MONT-SAINT-HILAIRE, QUEBEC (NASDAQ: AXCA) today announced
financial results for the first quarter of fiscal 2008. All amounts
are in U.S. dollars.
"We are very pleased with our financial performance in the first
quarter of fiscal 2008, which was primarily due to strong sales in
our CARAFATE, CANASA and ULTRASE product lines, but also to
expanded revenue from our international operations," stated Frank
Verwiel, M.D., President and Chief Executive Officer of Axcan.
Total revenue for the three-month period ended December 31,
2007, was $92.9 million, compared with $78.8 million for the first
quarter of fiscal 2007, an increase of 17.9%. Net income for the
first quarter of fiscal 2008 was $22.3 million or $0.39 of diluted
net income per share, compared with net income of $17.5 million or
$0.34 of diluted net income per share for the corresponding period
in fiscal 2007. The Company is unable to estimate the impact of
quarter-over-quarter variations of levels of wholesaler
inventories, as the necessary information was not available at the
date of this release.
For the first quarter of fiscal 2008, selling and administrative
expenses amounted to $32.6 million, compared to $22.2 million for
the corresponding period of the preceding fiscal year. The increase
in selling and administrative expenses is largely attributable to
investment banking and other professional fees incurred in relation
to the transaction with TPG Capital (amounting to $3.7 million for
the quarter), as well as higher expenses linked to increased sales
performance and the timing of certain marketing expenses.
Research and development expenses amounted to $5.5 million for
the first quarter of 2008, compared to $6.2 million for the
corresponding period in fiscal 2007. The decrease is mainly due to
the inclusion of non-recurring charges related the termination of
the development of ITAX in the first quarter of fiscal 2007 and
lower expenses for clinical studies related to the Company's
pancreatic enzyme products, compared to the corresponding period of
the previous fiscal year.
CORPORATE UPDATE
During the first quarter of fiscal 2008, Axcan announced that it
had entered into an agreement for all the outstanding shares of
Axcan to be acquired by an affiliate of TPG Capital in an all-cash
transaction with a total value of approximately $1.3 billion. On
January 25, 2008, the shareholders of the Company voted in favour
of the transaction, which is expected to close in the first quarter
of calendar 2008.
PRODUCT DEVELOPMENT PIPELINE UPDATE
An update on Axcan's major projects follows:
ULTRASE-VIOKASE
In April 2004, the FDA formally notified manufacturers of
pancreatic insufficiency products that these drugs, which include
ULTRASE and VIOKASE, must receive regulatory approval under a New
Drug Application ("NDA"), before April 2008, in order to remain on
the market. The FDA recently extended this deadline to April 2010.
Axcan completed the submission of its NDA for ULTRASE MT in the
fourth quarter of fiscal 2007, and the filing was granted a
priority review and accepted by the FDA in December 2007.
The clinical work required for Axcan to submit an NDA for
VIOKASE is currently ongoing and the Company expects to comply with
the FDA guidelines within the required timelines.
CANASA MAX-002
In fiscal 2007, Axcan initiated the CANASA MAX-002 program, a
Phase III clinical trial to evaluate the efficacy and safety of a
novel, high-concentration, 1-gram mesalamine suppository for the
treatment of ulcerative proctitis. Ulcerative proctitis is a
subgroup of ulcerative colitis, one of the most common inflammatory
bowel diseases. For approximately 30% of patients with ulcerative
colitis, the illness begins as ulcerative proctitis where bowel
inflammation is limited to the rectum. Currently, it is estimated
that there are 1 million cases of inflammatory bowel disease in the
U.S. with approximately 400,000 new cases every year.
In June 2007, the FDA published draft guidance on the type of
clinical program required for the approval of mesalamine
suppositories. Based on this guidance, Axcan temporarily suspended
the recruitment of this trial and expects to resume it in the
second half of calendar 2008, upon completion of ongoing
discussions with the FDA.
PYLERA
Axcan has initiated a Phase III clinical program with PYLERA in
the European Union to obtain approval to market this therapy for
the eradication of Helicobacter pylori. This Phase III clinical
trial will be conducted in approximately 400 patients and will
compare Axcan's PYLERA regimen given in combination with
omeprazole, to the widely used OAC triple therapy (20 mg of
omeprazole, 1 g of amoxicillin and 500 mg of clarithromycin). The
trial is expected to be completed in the second half of calendar
2009. PYLERA was successfully launched in the United States in
fiscal 2007.
AGI-010
Axcan and AGI Therapeutics, plc ("AGI") are co-developing
AGI-010, a delayed/controlled release formulation of the Proton
Pump Inhibitor ("PPI") drug omeprazole, which is being developed
for the treatment of gastro-esophageal reflux disease ("GERD"), and
in particular to address the control of night-time gastric acidity,
known as Nocturnal Acid Breakthrough ("NAB"). NAB remains a
significant unmet medical need, and is estimated to occur in more
than 50% of GERD patients on a PPI therapy.
Development of the final formulation for this compound showed
encouraging results that the Company has decided to investigate
further. An additional formulation study has been initiated and is
expected to be completed in the first half of calendar 2008. Once
this process is finalized, Axcan and AGI intend to make a decision
on the most appropriate development and filing strategy for this
product.
Cx401
On September 30, 2007, Axcan entered into an exclusive license
and development agreement with Cellerix of Spain, for the North
American (United States, Canada and Mexico) rights to Cx401, an
innovative biological product in development for the treatment of
perianal fistulas.
A Phase II trial conducted in 50 patients by Cellerix in Europe
demonstrated the efficacy and safety of Cx401. This randomized,
open-label, parallel assignment study evaluated the safety and
efficacy of Cx401 in the treatment of perianal fistulas in Crohn's
and non-Crohn's Disease patients. The primary endpoint for this
study was photographically assessed complete closure and healing,
and showed a 71% response rate in the acute phase, both in Crohn's
and non-Crohn's Disease patients, compared to 17% closure in the
control group. Results of this study were presented at Digestive
Disease Week (DDW) in May 2007 (Garci-Olmo D. et al., "Expanded
Adipose-Derived Stem Cells (Cx401) for the Treatment of Complex
Perianal Fistula. A Phase II Clinical Trial" (DDW 2007; Abstract:
492)) and their publication is pending.
Axcan will be responsible for the development of this product in
North America, where it expects to initiate a Phase IIb study in
fiscal 2008. Details of this study will be communicated upon its
initiation.
NMK 150
Axcan is developing NMK 150, a new high protease pancrelipase
preparation developed for the relief of pain in small duct chronic
pancreatitis, which represents an unmet medical need. A
dose-ranging, animal study assessing the toxicity of NMK 150, which
paid special attention to duodenal irritation, confirmed the safety
profile of this compound. A Phase I, ascending, multiple-dose
clinical study was also completed and confirmed the safety and
tolerability of this compound alone and in combination with a PPI.
Results of the pharmacodynamics part of the studies are currently
being analyzed.
SUDCA (Ursodiol disulfate)
Axcan is currently studying the use of SUDCA, a new ursodiol
derivative, in the prevention of the recurrence of colorectal
adenomateous polyps, considered to be a pre-cancerous stage of
colorectal cancer.
Preliminary results of studies conducted with SUDCA showed that
ursodiol disulfate reduces the number of aberrant crypts in a rat
model of colon cancer. Aberrant crypts are considered to be early
abnormal changes in the intestinal lining that are precursors to
colon cancer.
In addition to these animal studies, a single, ascending-dose
Phase I clinical study was completed in early 2006, and a multiple,
ascending-dose Phase I study was completed in September 2006, to
evaluate the safety, tolerability and preliminary pharmacokinetics
of SUDCA. Both studies confirmed the safety and tolerability of
this compound. Results of the pharmacokinetics part of the studies
are currently being analyzed.
INTERIM FINANCIAL REPORT
This release includes, by reference, the unaudited first quarter
financial reports incorporating the financial statements in
accordance with U.S. GAAP, as well as the Management's Discussion
& Analysis. For a copy of our full financial results for the
first quarter, including the Management's Discussion and Analysis
and Interim Financial Statements, please visit our website at
www.axcan.com. These financial reports will also be available on
SEDAR and EDGAR.
ABOUT AXCAN PHARMA
Axcan is a leading multinational specialty pharmaceutical
company focused on gastroenterology. The Company develops and
markets a broad line of prescription products to treat a range of
gastrointestinal diseases and disorders such as inflammatory bowel
disease, irritable bowel syndrome, cholestatic liver diseases and
complications related to pancreatic insufficiency. Axcan's products
are marketed by its own specialized sales forces in North America
and the European Union and through commercial collaborations in
many markets around the world. Its common shares are listed on the
NASDAQ Global Market under the symbol "AXCA" and on the Toronto
Stock Exchange under the symbol "AXP".
"Safe Harbor" statement under the Private Securities Litigation
Reform Act of 1995.
This release contains forward-looking statements, which reflect
the Company's current expectations regarding future events. To the
extent any statements made in this release contain information that
is not historical, these statements are essentially forward-looking
and are often identified by words such as "anticipate," "expect,"
"estimate," "intend," "project," "plan" and "believe." The results
or events predicted in these forward-looking statements may differ
materially from actual results or events. As a result, you are
cautioned not to place undue reliance on these forward-looking
statements. Forward-looking statements are subject to risks and
uncertainties, including the difficulty of predicting FDA and other
regulatory approvals, acceptance and demand for new pharmaceutical
products, the impact of competitive products and pricing, new
product development and launch, reliance on key strategic
alliances, availability of raw materials, the regulatory
environment, fluctuations in operating results, the protection of
our intellectual property and other risks detailed from time to
time in the Company's filings with the Securities and Exchange and
the Canadian Securities regulators.
This release also contains forward-looking statements relating
to the proposed acquisition of Axcan Pharma Inc., including
statements regarding the completion of the proposed transaction and
other statements that are not historical facts. The completion of
the proposed transaction is subject to a number of terms and
conditions, including, without limitation: (i) applicable
governmental authorities approvals, and (ii) certain termination
rights available to the parties under the Arrangement Agreement.
These approvals may not be obtained, the other conditions to the
transaction may not be satisfied in accordance with their terms,
and/or the parties to the Arrangement Agreement may exercise their
termination rights, in which case the proposed transaction could be
modified, restructured or terminated, as applicable.
The forward-looking statements contained in this news release
are made as of the date of this release. The Company cautions that
the foregoing list of factors that may affect future results is not
exhaustive. We disclaim any intention and assume no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, unless
obligated to do so pursuant to applicable securities laws and
regulations. Additionally, we undertake no obligation to comment on
expectations of, or statements made by, third parties in respect of
the proposed transaction. For additional information with respect
to certain of these and other assumptions and risks, please refer
to the related material change report and the Arrangement Agreement
filed by Axcan Pharma Inc. with the Canadian securities commissions
(available at www.sedar.com) and with the U.S. Securities and
Exchange Commission (available at www.sec.gov).
The names AXCAN, AXCAN PHARMA, CANASA, CARAFATE, DELURSAN,
LACTEOL, PANZYTRAT, PYLERA, SALOFALK, ULTRASE, URSO, URSO DS, URSO
250, URSO FORTE and VIOKASE appearing in this press release are
trademarks or registered trademarks of Axcan Pharma Inc. and its
subsidiaries.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share related data)
September 30, December 31,
2007 2007
----------------------------------------------------------------------
(unaudited)
$ $
Assets
Current assets
Cash and cash equivalents 179,672 310,898
Short-term investments, available for sale 129,958 6,200
Accounts receivable, net 36,674 43,043
Income taxes receivable 10,092 12,741
Inventories 26,706 30,395
Prepaid expenses and deposits 3,070 3,953
Deferred income taxes 15,955 16,999
----------------------------------------------------------------------
Total current assets 402,127 424,229
Property, plant and equipment, net 31,197 32,255
Intangible assets, net 367,217 366,633
Goodwill, net 27,467 27,467
Deferred income taxes 4,603 5,561
----------------------------------------------------------------------
Total assets 832,611 856,145
----------------------------------------------------------------------
----------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 83,196 79,142
Income taxes payable 18,938 16,411
Instalments on long-term debt 527 448
Deferred income taxes 2,076 2,964
----------------------------------------------------------------------
Total current liabilities 104,737 98,965
Long-term debt 122 83
Deferred income taxes 37,555 38,369
----------------------------------------------------------------------
Total liabilities 142,414 137,417
----------------------------------------------------------------------
Shareholders' Equity
Capital stock
Preferred shares, without par value;
unlimited shares authorized:
no shares issued - -
Series A preferred shares, without par
value; shares authorized: 14,175,000;
no shares issued - -
Series B preferred shares, without par
value; shares authorized: 12,000,000;
no shares issued - -
Common shares, without par value; unlimited
shares authorized: 55,374,561 issued
and outstanding as at December 31, 2007 and
55,359,652 as at September 30, 2007 395,888 396,115
Retained earnings 249,371 271,699
Additional paid-in capital 9,089 10,104
Accumulated other comprehensive income 35,849 40,810
----------------------------------------------------------------------
Total shareholders' equity 690,197 718,728
----------------------------------------------------------------------
Total liabilities and shareholders' equity 832,611 856,145
----------------------------------------------------------------------
----------------------------------------------------------------------
CONSOLIDATED OPERATIONS
(in thousands of U.S. dollars, except share related data - Unaudited)
For the For the
three-month three-month
period ended period ended
December 31, December 31,
2006 2007
----------------------------------------------------------------------
$ $
Revenue 78,819 92,890
----------------------------------------------------------------------
Cost of goods sold (a) 19,214 22,431
Selling and administrative expenses (a) 22,145 32,593
Research and development expenses (a) 6,211 5,490
Depreciation and amortization 5,402 5,927
----------------------------------------------------------------------
52,972 66,441
----------------------------------------------------------------------
Operating income 25,847 26,449
----------------------------------------------------------------------
Financial expenses 1,783 215
Interest income (2,068) (3,647)
Gain on foreign currency (110) (47)
----------------------------------------------------------------------
(395) (3,479)
----------------------------------------------------------------------
Income before income taxes 26,242 29,928
Income taxes 8,741 7,600
----------------------------------------------------------------------
Net income 17,501 22,328
----------------------------------------------------------------------
----------------------------------------------------------------------
Net income per common share
Basic 0.38 0.40
Diluted 0.34 0.39
----------------------------------------------------------------------
----------------------------------------------------------------------
Weighted average number of common shares
Basic 45,844,396 55,999,471
Diluted 55,203,936 56,848,715
----------------------------------------------------------------------
----------------------------------------------------------------------
(a) Exclusive of depreciation and amortization
KEY PRODUCT INFORMATION
----------------------------------------------------------------------
Q1 2008
Prescriptions
Q1 2008 Increase
Sales ($US M) Sales Increase(1)(%) (1),(2)(%)
----------------------------------------------------------------------
NORTH AMERICA
----------------------------------------------------------------------
CANASA 1 G 16.7 32.5 2.0
----------------------------------------------------------------------
SALOFALK 5.7 3.6 3.1
----------------------------------------------------------------------
ULTRASE 13.9 36.3 14.0
----------------------------------------------------------------------
URSO 250/FORTE/DS 14.0 (19.5) 1.0
----------------------------------------------------------------------
CARAFATE 15.1 54.1 4.7
----------------------------------------------------------------------
----------------------------------------------------------------------
EUROPEAN UNION
----------------------------------------------------------------------
LACTEOL 5.3 17.8 n/a
----------------------------------------------------------------------
PANZYTRAT 5.3 15.2 n/a
----------------------------------------------------------------------
DELURSAN 4.8 23.1 n/a
----------------------------------------------------------------------
(1) Compared with the same period a year earlier
(2) Based on IMS Prescription Data for products sold in the United States,
except for SALOFALK sold in Canada
PRODUCTS IN NORTH AMERICA
CANASA
Axcan reported sales of $16.7 million for CANASA in the United
States in the first quarter of 2008, an increase of 32.5% compared
to the comparable period in fiscal 2007. U.S. prescriptions of
CANASA 1 G were up 2.0%, while units dispensed were up 3.0% during
the quarter.
A price increase announced during the quarter, combined with
prescription and unit growth, resulted in higher sales as compared
with the same period in the prior year. Additionally, as Axcan has
transitioned to new eligibility rules in its patient assistance
programs, the Company continues to realize revenues from
prescriptions that were provided free of charge or at a reduced
cost in prior periods.
ULTRASE
U.S. prescriptions increased 14.0% for the first quarter,
compared to the same period in fiscal 2007. U.S. sales for the
first quarter increased 36.3%, compared to the same period in
fiscal 2007, based on prescription growth, price increases
announced during the quarter, as well as wholesaler ordering
patterns experienced during the first quarter of fiscal 2008 and
the comparable quarter for fiscal 2007. The Company continues to
leverage its Care First and Comprehensive Care for CF Patients
programs.
URSO 250/URSO FORTE/URSO DS
Total sales for URSO products in North America (Canada and the
United States) for the first quarter decreased 19.5%, compared to
the same period in fiscal 2007.
U.S. prescriptions for the first quarter increased slightly
(1.0%), compared with the same period in fiscal 2007. Sales for
URSO products in the United States decreased 3.8% for the first
quarter of fiscal 2008, compared to the same period a year earlier.
The decrease is due to the effect of wholesaler ordering patterns
experienced during the first quarter of fiscal 2008 and the
comparable quarter for fiscal 2007. During the quarter, the price
of certain URSO products was increased as part of the plans to
encourage patient switching to the URSO FORTE scored tablets.
The decrease in quarter-over-quarter total URSO DS sales in
Canada is primarily attributable to the impact of the launch of a
generic of the Canadian URSO product in fiscal 2007.
CARAFATE
U.S. prescriptions for the first quarter increased 4.7%,
compared to the same period in fiscal 2007, as the Company
continues to benefit from the promotional efforts during fiscal
2006 on CARAFATE oral suspension, which created prescription growth
and increased the size of the prescription dispensed.
U.S. sales for the first quarter increased 54.1% over the
corresponding period in fiscal 2007, as a result of prescription
growth, price increases announced during the quarter, and
wholesaler ordering patterns experienced during the first quarter
of fiscal 2008 and the comparable quarter for fiscal 2007.
PRODUCTS IN THE EUROPEAN UNION
LACTEOL
For the first quarter, sales of LACTEOL in the European Union
and elsewhere in the world, expressed in U.S. dollars, increased
17.8% as compared to the same period last year. In local currency,
LACTEOL sales increased 4.2% for the first quarter.
PANZYTRAT
For the first quarter, sales of PANZYTRAT expressed in U.S.
dollars increased 15.2% and increased 2.2% in local currency,
compared to the same period in fiscal 2007. The increase in sales
is largely due to a return to growth of this product in Germany,
and also to the continued positive impact of distribution
agreements with new partners that have been signed for the export
markets over the last few months.
DELURSAN
For the first quarter, sales of DELURSAN expressed in U.S.
dollars increased 23.1%, compared to the same period in fiscal
2007. In local currency, DELURSAN sales increased 11.4%, compared
to the same period in fiscal 2007. This is mainly due to the
Company's ongoing efforts in focusing its commercial activities on
gastroenterologists in France.
Contacts: Axcan Pharma Inc. Isabelle Adjahi Senior Director,
Investor Relations and Communications 450-467-2600 ext. 2000
www.axcan.com
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