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Press Release
Stellar Pharmaceuticals Shows Strong Third Quarter Revenue Growth to $3.2 Million
MILTON, ONTARIO -- (MARKETWIRE) -- Nov 13, 2012 -- Stellar Pharmaceuticals Inc. (OTCQB: SLXCF)(OTCBB: SLXCF)(PINKSHEETS: SLXCF) ("Stellar" or "the Company"), a specialty pharmaceutical company with a primary focus on the acquisition, licensing, development and promotion of healthcare products in Canada, today announced financial results for its fiscal 2012 third quarter and nine months ended September 30, 2012. In this press release, all dollar amounts are expressed in Canadian currency - unless otherwise noted - and results are reported in accordance with United States generally accepted accounting principles (U.S. GAAP).
Third Quarter 2012 Highlights:
-- Revenues increased 366% in Q3 and 276% in the nine months ended
September 30, 2012
-- Gross profit up 179% in Q3 and 119% in the first nine months of 2012
-- Entered into exclusive agreement with Pfizer Canada Inc. (NYSE:PFE) to
market Gelfoam®, a medical device used in surgical procedures as a
haemostatic agent, targeting the $30 million Canadian market for this
indication
-- Conducted prelaunch of CAMBIA®, a treatment for migraine headaches,
which launched on October 1 to serve the $150 million Canadian migraine
market
For the three month period ended September 30, 2012, Stellar reported total revenues $3,213,500, an increase of 366% compared to the same period in 2011. This increase was driven by licensed domestic product net sales of $2,267,500 (compared to nil in the previous year) as a result of the acquisition of Tribute Pharmaceuticals. Additional growth came from international sales which grew by 70% to $369,800 in the third quarter compared to the same period in 2011. There was also an increase in other domestic product sales for the three month period ending September 30, 2012 of 24% to $576,200 compared to the same period in 2011 due in part to sales of newly acquired Collatamp G®, a medical device used in the prevention of postoperative infections, which targets a $20 million Canadian market.
For the nine month period ended, September 30, 2012, total revenues from all sources increased by 276% to $9,004,700 compared to $2,395,900 for the same period in 2011.
Gross profits increased driven by a combination of higher revenues and lower costs associated with the revenues. The Company enjoyed a 179% increase in gross profit over the three month period ended September 30, 2012 and a 119% increase in gross profit over the nine month period of 2012.
Selling, general and administrative expenses for the third quarter were $2,131,400, an increase of 243% over the prior year period. The increase was due primarily to the expansion of the Company's sales force and CAMBIA pre-launch expenses. For the nine month period ended September 30, 2012, selling, general and administrative expenses were $6,240,000 compared to $2,024,600 in the same period of the prior year.
The Company's net loss in the third quarter of fiscal 2012 was $718,600 or $.02 per share compared to net income of $112,300 during the same period in 2011. The loss was mainly due to the significant investment Stellar made in the expansion of its sales force, marketing expenses to grow its existing products, marketing and sales expenses related to the launch of CAMBIA® on October 1, 2012, as well as an increase in business development activities.
For the nine month period ending September 30, 2012 net loss was $2,076,400 or $.05 per share compared to a prior year net loss of $132,200.
As of September 30 2012, the Company had cash and cash equivalents of $2,608,700.
During the third quarter Stellar executed on growing its revenues by expanding its product portfolio, which leveraged its strong sales and distribution infrastructure. Stellar further expanded and strengthened its Specialty Care Products group through its agreement with Pfizer to promote and sell Gelfoam® in Canada. Gelfoam® is a medical device approved in Canada and the United States for use in surgical procedures as a haemostatic agent, when control of capillary, venous, and arteriolar bleeding by pressure, ligature, and other conventional procedures is either ineffective or impractical. Gelfoam® is already used in hospitals and surgical centers across Canada and addresses a $30 million market. Stellar has begun promoting, selling and marketing Gelfoam®, while Pfizer is responsible for manufacturing, distribution, regulatory and medical activities. This marks Stellar's first agreement with Pfizer.
Stellar has created synergies in its product mix designed to increase sales of all of its specialty care products including NeoVisc®, Uracyst®, Collatamp G®, which was acquired in the second quarter of 2012, and now Gelfoam. In the third quarter Stellar also prepared for the launch of CAMBIA®, which was introduced on October 1, 2012. CAMBIA® has the potential to gain a significant proportion of the $150 million Canadian migraine market. It is the only available prescription non-steroidal anti-inflammatory drug ("NSAID") available with an indication for the acute treatment of migraine attacks with or without aura in adults.
"We continue to execute on our growth strategy with revenues of over $9 million in the first nine months of 2012. This is a strong foundation for what we believe will put us on a more accelerated path for growth," said Rob Harris, CEO of Stellar. "When our CFO Scott Langille and I merged our company, Tribute Pharmaceuticals, with Stellar, we came with a clear vision for evolving Stellar into a leading Canadian specialty care pharmaceutical company with global reach. Our goals, vision and strategy are very much aligned with and supported by Stellar's board as well as our entire management and sales team. Having led significant growth and expanded business development activities at other pharmaceutical companies, we feel confident in our path and our ability to execute."
About Stellar Pharmaceuticals Inc.
Stellar and its operating division, 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 also markets Bezalip® SR (bezafibrate), Soriatane® (acitretin), NeoVisc® (1.0% sodium hyaluronate solution) and Uracyst® (sodium chondroitin sulfate solution 2%), Collatamp G® and Gelfoam® in the Canadian market. Additionally, NeoVisc® and Uracyst® are commercially available and are sold globally through various international partnerships.
For further information on Stellar visit the Company's websites: www.stellarpharma.com, or www.tributepharma.com.
Stellar Pharmaceuticals' Forward-Looking Statement
This press release contains certain forward-looking statements about Stellar 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 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 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.
Soriatane and Bezalip are registered trademarks and under license from Actavis Group PTC ehf
Cambia is a registered trademark and under license from Nautilus Neurosciences, Inc.
Collatamp G is a registered trademark and under license EUSA Pharma (Europe) Limited.
Gelfoam is a registered trademark of Pharmacia & Upjohn Company LLC, used under license by Pfizer Canada Inc.
For further information on Stellar, visit www.stellarpharma.com.
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian dollars)
(Unaudited)
As at As at
September 30, December 31,
2012 2011
---------------- ----------------
---------------- ----------------
ASSETS
Current
Cash and cash equivalents $ 2,608,651 $ 2,227,973
Accounts receivable, net of allowance of
$nil (2011 - $nil) 1,208,042 763,810
Inventories 861,138 870,630
Taxes recoverable 187,363 180,160
Loan receivable 15,814 15,814
Prepaid expenses and other receivables 348,955 124,101
---------------- ----------------
Total current assets 5,229,963 4,182,488
Property, plant and equipment, net 1,174,888 1,207,462
Intangible assets, net 10,394,006 10,409,744
Goodwill 3,597,077 3,408,741
Debt issuance costs, net 358,516 -
---------------- ----------------
Total assets $ 20,754,450 $ 19,208,435
---------------- ----------------
---------------- ----------------
LIABILITIES
Current
Accounts payable and accrued liabilities $ 3,075,183 $ 2,684,542
Amount payable and contingent
consideration due 486,222 1,624,289
Current portion of long term debt 1,183,514 -
Warrant liability 246,303 2,543
---------------- ----------------
Total current liabilities 4,991,222 4,311,374
Long term debt 2,092,309 -
Deferred tax liability 793,800 1,524,200
---------------- ----------------
Total liabilities 7,877,331 5,835,574
---------------- ----------------
---------------- ----------------
Contingencies and commitments
SHAREHOLDERS' EQUITY
Capital Stock
Common shares 17,589,957 16,469,621
Additional paid-in capital options 1,738,162 1,277,830
Deficit (6,451,000) (4,374,590)
---------------- ----------------
Total shareholders' equity 12,877,119 13,372,861
---------------- ----------------
Total liabilities and shareholders'
equity $ 20,754,450 $ 19,208,435
---------------- ----------------
---------------- ----------------
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS,
COMPREHENSIVE (LOSS) INCOME AND DEFICIT
(Expressed in Canadian dollars)
(Unaudited)
For the Three Month Period For the Nine Month Period
Ended September 30 Ended September 30
---------------------------- ---------------------------
---------------------------- ---------------------------
2012 2011 2012 2011
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Revenues
Licensed domestic
product net sales $ 2,267,509 $ - $ 6,104,160 $ -
Other domestic
product sales 576,174 466,496 1,707,336 1,420,885
International
product sales 369,816 217,368 1,193,219 960,799
Royalty and
licensing revenues - 5,298 - 14,226
-------------- ------------- ------------- -------------
Total revenues 3,213,499 689,162 9,004,715 2,395,910
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Operating costs and
expenses
Licensor sales and
distribution fees 1,526,690 - 4,226,247 -
Cost of products
sold 327,582 201,870 922,983 634,799
-------------- ------------- ------------- -------------
Total cost of sales 1,854,272 201,870 5,149,230 634,799
Selling, general and
administrative 2,131,379 621,641 6,240,007 2,024,640
Amortization 155,807 12,314 380,270 36,438
-------------- ------------- ------------- -------------
Total cost and
expenses 4,141,458 835,825 11,769,507 2,695,877
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
(Loss) from
operations (927,959) (146,663) (2,764,792) (299,967)
Non-operating income
(expenses)
Change in warrant
liability 66,183 266,029 203,396 201,759
Cost of extending
the warrant
expiration - - (135,157) -
Change in fair
value of
contingent
consideration - - 79,724 -
Research and
development (6,590) (12,196) (14,916) (45,966)
Accretion expense (45,826) - (100,193) -
Interest expense (103,551) - (158,175) -
Interest income 12,150 5,091 12,150 11,945
-------------- ------------- ------------- -------------
(Loss) income and
comprehensive
(loss) income
before tax (1,005,593) 112,261 (2,877,963) (132,229)
Current income tax
recovery 71,153 - 71,153 -
Deferred income tax
recovery 215,800 - 730,400 -
-------------- ------------- ------------- -------------
Net (loss) income
and comprehensive
(loss) income for
the period $ (718,640) $ 112,261 $(2,076,410) $ (132,229)
Deficit, beginning
of period (5,732,360) (4,097,299) (4,374,590) (3,852,809)
-------------- ------------- ------------- -------------
Deficit, end of
period $ (6,451,000) $(3,985,038) $(6,451,000) $(3,985,038)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
Basic and Diluted
(Loss) Earnings per
share $ (0.02) $ 0.00 $ (0.05) $ (0.01)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
STELLAR PHARMACEUTICALS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
(Unaudited)
For the Nine Month Period
Ended September 30
-------------------------------
-------------------------------
2012 2011
--------------- ---------------
--------------- ---------------
Cash flows from (used in) operating
activities
Net (loss) $ (2,076,410) $ (132,229)
Items not affecting cash:
Deferred income tax recovery (730,400) -
Amortization 412,490 78,889
Change in warrant liability (203,396) (201,759)
Cost of extending the warrant expiration 135,157 -
Change in fair value of contingent
consideration (79,724) -
Stock-based compensation 460,332 138,327
Unrealized foreign exchange (54,378) -
Accretion expense 100,193 -
Issuance of equity instruments for services
rendered - 14,467
Change in non-cash operating assets and
liabilities (249,493) (686,148)
--------------- ---------------
Cash flows (used in) operating activities (2,285,629) (788,453)
--------------- ---------------
Cash flows (used in) investing activities
Additions to property, plant and equipment (32,489) (5,008)
Increase in intangible assets (32,270) (23,191)
Cash cost of acquisition (425,000) -
--------------- ---------------
Cash flows (used in) investing activities (489,759) (28,199)
--------------- ---------------
Cash flows from (used in) financing
activities
Financing costs deferred (343,934) -
Long term debt issued 3,500,000 -
Share issuance costs - (24,243)
--------------- ---------------
Cash flows from (used in) financing
activities 3,156,066 (24,243)
--------------- ---------------
Changes in cash and cash equivalents 380,678 (840,895)
Cash and cash equivalents, beginning of
period 2,227,973 4,352,285
--------------- ---------------
Cash and cash equivalents, end of period $ 2,608,651 $ 3,511,390
--------------- ---------------
--------------- ---------------
Contacts: Stellar Pharmaceuticals Inc. Scott Langille CFO 519-434-1540 scott.langille@stellarpharma.com Stellar Pharmaceuticals Inc. Arnold Tenney Chairman 705-445-9505 Hampton Growth Andrew Haag 877-368-3566 stellar@hamptongrowth.com