AXCAN REPORTS SIGNIFICANT INCREASES IN SALES
EBITDA AND NET EARNINGS
MONT-SAINTE-HILAIRE, Quebec, Nov. 10 /CNW/ - Axcan Pharma today
announced its results for the year ending September 30, 1999. Revenues for fiscal 1999 amounted to $64,920,000, a 51% increase over 1998 revenues of $43,107,000. Net earnings rose to $2,075,000 for fiscal 1999 from $1,540,000 a year earlier. Earnings per share were $0.13 in fiscal 1999, compared to $0.10 in fiscal 1998. Earnings before interest, taxes, depreciation and amortization, and earnings (loss) from discontinued operations (EBITDA) amounted to $13,266,000 for fiscal 1999 or $0.83 per share in comparison to $4,067,000 or $0.26 per share one year earlier, a 186% increase.
For the fourth quarter of fiscal 1999, Axcan reported revenues of
$29,634,000 compared to $12,073,000 for the same quarter the previous year, an increase of 142%.
Revenues for fiscal 1999 include two months' sales of $7,945,000 from recently acquired Scandipharm. These sales contributed to rising revenues along with rapidly increasing sales of URSO(R) in the United States which amounted to $7,507,000 for fiscal 1999, compared to $4,199,000 for fiscal 1998. In addition, continuing robust sales of VIOKASE(R) in the American market and of URSO(R) and SALOFALK(R) in Canada also contributed to the revenue increase.
''Our marketing efforts for URSO(R) in the United States are now showing tangible results,'' stated Léon Gosselin, Axcan's President and CEO. ''At the same time, Scandipharm sales are even healthier than we expected. Beginning next quarter, we will report our financial statements in US dollars reflecting the fact that more than 80% of our revenues will come from the United States, due in large part to the Scandipharm acquisition.
Cost of goods sold for fiscal 1999 declined to 30.4% of revenues compared to 37.8% for fiscal 1998, mainly due to an increase in sales of products with higher margins.
Selling and administrative expenses for fiscal 1999 amounted to
$27,180,000 compared to $19,906,000 for the previous fiscal year. In the fourth quarter these expenses were $11,201,000 compared to $6,371,000 for the same quarter of 1998.
Axcan's R&D expenditures for fiscal 1999 amounted to $4,734,000 an
increase of 66% over the $2,855,000 expenditure of the previous fiscal year. This increase is mainly due to the initiation of phase III trials for the bismuth-based single triple therapy intended to eradicate HELICOBACTER PYLORI.
Financial expenses amounted to $4,138,000 for fiscal 1999 compared to $122,000 for fiscal 1998. Depreciation and Amortization amounted to $4,504,000 for fiscal 1999 compared to $2,991,000 for fiscal 1998. These substantial increases are explained by the acquisition of Scandipharm Inc. in August 1999. Financial expenses include fees and interest on bridge financing and the assets acquired are amortized for two months.
During the year, the company sold its Axcan Ltd subsidiary, which focused on contraception and sexually transmitted diseases, to futher concentrate on the gastrointestinal field. The operations of this subsidiary are shown as discontinued operations.
A YEAR OF INTERNATIONAL ACQUISITIONS AND AGREEMENTS
Clearly Axcan's most important acquisition during fiscal 1999 was
Alabama-based Scandipharm Inc., which was acquired in August 1999, at a total cost of approximately CAN $152 million, before deducting Scandipharm's excess cash on hand of approximately CAN $50 million. Scandipharm specializes in the distribution of gastrointestinal and nutritional drug products, as well as other products related to the treatment of cystic fibrosis. It employs 98 people, 75 of whom make up its sales and marketing departments.
Later in August 1999, Axcan took another step towards strengthening its sales and broadening its distribution network, this time in Europe, with the closing of its transaction announced earlier in the year to acquire 50% of the outstanding shares of Bonne Santé Sp. z.o.o. of Poland and Czet Pharma Inc., a Canadian affiliate of Bonne Santé.
In April, 1999, Axcan renewed its agreement with Synthélabo, S.A. of France to use, manufacture and sell ursodiol (URSO(R)) for the treatment of Primary Biliary Cirrhosis (PBC) in Canada and the United States. The new license agreement for the United States is valid until the expiration of the patents in 2008. For Canada, Axcan acquired all rights on the patent relating to PBC.
Later in the spring of 1999, Axcan signed a letter of intent with Vianex, the leading pharmaceutical company in Greece for the distribution of Axcan's single capsule bismuth-based triple therapy for the eradication of HELICOBACTER PYLORI (Hp) bacterium.
Also in the spring of 1999, Axcan announced its decision to further focus its activities on gastrointestinal products and to sell its wholly owned subsidiary, Axcan Ltd., specializing in contraception and the prevention of sexually transmitted diseases, to Gephar S.A. of Switzerland and its wholly owned subsidiary, Istituto Pirri.
Shortly after the close of the fiscal year, the Company announced the purchase of Schwarz Pharma Inc.'s 50% membership interest in Axcan Schwarz LLC at a price of US $52 million (approximately CAN $78 million). The purchase is subject to approval under the Hart-Scott-Rodino Act. Axcan Schwarz LLC was created in January 1997 to market 250 mg tablets of URSO(R) in the United States. However, with the Scandipharm acquisition, Axcan now has its own resources to market URSO(R) in that market.
YEAR 2000 ISSUE
In 1998, Axcan introduced new, Y2K-compliant, business management
software and undertook modifications to its computerized systems to ensure a smooth transition to the next millennium. The Company remains vigilant in this regard and has a program in place to maintain on-going communications with third parties who play a material role in Axcan's operations in order to monitor their progress related to Y2K readiness.
Due to the general uncertainty inherent in Y2K conversion issues,
particularly relating to third party readiness, it is not possible to
determine whether the Y2K issue will have a material impact on the Company's operations. As a result, contingency plans such as stockpiling of raw materials and finished product inventories, as well as alternate sources of supply of goods and/or services are in place to minimize the general risks inherent in these issues.
Axcan Pharma is a North American pharmaceutical company involved in the development and distribution of pharmaceutical products, mainly in the field of gastroenterology. Axcan is one of the ten largest publicly traded health-care companies in Canada and is listed on the Montreal and Toronto Stock Exchanges under the AXP symbol. |
