Cangene Reports Second Quarter 2012 Results

Cangene Corporation has reported financial results for the second quarter of 2012, ended on January 31, 2012.

Revenues for the quarter were $33.6 million, compared with $40.2 million in the same quarter last year.

However, product sales increased due to non-specialty plasma sales, higher WinRho® SDF sales in Canada and internationally, and higher HepaGam B® sales in Canada.

Contract-manufacturing revenue declined compared with the same quarter last year, which had included a significant delivery of anthrax immune globulin ("AIG") product. Deliveries on the AIG contract were completed in 2011.

Compared with the same quarter a year ago, the current-year quarter included a delivery of botulism antitoxin ("BAT") product and a delivery of BAT plasma under the recently executed contract extension.

Contract-manufacturing revenues at Cangene Biopharma, Inc. and contract-R&D revenues were relatively flat quarter-over-quarter.

Net loss for the current quarter was $3.9 million, compared with net income of $2.0 million in the same quarter last year.

Net loss in the current quarter results largely from lower biodefence contract revenue, increased R&D expenditures on IGIV development and hyperimmune process improvements, reduced gross margins on biopharmaceutical product sales, write-downs related to inventory provisions, reorganization costs and an impairment loss on the write-down of certain patents.

A foreign-exchange gain in the current quarter compared to a foreign-exchange loss in the same quarter last year helped offset the current-quarter operating loss.

A loss per share for the current quarter of $0.06 compares with earnings per share of $0.03 in the same quarter a year ago.

"These results include $3.8 million in reorganizational costs and do not yet reflect the significant positive changes we are making within the organization aimed at re-creating our entrepreneurial culture and focusing on our strengths. During the quarter, we streamlined our organizational structure and established cross-functional teams that are focused on identifying and implementing specific strategies aimed at improved operating efficiency and growth," says John Sedor, President and CEO of Cangene.

"As we work towards redefining our corporate priorities, we believe that we will be well positioned to generate added value for our stakeholders" adds Mr. Sedor.

As at January 31, 2012, Cangene had a cash balance of $34.0 million and no debt. Cash flow from operations, excluding changes in working capital, was $0.7 million for the current quarter, compared with $4.2 million in the same quarter last year.

The net change in non-cash working capital for the quarter was an increase of $4.8 million due to higher accounts receivable and income taxes recoverable balances, which were partly offset by lower inventories.

Quarterly Highlights

• The Company's cash position remains strong at $34.0 million.

• The Company signed a collaborative research agreement with the University of British Columbia aimed at developing immune-based therapies for Alzheimer's disease.

• A workforce reorganization was implemented in the quarter that included changes to the Company's senior management team and a workforce reduction.

The reorganization is intended to create greater alignment with the Company's strategy and optimize operating efficiencies.

• In line with its increasing focus on the U.S. commercial market, the Company opened a new office in Philadelphia, Pennsylvania that will serve as the headquarters for the U.S. sales and marketing team.

Certain comparative figures in the following financial statements have been reclassified to conform to the current year's presentation.