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Press Release
Stellar Pharmaceuticals Reports First Quarter 2012 Financial Results
Company outperforms growth targets as a result of expanded product lines
MILTON, ONTARIO -- (MARKETWIRE) -- May 15, 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 period ended March 31, 2012. 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).
First Quarter 2012 Highlights
-- Revenues increase by 357% -- International Product Sales up 102% -- Gross profit up 167%
For the period ended March 31, 2012, Stellar's total revenues were $2,900,000, an increase of 357% compared to the same period in 2011. This increase was largely driven by licensed domestic product net sales of $1,906,000 as a result of the acquisition and integration of Tribute Pharmaceuticals. International product sales also grew by 102% compared to the same period in 2011 to reach $520,000.
The Company also achieved a 167% increase in gross profit for the quarter, again due to the addition of licensed domestic product net sales. Excluding this new income source, gross profit would stand at $673,800, an increase of $211,000 over the same period in the prior year.
The Company recorded a net loss for the first quarter of $819,000, mainly due to increased sales and marketing expenses and one-time expenses related to regulatory and pre-launch expenses for Cambia®, regulatory expenses for Bezalip SR® in the United States, and costs related to the integration of Tribute. Additionally, $158,500 was recorded for stock based compensation expenses compared to $63,700 in the same period of 2011. As a result, selling, general and administrative expenses increased 187% or $1,314,900 over the same period in the prior year.
Cambia®, the only approved prescription NSAID available in Canada for the treatment of acute migraine attacks with or without aura in adults over 18 years of age, achieved regulatory approval from Health Canada in March 2012. As a result, the Company expects to launch Cambia in the second half of 2012. Stellar has also 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. The US fibrate market, which Bezalip SR would compete upon approval, is valued at approximately $2.5 billion annually in the US.
"This quarter has reinforced Stellar's strong growth potential and demonstrated the value that has been gained through the integration of Tribute's operations and product lines," said Mr. Harris. "The launch of Cambia® will add further value to our company and our shareholders going forward. We are confident that our focus on expanding our sales and promotional activities will drive revenues across our established products and the successful launch of Cambia."
As of March 31, 2012, the Company had cash and cash equivalents of $1,016,000. Recently the company announced the closing of the first of two tranches of a US$ 6.0 million term loan from MidCap Financial LLC. The Company received US$3.5 million as proceeds of the first tranche of the term loan. This facility provides a minimally dilutive source of growth financing, enables the Company to expand sales force and promotion to support growth of existing products and the launch of Cambia in Canada and enhances existing business development activities.
About Stellar Pharmaceuticals Inc.
Stellar 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. The Company has recently received approval by Health Canada for the sale and distribution of Cambia® in Canada and expects to launch the product in the second half of the year.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the Company's business including increased competition; the ability of the Company to expand its operations, to attract and retain qualified professionals, technological obsolescence; general economic conditions; and other risks detailed from time to time in the Company's filings.
For further information on Stellar visit http://www.stellarpharma.com.
STELLAR PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(Expressed in Canadian dollars)
(Unaudited)
As at As at
March 31, December 31,
ASSETS 2012 2011
--------------- ---------------
Current:
Cash and cash equivalents $ 1,015,954 $ 2,227,973
Accounts receivable, net of allowance of
$nil (2011 - $nil) 957,391 763,810
Inventories 785,832 870,630
Taxes recoverable 167,017 180,160
Loan receivable 15,814 15,814
Prepaid expenses and other receivables 99,674 124,101
--------------- ---------------
Total current assets 3,041,682 4,182,488
Property, Plant and Equipment, net 1,194,977 1,207,462
Goodwill 3,408,741 3,408,741
Intangible Assets 10,338,366 10,409,744
--------------- ---------------
Total assets $ 17,983,766 $ 19,208,435
--------------- ---------------
--------------- ---------------
LIABILITIES
Current:
Accounts payable and accrued liabilities $ 2,182,781 $ 2,684,542
Amount payable and contingent consideration
due 444,893 1,624,289
Warrant liability - 2,543
--------------- ---------------
Total current liabilities 2,627,674 4,311,374
Deferred tax liability 1,330,700 1,524,200
--------------- ---------------
Total liabilities 3,958,374 5,835,574
Contingencies and commitments
SHAREHOLDER'S EQUITY
Capital stock
Authorized
Unlimited non-voting, convertible
redeemable and retractable preferred
shares with no par value
Unlimited common shares with no par value
Issued
Common shares 39,610,042 (2011 -
37,610,042) 17,589,957 16,469,621
Additional paid-in capital options 1,436,373 1,277,830
--------------- ---------------
19,026,330 17,747,451
Deficit (5,000,938) (4,374,590)
--------------- ---------------
Total shareholders' equity 14,025,392 13,372,861
--------------- ---------------
Total liabilities and shareholders'
equity $ 17,983,766 $ 19,208,435
--------------- ---------------
--------------- ---------------
STELLAR PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS AND DEFICIT
(Expressed in Canadian dollars)
(Unaudited)
For the Three Month Period
Ended March 31
---------------------------------
2012 2011
--------------- ---------------
Revenues
Licensed domestic product net sales $ 1,905,862 $ -
Other domestic product sales 474,267 373,766
International product sales 520,025 257,510
Royalty and licensing revenues - 2,766
--------------- ---------------
Total revenues 2,900,154 634,042
--------------- ---------------
Cost of sales
Licensor sales and distribution fees 1,346,772 -
Cost of products sold 320,592 171,396
--------------- ---------------
Gross profit 1,232,790 462,646
--------------- ---------------
Expenses
Selling, general and administrative 2,018,957 704,055
Amortization of assets (non-manufacturing
property, plant and equipment) 97,037 12,062
--------------- ---------------
2,115,994 716,117
--------------- ---------------
(Loss) from operations (883,204) (253,471)
Non-operating income (expenses)
Change in warrant liability 2,543 (39,246)
Change in fair value of contingent
consideration 79,724 -
Research and development (1,752) (13,678)
Accretion expense (20,664) -
Interest income 3,505 3,500
--------------- ---------------
Net loss and comprehensive loss before tax (819,848) (302,895)
Deferred income tax (recovery) (193,500) -
--------------- ---------------
Net loss and comprehensive loss for the
period $ (626,348) $ (302,895)
Deficit, beginning of period (4,374,590) (3,852,809)
--------------- ---------------
Deficit, end of period $ (5,000,938) $ (4,155,704)
--------------- ---------------
--------------- ---------------
Loss per share
- Basic and diluted $ (0.02) $ (0.01)
--------------- ---------------
--------------- ---------------
Weighted average number of common shares
outstanding
- Basic and diluted 37,829,822 24,585,040
--------------- ---------------
--------------- ---------------
STELLAR PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)
For the Three Month Period
Ended March 31
---------------------------------
2012 2011
--------------- ---------------
Cash flows used in operating activities:
Net loss $ (626,348) $ (302,895)
Items not affecting cash:
Deferred income tax (recovery) (193,500) -
Amortization 105,824 26,722
Change in warrant liability (2,543) 39,246
Change in fair value of contingent
consideration (79,724) -
Stock-based compensation 158,543 63,735
Accretion expense 20,664 -
Issuance of equity instruments for
services rendered - 5,466
Change in non-cash operating assets and
liabilities (572,976) (442,435)
--------------- ---------------
Cash flows used in operating activities (1,190,060) (610,161)
--------------- ---------------
Cash flows used in investing activities:
Additions to property, plant and
equipment (9,356) -
Increase in other assets (12,603) (3,943)
--------------- ---------------
Cash flows used in investing activities (21,959) (3,943)
--------------- ---------------
Change in cash and cash equivalents (1,212,019) (614,104)
Cash and cash equivalents, beginning of
period 2,227,973 4,352,285
--------------- ---------------
Cash and cash equivalents, end of period $ 1,015,954 $ 3,738,181
--------------- ---------------
--------------- ---------------
Contacts: Stellar Pharmaceuticals Inc. Scott Langille CFO 519-434-1540 scott.langille@stellarpharma.com Stellar Pharmaceuticals Inc. Arnold Tenney Chairman 705-455-9505 www.stellarpharma.com