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Press Release
Stellar Pharmaceuticals Strong Product Sales in 2011; Builds for the Future
MILTON, ONTARIO -- (MARKET WIRE) -- Apr 02, 2012 -- Stellar Pharmaceuticals Inc. (OTCQB: SLXCF)(OTCBB: SLXCF)(PINKSHEETS: SLXCF) ("Stellar" or "the Company"), an emerging specialty pharmaceutical company with a primary focus on the acquisition, licensing, development and promotion of healthcare products in Canada, today announced financial results for the year ended December 31, 2011. In this press release, all dollar amounts are expressed in Canadian currency and results are reported in accordance with United States generally accepted accounting principles (U.S. GAAP).
2011 Highlights
-- Domestic product sales increased 35.6%
-- International product sales increased 56.4%
-- Total product sales up 42.0%
-- Gross profits from product sales up 37.9%
-- Completes acquisition of Tribute Pharmaceuticals
-- Obtains exclusive license for MycoVa in Canada
For the year ended December 31, 2011, Stellar's total revenues were $3,869,900, which includes total product sales of $3,855,700, an increase over 2010 of 42.0%. Revenues from other sources were $14,200. Domestic product sales in 2011 were $2,549,400, an increase of 35.6%, which included net sales from licensed domestic products, a new revenue source for Stellar, which added $572,300. Total international sales for 2011 were $1,306,200, an increase over 2010 of 56.4%. Excluding one-time licensing and milestone revenues of $1,851,100 booked in 2010, total revenues increased 34.1% over the same period in 2010.
Gross profit for the year was $2,426,500, down 32.5% compared to the same period in 2010, largely due to one-time royalty and licensing revenues in 2010. Excluding one-time licensing fees mentioned above, gross profits increased by $682,800 or 39.2% in comparison to 2010.
During 2011, the Company completed a number of important transactions designed to build revenue and grow profits in the future. On December 1, 2011, the Company acquired 100% of the outstanding shares of Tribute Pharmaceuticals Canada Ltd. and Tribute Pharma Canada Inc. ("Tribute"), creating a much larger North American specialty pharmaceutical company. As a result, Stellar has gained access to a portfolio of existing products, as well as certain rights to the future development and distribution of therapeutic products within the Canadian and U.S. marketplace. In December 2011, the acquisition resulted in $572,300 in additional revenue from licensed domestic product sales.
"The successful acquisition and integration of Tribute, strengthens the Company's revenue and profit capabilities and delivers significant value for shareholders," said Rob Harris, President & CEO of Stellar. "What made this transaction special, is that both companies individually were experiencing strong sales growth in 2011." Mr. Harris further noted, "Heading into 2012, momentum from product sales is strong and we expect double digit growth this year. The expanded promotion of Bezalip® SR and Soriatane® is beginning to have a significant impact on sales. According to IMS, at the end of February 2012 on a year-to-date basis, Bezalip SR grew by 11.3% compared to the same period in 2011 and Soriatane is up 20.4%. Promotional efforts on NeoVisc® in Canada have more than doubled due to our expanded sales force as we take advantage of valuable synergies resulting from the acquisition." Mr. Harris went on to say, "In March 2012, Cambia® (diclofenac potassium for oral solution) obtained regulatory approval from Health Canada. This approval was several months sooner than we anticipated and we believe it is reflective of the corroborative effort between the Company and Health Canada." As a result, the Company expects to launch Cambia in the second half of 2012. Cambia is the only approved prescription NSAID in Canada for the treatment of acute migraine attacks with or without aura in adults over 18 years of age. Cambia will compete in the migraine market in Canada, which is valued at approximately $150 million. Cambia is the only available prescription NSAID studied and proven under guidelines published by the International Headache Society to reach statistically significant results for all four co-primary endpoints including pain free response, nausea free, photophobia free and phonophobia free. In addition, Cambia works fast to reduce migraine pain with onset of action occurring within 30 minutes.
In 2012, Stellar will work diligently to pursue a regulatory filing with Health Canada for MycoVa™ (terbinafine topical suspension for nail fungus), a product to which Stellar obtained the exclusive Canadian distribution license for in late 2011.
Stellar continues to engage in licensing discussions for the distribution rights for NeoVisc® and Uracyst® in international territories and has recently met with the FDA in the United States to discuss a regulatory strategy for the approval of Bezalip® SR, a product that has already been approved in more than 40 countries around the world.
As a result of the acquisition and licensing activities, the Company's current portfolio of assets includes nine medical products: NeoVisc®, NeoVisc® Single Dose, Uracyst®, BladderChek®, Bezalip® SR, Soriatane®, Cambia®, Daraprim®, and MycoVa™.
While the Company recorded a net loss for 2011 of $521,800, or $0.02 per common share, this was impacted by a number of one-time and unusual items, including an increase in selling, general and administrative expenses of $546,400, largely due to the inclusion of post-acquisition operating expenses of Tribute ($364,100), costs related to the acquisition of Tribute ($671,100), and a non-cash loss on disposal of equipment of $244,300.
As of December 31, 2011, the Company had cash and cash equivalents of $2,228,000 and remains debt free.
"Looking ahead, we have a number of exciting business development initiatives underway that we expect to enhance our growth going forward," noted Mr. Harris. "With the potential for new product acquisitions, licensing opportunities, growth from existing products and strengthening relationships with our existing and new partners in international markets, we are confident that our business strategy will create value for our shareholders in both the near and long-term."
About Stellar Pharmaceuticals Inc.
Stellar Pharmaceuticals and its subsidiary, Tribute Pharmaceuticals, is an emerging Canadian specialty pharmaceutical company focused on the acquisition, licensing, development and management of pharmaceutical and healthcare products with its primary focus on the Canadian market.
Stellar markets Bezalip® SR (bezafibrate), Soriatane® (acitretin), NeoVisc® (1.0% sodium hyaluronate solution) and Uracyst® (sodium chondroitin sulfate solution 2%) in the Canadian market. Additionally, NeoVisc® and Uracyst® are commercially available and are sold globally through various international partnerships. Stellar is currently in negotiations to license both NeoVisc® and Uracyst® in the United States and other international markets.
Forward-Looking Statements
This press release contains certain forward-looking statements about Stellar Pharma as defined in the Private Securities Litigation Reform Act of 1995, which statements can be identified by the use of forward-looking terminology, such as "may", "will", "expect", "intend", "anticipate", "estimate", "predict", "plan" or "continue" or the negative thereof or other variations thereon or comparable terminology referring to future events or results. Forward-looking statements, by their nature, are subject to risks and uncertainties. Stellar's actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including general economic conditions, the ability of Stellar to successfully integrate operations, and the timing of expenditures and expansion opportunities, any of which could cause actual results to vary materially from current results or anticipated future results. See Stellar's reports filed with the Canadian Securities Regulatory Authorities and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from results referred to in forward-looking statements. Stellar assumes no obligation to update the information contained in this press release to update forward-looking statements to reflect changed assumptions, the occurrence of anticipated events or changes in future operating results, financial condition or business over time.
For further information on Stellar Pharma, visit http://www.stellarpharma.com and for information on its subsidiary please visit http://www.tributepharma.com.
STELLAR PHARMACEUTICALS INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian dollars)
December 31
ASSETS 2011 2010
CURRENT
------------------------------
Cash and cash equivalents $ 2,227,973 $ 4,352,285
Accounts receivable, net of allowance of
$nil (2010 - $nil) 763,810 493,370
Inventories 870,630 611,676
Taxes recoverable 180,160 -
Loan receivable 15,814 15,814
Prepaid expenses and other receivables 124,101 99,433
------------------------------
Total current assets 4,182,488 5,572,578
PROPERTY, PLANT AND EQUIPMENT, net 1,207,462 1,568,729
GOODWILL 3,408,741
INTANGIBLE ASSETS, net 10,409,744 139,287
------------------------------
Total assets $ 19,208,435 $ 7,280,594
------------------------------
------------------------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 2,684,542 $ 802,800
Product returns liability - 112,500
Amount payable and contingent consideration
due 1,624,289 -
Warrant liability 2,543 -
------------------------------
Total current liabilities 4,311,374 915,300
LONG TERM WARRANT LIABILITY - 216,823
DEFERRED TAX LIABILITY 1,524,200 -
------------------------------
Total liabilities 5,835,574 1,132,123
------------------------------
Contingencies and commitments
SHAREHOLDERS' EQUITY
CAPITAL STOCK
AUTHORIZED
Non-voting, convertible
Unlimited redeemable and retractable
preferred shares with no par
value
Common shares with no par
Unlimited value
ISSUED
Common shares 37,610,042
(2010 - 24,585,040) 16,469,621 9,055,982
Additional paid-in capital
options 1,277,830 945,298
------------------------------
17,747,451 10,001,280
DEFICIT (4,374,590) (3,852,809)
------------------------------
Total shareholders' equity 13,372,861 6,148,471
------------------------------
Total liabilities and shareholders' equity $ 19,208,435 $ 7,280,594
------------------------------
------------------------------
STELLAR PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
(LOSS) INCOME
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31
2011 2010
--------------- -------------
REVENUES
Licensed domestic product net sales $ 572,272 $ -
Other domestic
product sales 1,977,167 1,879,554
International
product sales 1,306,215 835,381
Royalty and
licensing
revenues 14,227 2,022,383
--------------- -------------
TOTAL REVENUE FROM ALL SOURCES 3,869,881 4,737,318
--------------- -------------
COST OF SALES
Licensor sales and distribution fees 484,480 -
Cost of products
sold 932,755 947,069
Write down of
inventories 26,117 120,328
Product returns
allowance - 75,160
--------------- -------------
GROSS PROFIT 2,426,529 3,594,761
--------------- -------------
EXPENSES
Selling, general and administrative 3,034,740 2,488,278
Amortization of assets (non-manufacturing
property, plant and
equipment) 77,951 49,720
--------------- -------------
3,112,691 2,537,998
--------------- -------------
(LOSS) INCOME FROM OPERATIONS (686,162) 1,056,763
NON-OPERATING INCOME (EXPENSES)
Retirement payout - (401,000)
Change in warrant
liability 214,280 (10,048)
Change in fair value of contingent
consideration (57,996) -
Loss on disposal
of equipment (259,636) (15,308)
Research and
development (49,977) (115,471)
Acquisition and restructuring costs (671,112) -
Accretion expense (6,888) -
Interest income 18,910 10,772
--------------- -------------
NET (LOSS) INCOME AND COMPREHENSIVE (LOSS)
INCOME FOR THE YEAR (before tax) (1,498,581) 525,708
DEFERRED INCOME TAX (RECOVERY) (976,800) -
--------------- -------------
NET (LOSS) INCOME $ (521,781) $ 525,708
--------------- -------------
--------------- -------------
(LOSS) EARNINGS
PER SHARE - Basic $ (0.02) $ 0.02
--------------- -------------
--------------- -------------
- Diluted $ (0.02) $ 0.02
--------------- -------------
--------------- -------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES
OUTSTANDING - Basic 25,706,000 23,767,369
--------------- -------------
--------------- -------------
- Diluted 25,706,000 23,767,369
--------------- -------------
--------------- -------------
STELLAR PHARMACEUTICALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31
2011 2010
CASH FLOWS (USED IN) PROVIDED BY OPERATING
ACTIVITIES
Net (loss) income $ (521,781) 525,708
Items not affecting cash:
Deferred income tax
(recovery) (976,800) -
Amortization 143,505 104,042
Loss on disposal of
equipment 259,636 15,308
Issuance of equity
instruments for services
rendered 14,467 4,000
Change in warrant liability (214,280) 10,048
Change in fair value of
contingent consideration 57,996 -
Stock-based compensation 332,532 166,400
Accretion expense 6,888 -
Change in non-cash operating
assets and liabilities (113,611) 483,754
----------- -------------
CASH FLOWS (USED IN) PROVIDED BY OPERATING
ACTIVITIES (1,011,448) 1,309,260
----------- -------------
CASH FLOWS (USED IN) INVESTING ACTIVITIES
Additions to property, plant
and equipment (9,990) (307,920)
Increase in other assets (42,521) (27,224)
Proceeds from sale of
equipment -- 12,630
Acquisition, net of cash
acquired (1,036,110) --
----------- -------------
CASH FLOWS (USED IN) INVESTING ACTIVITIES (1,088,621) (322,514)
----------- -------------
CASH FLOWS (USED IN) PROVIDED BY FINANCING
ACTIVITIES
Stock options exercised -- 69,000
Issuance costs (24,243) (42,273)
Private placement units
issued for cash -- 1,013,600
----------- -------------
CASH FLOWS (USED IN) PROVIDED BY FINANCING
ACTIVITIES (24,243) 1,040,327
----------- -------------
CHANGE IN CASH AND CASH EQUIVALENTS (2,124,312) 2,027,073
CASH AND CASH EQUIVALENTS, beginning of
year 4,352,285 2,325,212
----------- -------------
CASH AND CASH EQUIVALENTS, end of year $ 2,227,973 $ 4,352,285
----------- -------------
----------- -------------
Contacts: Stellar Pharmaceuticals Inc. Scott Langille CFO 519-434-1540 scott.langille@stellarpharma.com Stellar Pharmaceuticals Inc. Arnold Tenney Chairman 705-445-9505