MONTREAL, CANADA--(Marketwire - May 3, 2012) - Paladin Labs Inc. (TSX:PLB), a leading specialty pharmaceutical company, today reported its financial results for the quarter ended March 31, 2012. 

2012 First Quarter Highlights

Financial

• Revenues reached a record $38.6 million, an increase of 21% over the same period last year
• Net income was $11.3 million, an increase of 40% over the same period last year
• EBITDA¹ was $18.0 million, an increase of 4% over the same period last year

Product Development

• Filed a new drug submission (NDS) that has been accepted for review by Health Canada for Silenor® (doxepin) for the treatment and symptomatic relief of insomnia
• Received regulatory approval from Health Canada for Oralair™, a sublingual grass pollen immunotherapy tablet for the treatment of the symptoms of moderate to severe seasonal grass pollen allergic rhinitis with or without conjunctivitis

Corporate Development

• Entered into a strategic partnership whereby the Company will accelerate the buy-out of Pharmaplan (Pty) Limited ("Pharmaplan") and merge the Pharmaplan business with the pharma division of Litha Healthcare Group Limited (JSE:LHG) ("Litha")

"The first quarter of 2012 was marked by important business development and regulatory activities. We are pleased that our partnership agreement with Litha remains on track to close in early July and, on closing, will further expand Paladin's geographic footprint and our international growth prospects. We expect the transaction will be immediately accretive and result in a step change in Paladin's financial profile. During the quarter, we received regulatory approval for Oralair™, a novel sublingual grass pollen immunotherapy tablet. We also submitted our insomnia treatment, Silenor®, for regulatory approval. With our robust product pipeline and strong balance sheet we are confident in our ability to continue to execute our growth strategy" said Mark Beaudet, interim President and CEO of Paladin Labs.

Financial Results

Revenues increased $6.8 million or 21% to $38.6 million for the first quarter of 2012 from $31.8 million for the same period in 2011. The increase in revenues for the first quarter is primarily due to incremental revenues from products acquired and/or launched after the comparative quarter, March 31, 2011, which contributed $3.4 million to the quarter ended March 31, 2012. The increase in revenues is also attributable to the sales growth of certain significant promoted products, including Tridural®, Trelstar®, Testim®, Metadol®, Plan B® and Abstral®, which combined increased by 9% compared to 2011.

First quarter 2012, EBITDA¹ increased 4% to $18.0 million, compared to EBITDA¹ of $17.3 million in the first quarter of 2011.

Net income for the quarter was $11.3 million or $0.54 per fully diluted share, compared to net income of $8.1 million or $0.40 per fully diluted share in the first quarter a year ago. 

As at March 31 2012, Paladin's cash, cash equivalents and investments in marketable securities totaled a record $252.7 million. From this strong cash position, Paladin continues to pursue acquisition opportunities.

Product Developments

During the quarter Paladin filed a NDS with Health Canada for Silenor® and received regulatory approval from Health Canada for Oralair™.

In February 2012, Paladin announced that it filed a NDS for Silenor® with Health Canada and that Health Canada had accepted the submission for review. Silenor® is a low-dose oral tablet formulation of doxepin indicated for the treatment and symptomatic relief of insomnia. If approved, Silenor® is expected to be the first and only non-controlled prescription sleep medication in Canada indicated for the treatment and symptomatic relief of insomnia characterized by difficulty in falling asleep, frequent nocturnal awakening and/or early morning awakenings. 

In March 2012, Paladin received regulatory approval for Oralair™. Oralair™ is a sublingual grass pollen immunotherapy tablet for the treatment of the symptoms of moderate to severe seasonal grass pollen allergic rhinitis with or without conjunctivitis. Paladin anticipates launching Oralair™ in time for the 2013 allergy season and is confident that, when launched, Oralair™ will provide Canadian allergy sufferers with a safe, effective and convenient alternative for the treatment of seasonal grass allergies.

Corporate Developments

In February, 2012, Paladin entered into a strategic partnership whereby it will accelerate the buy-out of the remaining 55.01% of Pharmaplan and merge the Pharmaplan business with the pharma division of Litha (the "Combined Transactions"). Under the terms of the Combined Transactions, Paladin will acquire the 55.01% of Pharmaplan which it does not currently own. Litha will then acquire 100% of the share capital of Pharmaplan from Paladin in exchange for cash and the issuance of 169,090,909 shares in Litha at ZAR2.75 per share. Paladin has also agreed to acquire an additional 72,989,078 shares of Litha from the Blackstar Group at ZAR2.75 per share. Paladin will deploy an anticipated $48 million in cash and issue 88,948 shares at $44.97 per share to complete the Combined Transactions. As a result Paladin will own approximately 45% of Litha, making it Litha's single largest shareholder upon closing. The Combined Transactions are subject to certain regulatory approvals including South African competition review and approval by shareholders of Litha and is expected to close on July 2, 2012.

Had the Combined Transactions taken place on January 1, 2011, Paladin would have recorded $255 million of consolidated revenue and $96 million of consolidated EBITDA, an increase of $113 million and $28 million, respectively, over its reported revenue of $141.5 million and EBITDA of $67.6 million for the year ended December 31, 2011. These amounts do not give effect to the interest in Litha not owned by Paladin.

During 2011, Paladin received regulatory approval from the Toronto Stock Exchange to carry out a normal course issuer bid and to date has purchased 75,420 shares under this normal course issuer bid.

Jonathan Goodman Update

On August 18, 2011, the Company announced that its President and CEO, Mr. Jonathan Ross Goodman, was involved in an accident and was hospitalized with serious injuries. As Mr. Goodman was unable to perform his duties as President and CEO, the Board of Directors of Paladin asked Mr. Mark Beaudet, Co-Founder, Director and Vice President Marketing and Sales of Paladin, to assume such duties on an interim basis. Mr. Goodman continues his recovery and rehabilitation program. As a result, Mr. Goodman will remain absent from the Company for an indeterminate period of time. The Company will provide further updates on Mr. Goodman's condition only when a change in circumstance warrants same.

⁽¹⁾ EBITDA - Non-IFRS Financial Measures

The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. The Company defines EBITDA as earnings before interest expense, other expense (income), taxes, amortization, foreign exchange gains (losses), share of net income in an associate and unusual items; such as write-downs and gains (losses) on intellectual property and investments. EBITDA is calculated and presented consistently from period to period and agrees, on a consolidated basis, with the amount disclosed as "Earnings before under-noted items" on the consolidated statements of income. The Company believes EBITDA to be an important measurement that allows it to assess the operating performance of its ongoing business on a consistent basis without the impact of amortization expenses. The Company excludes amortization expenses because their level depends substantially on non-operating factors such as the historical cost of intangible assets. The Company's method for calculating EBITDA may differ from that used by other issuers and, accordingly, this measure may not be comparable to EBITDA used by other issuers. 

Conference Call Notice

Paladin will host a conference call to discuss its first quarter results today at 10:00 a.m. EST. The dial-in number for the conference call is 1-800-768-2481 or 416-981-9000. The call will be audio-cast live and archived for 30 days at www.paladinlabs.com.

About Paladin Labs Inc.

Paladin Labs Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian and select international markets. With this strategy, a focused Canadian national sales team and proven marketing expertise, Paladin has evolved into one of Canada's leading specialty pharmaceutical companies. For more information, please visit the Company's web site at www.paladinlabs.com.

This press release may contain forward-looking statements and predictions. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The Company considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared, but cautions that these assumptions regarding the future events, many of which are beyond the control of the Company and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations, are discussed in the annual report as well as in the Company's Annual Information Form for the year ended December 31, 2011. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information or future events and except as required by law. For additional information on risks and uncertainties relating to these forward-looking statements, investors should consult the Company's ongoing quarterly filings, annual report and Annual Information Form and other fillings found on SEDAR at www.sedar.com.

INTERIM CONSOLIDATED BALANCE SHEETS

[In thousands of Canadian dollars]
As at	March 31, 2012	December 31, 2011
ASSETS
Current
Cash and cash equivalents	89,402	72,115
Marketable securities	163,298	166,894
Trade and other receivables	24,825	20,208
Inventories	13,101	13,327
Income tax receivable	1,412	718
Other current assets	2,638	1,476
Total current assets	294,676	274,738
Investment in an associate	21,275	20,850
Financial assets	8,905	9,311
Investment tax credits recoverable	24,674	24,674
Deferred income tax assets	36,297	40,613
Property, plant and equipment	152	162
Pharmaceutical product licenses and rights	24,662	27,565
Total assets	410,641	397,913
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Payables, accruals and provisions	42,350	38,849
Finance lease liability	1,008	984
Deferred revenue	3,190	2,999
Income tax payable	21,542	22,205
Balances of sale payable	849	1,809
Total current liabilities	68,939	66,846
Finance lease liability	5,467	5,745
Deferred revenue	1,861	2,099
Balances of sale payable	497	497
Total liabilities	76,764	75,187
Shareholders' equity
Share capital	167,342	166,681
Other paid-in capital	5,494	5,144
Other capital reserves	19	553
Retained earnings	161,022	150,348
Total shareholders' equity	333,877	322,726
Total liabilities and shareholders' equity	410,641	397,913

 

INTERIM CONSOLIDATED INCOME STATEMENTS
[In thousands of Canadian dollars except for share and per share amounts]
	Three months ended March 31
	2012		2011
Revenues	38,557		31,752
Cost of sales	11,188		8,040
Gross income	27,369		23,712
Expenses (income)
Selling, general and administrative	7,668		7,040
Research and development	2,548		2,071
Interest income	(893	)	(2,669	)
Earnings before under-noted items	18,046		17,270
Amortization of pharmaceutical product licenses and rights	2,903		5,330
Other finance expense	555		573
Other income	(200	)	-
Foreign exchange gain	(154	)	(381	)
Share of net income of an associate	(425	)	(201	)
Income before income tax	15,367		11,949
Provision for income taxes	4,045		3,849
Net income for the period	11,322		8,100
Attributable to shareholders
Basic earnings per share	0.56		0.42
Diluted earnings per share	0.54		0.40
Weighted average number of shares outstanding
Basic	20,284,749		19,290,851
Diluted	20,919,714		20,042,756

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]		Three months ended March 31
		2012		2011
Operating activities
Net income for the year		11,322		8,100
Adjustments reconciling net income to operating cash flows
	Amortization of pharmaceutical product licenses and rights	2,903		5,330
	Deferred tax	4,373		2,280
	Share-based compensation expense	581		423
	Other finance expense	555		573
	Unrealized foreign exchange loss (gain)	65		(470	)
	Depreciation of property, plant and equipment	27		105
	Share of net income of an associate	(425	)	(201	)
		19,401		16,140
Net change in non-cash balances relating to operations		(4,518	)	(1,638	)
Cash inflow from operating activities		14,883		14,502
Investing activities
Disposal and maturities of marketable securities		39,507		2,913
Purchases of marketable securities		(36,578	)	(45,738	)
Purchase of property, plant and equipment		(16	)	(55	)
Purchase of financial assets		-		(80,338	)
Purchase of pharmaceutical product licenses and rights		-		(7,567	)
Investment in an associate		-		(2,936	)
Repayment of balances of sale payable		-		(250	)
Proceeds from disposal of financial assets		-		3,344
Dividends from an associate		-		251
Net cash inflow (outflow) from investing activities		2,913		(130,376	)
Financing activities
Common shares issued for cash, net of issuance costs of $nil [2011: $1,643]		571		39,387
Repurchase of shares		(819	)	-
Repayment of obligation under finance lease		(250	)	-
Net cash (outflow) inflow from financing activities		(498	)	39,387
Foreign exchange loss on cash and cash equivalents		(11	)	(167	)
Increase (decrease) in cash and cash equivalents during the period		17,287		(76,654	)
Cash and cash equivalents, beginning of the period		72,115		96,295
Cash and cash equivalents, end of the period		89,402		19,641
Cash and cash equivalents		89,402		19,641
Marketable securities		163,298		86,067
		252,700		102,708