotpartners.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 Aralez Distribution, the availability of certain liquidity events for shareholders, including the election of shareholders to receive cash in lieu
of Aralez Shares, the effect the strategic 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 initiate a pivotal trial
of QLT091001 in the third quarter of 2016; 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 Companys future operating results are uncertain and likely to fluctuate; currency fluctuations; the risk that the proposed return of capital via the Aralez Distribution may not occur; the risk that the share purchase
agreement entered into between the Company and certain third parties under which such third parties agreed to purchase up to $15.0 million of the Aralez Shares from the Company in order to fund the cash election in the Aralez Distribution will not
be completed, and therefore no cash will be distributed to shareholders; the risk that we will be treated as a PFIC in 2016 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; risks and uncertainties associated with our ability
and timing to commence a pivotal trial for QLT091001, including due to interactions between QLT and the applicable regulatory authorities; the risk that the EMA denies any conditional approval and the MAA we may submit; risks and uncertainties
concerning the impact that QLTs 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; 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; 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 QLTs 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 managements 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.
5
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