Mar 18 2011
Cangene Corporation today reports financial results for the quarter ended January 31, 2011, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Prior periods have also been restated to reflect the adoption of IFRS with effect from August 1, 2009 (the "Transition date"), which includes the transition to reporting in U.S. dollars as the functional currency.
Revenues for the second quarter of 2011 were US$40.2 million, 3% higher than the US$39.0 million recorded during the same period last year. Two deliveries on U.S. government biodefence contracts during the current quarter contributed to the strong revenue. Decreased royalty revenues received from the Apotex Group during the current quarter reflect the reduced royalty rate in fiscal 2011, the last year of the royalty agreement. Royalty revenues are being phased out in accordance with the terms of the Company's agreement with Apotex. Higher R&D services revenue in the quarter partially offset this decrease.
"Strong revenues highlighted the second quarter of 2011 and marked a return to profitability after two weaker quarters," said Michael Graham, Cangene's acting president and CEO. "In conjunction with the ongoing CEO search, other initiatives are being developed to position Cangene for improved financial results in future quarters.
Net income in the current quarter was US$2.4 million or US$0.04 per share, compared with US$5.7 million or US$0.08 per share in the same quarter last year. The drop in net income resulted from higher cost of sales, and increased amortization and selling, general and administrative ("SG&A") expenses in the current-year quarter. Gross profit decreased in the quarter due to unabsorbed manufacturing overhead costs, under absorbed overhead due to plasma centre start up costs, additional inventory provisions and lower prices on international sales of commercial products. The higher SG&A expense in the current-year quarter includes an increase of $1.0 million related to the new sales and marketing staff at Cangene bioPharma, Inc., compared to the same quarter of the prior year, and higher compensation and legal costs. Independent R&D expense decreased in the quarter while efforts on the IGIV project slowed while our plant was changed over to commence production scale engineering runs. The current quarter included a foreign exchange loss of $0.5 million, compared to foreign exchange gain of $0.1 million in the same quarter of the prior year.
The Company had US$21.9 million in cash at January 31, 2011, compared with US$40.4 million at July 31, 2010. The three main factors contributing to the decrease in cash were increases in net non-cash working capital of US$14.0 million, US$5.6 million in capital expenditures and US$2.5 million in share repurchases. At January 31, 2011, Cangene had no debt.