FOR IMMEDIATE RELEASE

 

PALADIN ACHIEVES RECORD RESULTS FOR THIRD QUARTER

Quarter Marked by a 60% Increase in Revenues and an 80% increase in Net Income--

Montreal, PQ, November 8, 2001 Paladin Labs Inc. ("Paladin") (TSE: PLB) today announced its financial results for the quarter ended September 30, 2001.

Highlights of the third quarter 2001 include:

"Our strong performance was primarily due to revenues derived from new or recently launched products, including Androderm®, Plan B™, MUSE®, Tapazole®, and Oesclim®," said Jonathan Goodman, President and CEO of Paladin. "We expect revenue growth to accelerate in the future as these products gain market acceptance."

Revenues for the third quarter of 2001 were $4.9 million, an increase of $1.8 million or 60% over the third quarter of 2000. For the nine-month period ended September 30, 2001, revenues increased by $4.1 million or 46% to $12.9 million from $8.8 million in the first nine months of 2000. Gross profit, as a percentage of revenues, improved to 71% in the current quarter from 69% in the same quarter last year.

Net income for the quarter increased 80% to $1.4 million from $819,210 in the third quarter last year. Diluted earnings per share increased 71% to $0.12 per share compared to $0.07 per share in the third quarter of 2000. Net income for the nine months ended September 30, 2001 increased 53% to $2.9 million from $1.9 million for the comparable period last year. Diluted earnings per share increased 41% to $0.24 per share compared to $0.17 per share for the same period last year.

Selling and administrative expenses increased to $1.7 million from $1.1 million in the third quarter of 2000. This increased spending was due to marketing spending associated with new product launches and to higher staffing costs related to an expanded sales and marketing infrastructure. Research and development expenses amounted to $247,786 in the current quarter, a reduction of $182,600 from the third quarter last year. Amortization expense in the third quarter of 2001 was $166,513, compared to $47,094 in the corresponding quarter last year. This increase reflected Paladin's success in acquiring new products during the past year.


Product Acquisitions & In-Licensing

This quarter Paladin strengthened its portfolio with the acquisition of Propyl-Thyracilâ from Merck Frosst Canada & Co. (NYSE: MRK). Propyl-Thyracilâ is indicated for the treatment of hyperthyroidism and competes in a market that, according to IMS Canada, grew at an annual rate of 9% for the past three years.

Subsequent to the quarter, Paladin announced the acquisition of the Canadian rights to Rogitineâ from Novartis Pharmaceuticals Canada Inc. (NYSE:NVS). Rogitineâ is an alpha-adrenoreceptor blocker and is indicated to prevent and control hypertensive episodes in-patients with pheochromocytoma. There have been numerous publications on the use of Rogitineâ, in combination with other products, for the treatment of erectile dysfunction. Rogitine® sales are well established in Canada, reaching approximately $500,000 during the past twelve-month period.

"With over $22 million of cash and temporary investments and virtually no debt, Paladin is well positioned to execute its strategy of acquiring or in-licensing innovative pharmaceuticals for the Canadian market", said Jonathan Goodman, President & CEO.


2001 Third Quarter Results - Conference Call Notice

Paladin will host a conference call to discuss the third quarter 2001 results on Thursday, November 8 at 10:00 am EST. The dial in number for the conference call is 1-800-273-9672 or 1-416-695-5806 and the reference number is 962654.

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.paladinlabs.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, Account Manager
Tel: 416-815-0700 ext.233
E-mail: jlongo@equicomgroup.com

Paladin Labs Inc.

Balance Sheet

 

September 30

2001

December 31

2000

 

$

$

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

Current

 

 

 Cash and cash equivalents

2,616,487

2,857,528

 Temporary investments

19,854,918

21,481,436

 Accounts receivable

2,380,127

1,494,527

 Inventories

49,785

410,885

 Income tax credits receivable

440,446

1,036,374

 Future income tax assets

1,520,000

1,520,000

Total current assets

26,861,763

28,800,750

 

 

 

Capital assets, net of accumulated amortization

10,720,607

6,143,770

Investments, at cost

2,770,527

2,366,016

Long term future income tax assets

2,888,871

4,118,321

 

 

 

 

43,241,768

41,428,857

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current

 

 

 Accounts payable and accrued liabilities

1,226,706

1,802,581

 Income taxes payable

89,188

98,413

 Deferred credit

977,760

977,760

Total current liabilities

2,293,654

2,878,754

 

 

 

Balance of sale payable

531,750

495,000

Long term deferred credit

1,428,594

2,286,594

 

4,253,998

5,660,348

 

 

 

Shareholders’ equity

 

 

 Capital stock

36,831,013

36,595,379

 Contributed surplus

86,513

86,513

 Retained earnings (Deficit)

2,070,244

(913,383)

Total shareholders’ equity

39,987,770

35,768,509

 

 

 

 

43,241,768

41,428,857

 

 

Paladin Labs Inc.

Statement of Income

(Unaudited)

 

 

Three months ended September 30

Nine months ended September 30

 

2001

2000

2001

2000

 

$

$

$

$

 

 

 

 

 

Revenues

4,859,314

3,044,554

12,858,858

8,791,530

Cost of Sales

1,407,300

951,921

4,112,536

3,059,063

Gross profit

3,452,014

2,092,633

8,746,322

5,732,467

 

 

 

 

 

Selling and administrative

1,691,275

1,069,763

5,263,364

3,342,778

Research and development

247,786

430,386

492,220

902,581

Amortization

166,513

47,094

475,816

94,525

Interest income

(231,939)

(375,616)

(829,011)

(789,140)

Gain on disposal of license

(108,694)

-     

(108,694)

-     

Income before income taxes

1,687,073

921,006

3,452,627

2,181,723

 

 

 

 

 

Provision for income taxes

 

 

 

 

 Current

5,000

-     

15,000

-     

 Future

209,000

101,796

454,000

232,135

 

214,000

101,796

469,000

232,135

 

 

 

 

 

Net income

1,473,073

819,210

2,983,627

1,949,588

 

 

 

 

 

Earnings per share

 

 

 

 

 Basic

$              0.12

$             0.07

$             0.24

$               0.17

 Diluted

$              0.12

$             0.07

$             0.24

$               0.17

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

Basic

12,428,420

12,385,909

12,410,020

11,208,676

Diluted

12,486,145

12,486,098

12,476,703

11,349,849

 

 Paladin Labs Inc.

Statement of Cash Flows

(Unaudited)

 

 

Three months ended September 30

Nine months ended September 30

 

2001

2000

2001

2000

 

$

$

$

$

Operating activities

 

 

 

 

Net income

1,473,073

819,210

2,983,627

1,949,588

Add items not affecting cash

 

 

 

 

   Amortization

166,513

47,094

475,817

94,525

   Future income taxes

173,450

101,796

371,450

232,135

   Gain on disposal of license

(108,694)

-   

(108,694)

-   

   Imputed interest on balance of sale

12,250

-   

36,750

-   

 

1,716,592

968,100

3,758,950

2,276,248

Net change in non-cash balances relating to operations

(518,354)

194,284

(513,672)

(2,326,405)

Cash flows from (used in) operating activities

1,198,238

1,162,384

3,245,278

(50,157)

 

 

 

 

 

Investing activities

 

 

 

 

Acquisition of capital assets

(459)

(31,089)

(10,836)

(31,089)

Additions to patents, pharmaceutical product licenses and rights

(2,311,107)

(1,982,368)

(5,126,586)

(2,716,148)

Investments

(211,049)

(262,843)

(211,049)

287,157

Net decrease (increase) in temporary investments

(7,399,993)

(17,789,539)

1,626,518

(20,388,728)

Cash flows from (used in) investing activities

(9,922,608)

(20,065,839)

(3,721,953)

(22,848,808)

 

 

 

 

 

Financing activities

 

 

 

 

Common shares issued for cash

103,134

138,801

235,634

20,436,977

Share issue costs

-   

-   

-   

(1,890,426)

Cash flows from financing activities

103,134

138,801

235,634

18,546,551

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

(8,621,236)

(18,764,654)

(241,041)

(4,352,414)

 

 

 

 

 

Cash and cash equivalents, beginning of period

11,237,723

19,297,768

2,857,528

4,885,528

 

 

 

 

 

Cash and cash equivalents, end of period

2,616,487

533,114

2,616,487

533,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

2,616,487

533,114

 

 

Temporary investments

19,854,918

25,388,733

 

 

 

22,471,405

25,921,847