Q2 2010 Earnings Call

July 27, 2010 8:30 AM ET


Karen Peterson – Investor Relations Specialist

Bob Butchofsky – President and CEO

Cameron Nelson – Chief Financial Officer


Scott Henry – Roth Capital

Seth Hamot – RRH

Eric Shahinian – Kingstown Capital



Welcome to the QLT, Inc. Second Quarter 2010 Conference Call. As a reminder, all participants are in a listen-only mode. And the conference is being recorded. After the presentation there will an opportunity to ask questions. (Operator Instructions)

At this time, I’d like to turn the conference over to Karen Peterson, Investor Relations Specialist. Please go ahead.

Karen Peterson

Good morning everyone. And welcome to QLT’s second quarter 2010 earnings conference call. If you have not yet received a copy of our press release you can find it by visiting our website at www.qltinc.com. The conference call is being webcast live and will be available on our website for the next 30 days. Presenting today is Bob Butchofsky, our President and CEO; and Cameron Nelson, our CFO.

Before I turn the call over to Bob I’d like to take a few moments to go over the Safe Harbor statements. On behalf of the speakers you follow we caution investors that certain statements in this conference call are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and constitute forward-looking information within the meaning of Canadian Securities laws.

The purpose of this caution, we refer to such statement is forward-looking statements. Forward-looking statements include but are not limited to, our statements relating to our business and Clinical development plans and objectives, timing to commence studies, complete enrollment and receive results, sales and other financial guidance, the potential benefits, targets and commercial success of our products and technologies and other statements which contain language such as may, will, likely, potential, believe, anticipate, expect, intend, plan, estimate and other similar expressions.

Forward-looking statements are predictions only which involve known and unknown risks and uncertainties and undue reliance should not be placed on such statements. Current material factors or assumptions are implied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.

Forward-looking statements are based on estimates and assumptions made by QLT in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors that QLT believes are appropriate in the circumstances.

For additional information about the material factors or assumptions underlying such statements and about the material factors that may cause actual results to vary for those expressed terms or implied in such statements, please consult QLT’s press release dated July 27, 2010 and available on our website as well as filings with the U.S. Securities and Exchange Commission and the Canadian Securities regulatory authorities including its risk factors detailed in the most recently filed annual report on Form 10-K and quarterly report on Form 10-Q.

The information set forth herein should be considered in light of such factors. QLT has no intention and undertakes no obligation to update such information to reflect later events or developments, except it’s required by law.

The presentation includes a discussion of non-GAAP financial measures as defined by applicable securities laws in most directly comparable U.S. GAAP financial measures. Information reconciling those non-GAAP financial measures QLT’s financial results prepared in accordance with U.S. GAAP have been included in the earnings press release issued today and posted on our website.

And with that, I’ll turn the call over to Bob.

Bob Butchofsky

Great. Thanks a lot Karen, and good morning, everyone. Thank you for joining us on our second quarter earnings call. I’m going to spend a little time and give you some of the financial highlights but Cam will discuss that in more detail, we’ll also talk about the pipeline.

Kind of to put the quarter in perspective as well as the call today, overall, we continue to deliver solid financial results as we strive to build shareholder value by appropriate spending on R&D programs related to our pipeline of innovative drugs and technologies, which is solely focused now on treating ocular diseases.

I’m pleased with our financial performance in the second quarter and through the first half of this year and there’s a couple of points I just want to highlight for you. First, starting with adjusted EBITDA, plus the contingent consideration, that was $6.7 million in the second quarter and $10.4 million for the first half of the year.

Turning to Visudyne, Visudyne sales grew sequentially from $21.1 million in the first quarter to $24.4 million in the second quarter. Cash at the end of the second quarter on hand is $186 million and as a reminder, we have no long-term debt or other obligations outstanding.

Contingent consideration now stands at $138 million at the end of the second quarter and this gives you an implied underlying asset value of cash and contingent consideration of about $324 million. We are generating cash from operations. We’re using some of that cash in addition to funding our R&D programs. We continue to buying back stock and we recently expanded our stock buyback. In the second quarter we purchased 1.2 million shares in the quarter and the total buyback since 2005 is now up to 42.3 million shares.

Now, following those highlights, I just want to spend a few moments talking through some of the development milestones. I want to update you on the progress we’ve made thus far in developing our punctal plug program. We’re now targeting two prevalent ocular diseases, glaucoma and allergic conjunctivitis. We’ll be starting new studies in both of those conditions.

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