The upfront payment by Paladin was Can$7.5mill. Fox.
Q4 fiscsal report: Dimethaid announces year-end and fourth quarter results
Canadian sales of Pennsaid(R) up 59% in the year
TORONTO, Aug. 19 /CNW/ - Pharmaceutical developer Dimethaid Research Inc.
(TSX: DMX) today reported consolidated fiscal 2005 results for the fourth
quarter and year-ended May 31, 2005. All amounts are expressed in Canadian
dollars, unless otherwise noted. The full Fiscal 2005 year end report,
including financial statements and notes, is posted on the Company's web site
at www.dimethaid.com and on SEDAR at www.sedar.com.
Restructuring a Promising Drug Development Company for the Future
Fiscal 2005 saw Pennsaid(R) revenues hit a new high of $9.5 million,
largely as a result of a 59% increase in Canadian sales over fiscal 2004.
"Pennsaid(R) sales underline what we always believed about our products," said
Dan Chicoine, Chairman of Dimethaid. "While a major focus of this past year
has been restructuring, we believe our underlying technologies hold
considerable promise. The success of Pennsaid(R) in Canada illustrates the
opportunity to develop and market safe and effective topical medications like
Pennsaid(R) and our new Pennsaid(R) Plus throughout the world. Pennsaid's
Canadian success will help us in our recently launched initiative to secure a
US licensing deal for Pennsaid and Pennsaid Plus"
The Board and management of Dimethaid assumed their roles following last
year's annual meeting of shareholders. Upon assuming office, the new
leadership team was confronted with a number of major challenges:
- The Company's limited cash position of about $250,000;
- Over $11 million in payables;
- A $27.7 million US debt obligation to the founder of Oxo Chemie,
Dr. Kuhne, arising from Dimethaid's purchase of Oxo Chemie;
- A letter from the FDA stating that it was not approving
Pennsaid(R) for marketing in the United States without the
successful completion of two additional Phase III clinical trials;
- Little or no patent protection for the Company's lead product,
Pennsaid(R).
Restructuring efforts became an immediate priority due to the company's
financial difficulties. Highlights of this restructuring phase included:
- Renegotiating agreements with creditors and debt holders to reduce
accounts payable by $4.9 million;
- Renegotiating the Oxo Chemie acquisition to eliminate
$27.7 million US in future debt obligations to Dr. Kuhne;
- Raising $11.2 million in a public financing;
- Terminating an unproductive, costly licensing and marketing
agreement with In2Focus in the U.K.;
- Lowering overall fixed costs by 50 percent and downsizing the
workforce by over 40 percent;
- Listing non-strategic assets for sale: specifically, the Markham
head office, the Varennes-2 plant previously earmarked for
manufacturing expansion, and Dioptic Laboratories, Dimethaid's
ophthalmic products subsidiary;
- Successfully persuading the Patented Medicines Price Review Board
to overturn an earlier ruling that Dimethaid had earned excess
revenues of $4.2 million on Canadian Pennsaid(R) sales;
- Raising $7.5 million of cash by selling its Dimethaid Health Care
subsidiary on August 16, 2005
The restructuring efforts are largely completed at this point and the
Company has launched a number of initiatives to fulfill the promise of its two
technology platforms, transcellular drug delivery and immune system
regulation:
- Developing a new formulation for the Company's lead product
Pennsaid(R). The new formulation is expected to enhance efficacy
while reducing the likelihood of skin irritation, and a patent is
now pending;
- Recruiting a vice-president of intellectual property to ensure
products under development gain the strongest possible patent
protection;
- Retaining an industry licensing consultant to facilitate
discussions with potential industry partners, particularly
partners for Pennsaid(R) in the United States;
- Determining new, promising uses of WF10 in the oncology field.
"Ultimately we have put Dimethaid on a new path," Mr. Chicoine said. "We
are developing a strategy based on what we can do best: advance product
development based on our two technology platforms, transcellular drug delivery
and immune system regulation. We look forward to implementing this strategy
with the support of new and existing partners. We see this as the best course
to follow to create shareholder value."
Financial Results
Revenue
Total revenue for the fourth quarter ended May 31, 2005 was $3.1 million,
up 55% from the fourth quarter of fiscal 2004 ($2.0 million), and 36% from the
third quarter of fiscal 2005 ($2.3 million). The significant increase was
primarily due to an increase in sales of Pennsaid(R) in the Canadian market.
For the year ended May 31, 2005, total revenue was $10.1 million, up
close to 52% from last year's $6.7 million. Again, the increase is
attributable to the increase in Canadian Pennsaid(R) sales.
Total Pennsaid(R) revenue in the 2005 fiscal year amounted to
$9.5 million, up 58% from the same period last year when sales were
$6.0 million.
The Canadian rights to Pennsaid(R) are held by Dimethaid Health Care Ltd.
("DHCL"), which until August 16, 2005, was a wholly owned subsidiary of
Dimethaid. Subsequent to the year end, on August 16, 2005, Dimethaid sold DHCL
to Paladin Labs Inc. for a $7.5 million up front payment, plus a share in
operating profits from the sale of Pennsaid(R) in Canada above specified
targets and a long-term supply agreement whereby Dimethaid's manufacturing
plant in Varennes Quebec will continue to supply Pennsaid(R) to DHCL for the
Canadian market. Dimethaid retains all rights to Pennsaid(R) for all other
territories of the world.
Gross profit for the fourth quarter was $1.5 million or 75% of net
revenue, compared to $1.2 million or 90% of net revenue, for the same period a
year ago. Gross profit for fiscal 2005 was $5.5 million, or 76% of net
revenue, compared to $5.2 million, or close to 84% of net revenue for the same
period last year. The decrease in margin percentage is due to revenue
allocation with Dimethaid's co-promotion partner in Canada. This decrease is
more than offset by revenue growth and reduction in sales overhead. |
