FOR IMMEDIATE RELEASE

 

PALADIN ANNOUNCES RECORD FINANCIAL RESULTS FOR 2001

-- Revenues up 41% over 2000 on strong sales of new products --

Montreal, Canada, February 14, 2002 - - Paladin Labs Inc. ("Paladin") (TSE: PLB) today announced its financial results for the fourth quarter and year ended December 31, 2001.

Highlights of 2001 include:

Revenues for the fourth quarter of 2001 were a record $4.9 million, an increase of $1.1 million or 29% over the fourth quarter of 2000. For the year ended December 31, 2001, revenues increased by $5.2 million or 41% to a record $17.8 million from $12.6 million in fiscal 2000. Gross profit, as a percentage of revenues, improved to 67% for the current year from 66% for fiscal 2000.

Net income, excluding write-downs, increased 60% to $0.86 million for the fourth quarter of 2001, versus $0.53 million net income for the fourth quarter of 2000.

Net income, excluding write-downs, for the year ended December 31, 2001 increased 47% to $3.7 million from $2.5 million for the prior period.

Diluted earnings per share, excluding write-downs, increased to $0.07 per share for the fourth quarter of 2001 versus $0.04 per share for the fourth quarter of 2000. For fiscal year 2001, diluted earnings per share, excluding write-downs, increased 36% to $0.30 per share for 2001 versus $0.22 per share for 2000.

Net loss for the fourth quarter was $1.5 million or $0.12 per share and net income for the fiscal 2001 was $1.49 million or $0.12 per share. During the fourth quarter a $2.5 million ($2.2 million after tax) charge was recorded related to the write-down of intellectual property associated with the acquisition of the licenses for ConXn™ (relaxin), SYNSORB CD™, and DepoCyt™. For the year ended December 31, 2001, the Company had net write-downs of $2.4 million ($2.06 million after tax). In addition, for the quarter and for the year ended December 31, 2001, the Company recorded $0.16 million in tax expense for the impact of expected changes in tax rates related to loss carryforwards.

Selling and administrative expenses for 2001 increased to $7.0 million from $5.8 million in fiscal 2000. This increased spending was due to marketing expenses associated with new product launches and to higher staffing costs related to an expanded sales and marketing infrastructure. Research and development expenses amounted to $1.0 million in the current year, an increase of $0.13 million from fiscal 2000. Amortization expense for fiscal 2001 was $0.66 million, compared to $0.16 million last year. This increase reflected Paladin's success in acquiring new products during the past year.


Product Acquisitions & In-Licensing

During the fourth quarter, Paladin strengthened and expanded its product portfolio. In December of 2001, Paladin acquired the Canadian rights to the Locacorten® Vioform® family of dermatological products from Novartis Pharmaceuticals Canada Inc. Also during the quarter, Paladin acquired the Canadian rights to Rogitine®, an alpha-adrenoreceptor blocker, complementing the Company's established urology franchise.

In August of 2001, the Company completed the acquisition of Propyl-Thyracil® from Merck Frosst Canada & Co. Propyl-Thyracil®, indicated for the treatment of hyperthyroidism, strengthened Paladin's position in the growing Canadian endocrinology market. Paladin also added Oesclim® to its portfolio in fiscal 2001. Oesclim® is an estrogen patch indicated for the relief of menopausal and post-menopausal symptoms under license from Laboratoires Fournier S.A.

Subsequent to year-end, Paladin entered into a significant agreement with Pharmacia Canada Inc. to be the exclusive Canadian distributor of a portfolio of endocrinology and women's health brands. The products include the brands Dostinex®, Estring®, and Dalacin® Vaginal Cream. All products are currently being sold in Canada, with combined sales of approximately $5.0 million in 2001.

"We are pleased with our performance in the fourth quarter and year ended December 31, 2001. This is our sixth consecutive year of record revenues. In fact, our revenues have grown at a compounded annual growth rate of 237% since our founding in 1996 and 43% since 1998. The write-downs of intellectual property we took this quarter reflect the inherent risks of drug development. We continue to mitigate this risk by building a diversified and profitable pharmaceutical business. We have $22 million of cash and temporary investments despite having invested over $17 million in acquisitions over the past 12 months. We believe that we are in a great position to execute our strategy of acquiring or in-licensing innovative pharmaceuticals for the Canadian market," said Jonathan Goodman, President & CEO.


Revenue & Earnings Guidance for 2002

Paladin is comfortable with the published consensus analyst estimates that revenues will grow by 29% to $23 million and net income will grow to $5.5 million or $0.44 per share. The Company believes this growth will be achieved from increased sales of recently launched products such as Androderm™, Plan B™, Muse®, and Valtaxin™, as well as the 2002 launch of newly acquired products from Novartis and Pharmacia.

Paladin will report its first quarter 2002 results on May 2, 2002.


2001 Year-End and Fourth Quarter Results - Conference Call Notice

Paladin will be hosting a conference call to discuss fourth quarter and year-end 2001 results on Thursday, February 14th at 10:00 a.m. EST. The dial in number for the conference call is 1-800-478-9326 or 1-416-695-5801 and the reference number is 1078720. A taped replay will be available from Thursday, February 14th at 11:00 a.m. until Thursday, February 21st at midnight. The taped replay number is 1-800-408-3053 or 1-416-695-5800. The call will be audio-cast live and archived for 90 days at www.financialdisclosure.ca and www.paladin-labs.com.

About Paladin Labs Inc.
Paladin Labs, headquartered in Montreal, Quebec, is a rapidly growing pharmaceutical company focused on acquiring or in-licensing innovative pharmaceutical products for the Canadian market. With this strategy, a focused national sales team and proven marketing expertise, Paladin has evolved into one of Canada's most profitable publicly-traded pharmaceutical companies. Paladin's shares trade on the Toronto Stock Exchange under the symbol PLB. For more information about Paladin, please visit the Paladin Web Site at www.paladin-labs.com.

This news release may contain forward-looking statements or predictions. These statements represent our judgement as of this date and are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, future revenues and profitability, and obtaining marketing approval.

For further information please contact:

Paladin Labs Inc.
 Samira Sakhia, CFO
Tel: 514-340-5067
E-mail: info@paladin-labs.com
Web Site: www.paladinlabs.com

The Equicom Group Inc.
Joanna Longo, Investor Relations
Tel: 416-815-0700 ext.233
E-mail: jlongo@equicomgroup.com

Paladin Labs Inc.

Balance Sheet

[In thousand of Canadian dollars except share and per share amouts]


 

December 31

2001

December 31

2000

 

$

$

 

 

 

ASSETS

 

 

 

 

 

Current

 

 

 Cash and cash equivalents

1,978

2,858

 Temporary investments

20,470

21,481

 Accounts receivable

2,067

1,495

 Inventories

50

411

 Income tax credits receivable

487

1,036

 Future income tax assets

2,275

1,520

Total current assets

27,327

28,801

 

 

 

Capital assets

12,530

6,144

Investments, at cost

2,771

2,366

Future income tax credits receivable

347

187

Future income tax assets

2,216

4,026

 

 

 

 

45,191

41,524

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current

 

 

 Accounts payable and accrued liabilities

3,924

1,803

 Income taxes payable

181

98

 Deferred credit

1,638

978

Total current liabilities

5,743

2,879

 

 

 

Balance of sale payable

544

495

Deferred credit

935

2,286

Future income tax credits liability

133

95

7,355

5,755

 

 

 

Shareholders’ equity

 

 

 Capital stock

37,154

36,595

 Contributed surplus

87

87

 Other paid-in capital

23

-

 Retained earnings (Deficit)

572

(913)

Total shareholders’ equity

37,836

35,769

 

 

 

 

45,191

41,524

 

Paladin Labs Inc.

Statement of Income

[In thousand of Canadian dollars except share and per share amounts]

¨

 

Three months ended December 31 (Unaudited)

Twelve months ended December 31

 

2001

2000

2001

2000

 

$

$

$

$

 

 

 

 

 

Revenues

4,937

3,815

17,795

12,607

Cost of Sales

1,675

1,166

5,788

4,225

Gross profit

3,262

2,649

12,007

8,382

 

 

 

 

 

Selling and administrative

1,768

2,432

7,031

5,775

Research and development

502

(46)

994

857

Amortization

186

70

661

165

Interest income,net

(180)

(321)

(1,009)

(1,110)

Income before undernoted items

986

514

4,330

2,695

 

 

 

 

 

Gain on disposal of investment

-

(296)

-

(296)

Net loss on disposition and write-downs of intellectual property

2,510

-

2,402

-

Income before income taxes

(1,524)

810

1,928

2,991

 

 

 

 

 

Provision for (recovery of)income taxes

 

 

 

 

 Current

26

20

41

20

 Future

(52)

(58)

402

174

 

(26)

(38)

443

194

 

 

 

 

 

Net income

(1,498)

848

1,485

2,797

 

 

 

 

 

Earnings per share

 

 

 

 

 Basic

(0.12)

$             0.07

$             0.12

$               0.24

 Fully diluted

(0.12)

$             0.07

$             0.12

$               0.24

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

Basic

12,482,098

12,394,038

12,428,188

11,506,636

Fully diluted

12,581,315

12,456,193

12,496,356

11,632,798

 

Paladin Labs Inc.

Statement of Cash Flows

[In thousands of Canadian dollars except share and per share amounts]

 

Twelve months ended December 31

 

 

 

2001

 

2000

 

 

$

 

$

Operating activities

 

 

 

 

Net income

  

1,485

 

2,797

Add items not affecting cash

 

 

 

 

    Amortization

 

661

165

    Write-down of intellectual property

 

2,402

-

    Future income taxes

242

(13)

    Gain on disposal of investment

-

(296)

    Imputed interest on balance of sale

49

45

    Expense related to options issued to consultants

23

-

 

4,862

2,698

Net change in non-cash balances relating to operations

292

(1,191)

Cash flows from operating activities

5,154

1,507

 

 

 

 

 

Investing activities

 

 

 

 

Addition to patents, pharmaceutical product licenses, rights and intellectual property

(9,627)

(5,497)

Accounts payable related to the acquisition of intellectual property

2,250

-

Acquisition of capital assets

(16)

(31)

Net increase (decrease) in temporary investments

1,011

(16,481)

Investments

(211)

(565)

Proceed from disposal of investment

-

598

Cash flows from (used in) investing activities

(6,593)

(21,976)

 

 

 

 

 

Financing activities

 

 

 

 

Common shares issued for cash

559

20,337

Share issue costs

     

-

     

(1,896)

Cash flows from financing activities

559

18,441

 

 

 

 

 

Net change in cash and cash equivalents during the year

(880)

(2,028)

 

 

 

 

 

Cash and cash equivalents, beginning of year

2,858

4,886

 

 

 

 

 

Cash and cash equivalents, end of period

1,978

2,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds available for operations and investments

1,978

2,858

Cash and cash equivalents

20,470

21,481

Temporary investments

22,448

24,339