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8-K - Tribute Pharmaceuticals Canada Inc.slxcf_8k.htm
Press Release
Source: Stellar Pharmaceuticals Inc.

Stellar Pharmaceuticals Shows Strong Third Quarter
Revenue Growth to $3.2 Million
Milton, Ontario, Canada, November 13, 2012 – Stellar Pharmaceuticals Inc. (OTCQB:SLXCF; OTCBB:SLXCF) ("Stellar" or "the Company"), a specialty pharmaceutical company with a primary focus on the acquisition, licensing, development and promotion of healthcare products in Canada, today announced financial results for its fiscal 2012 third quarter and nine months ended September 30, 2012. In this press release, all dollar amounts are expressed in Canadian currency - unless otherwise noted - and results are reported in accordance with United States generally accepted accounting principles (U.S. GAAP).

Third Quarter 2012 Highlights:
Revenues increased 366% in Q3 and 276% in the nine months ended September 30, 2012
Gross profit up 179% in Q3 and 119% in the first nine months of 2012
Entered into exclusive agreement with Pfizer Canada Inc. (NYSE:PFE) to market Gelfoam®, a medical device used in surgical procedures as a haemostatic agent, targeting the $30 million Canadian market for this indication
Conducted prelaunch of CAMBIA®, a treatment for migraine headaches, which launched on October 1 to serve the $150 million Canadian migraine market

For the three month period ended September 30, 2012, Stellar reported total revenues $3,213,500, an increase of 366% compared to the same period in 2011. This increase was driven by licensed domestic product net sales of $2,267,500 (compared to nil in the previous year) as a result of the acquisition of Tribute Pharmaceuticals. Additional growth came from international sales which grew by 70% to $369,800 in the third quarter compared to the same period in 2011. There was also an increase in other domestic product sales for the three month period ending September 30, 2012 of 24% to $576,200 compared to the same period in 2011 due in part to sales of newly acquired Collatamp G®, a medical device used in the prevention of postoperative infections, which targets a $20 million Canadian market.

For the nine month period ended, September 30, 2012, total revenues from all sources increased by 276% to $9,004,700 compared to $2,395,900 for the same period in 2011.

Gross profits increased driven by a combination of higher revenues and lower costs associated with the revenues. The Company enjoyed a 179% increase in gross profit over the three month period ended September 30, 2012 and a 119% increase in gross profit over the nine month period of 2012.

Selling, general and administrative expenses for the third quarter were $2,131,400, an increase of 243% over the prior year period. The increase was due primarily to the expansion of the Company’s sales force and CAMBIA pre-launch expenses. For the nine month period ended September 30, 2012, selling, general and administrative expenses were $6,240,000 compared to $2,024,600 in the same period of the prior year.

The Company's net loss in the third quarter of fiscal 2012 was $718,600 or $.02 per share compared to net income of $112,300 during the same period in 2011. The loss was mainly due to the significant investment Stellar made in the expansion of its sales force, marketing expenses to grow its existing products, marketing and sales expenses related to the launch of CAMBIA® on October 1, 2012, as well as an increase in business development activities.

For the nine month period ending September 30, 2012 net loss was $2,076,400 or $.05 per share compared to a prior year net loss of $132,200.

As of September 30 2012, the Company had cash and cash equivalents of $2,608,700.

During the third quarter Stellar executed on growing its revenues by expanding its product portfolio, which leveraged its strong sales and distribution infrastructure. Stellar further expanded and strengthened its Specialty Care Products group through its agreement with Pfizer to promote and sell Gelfoam® in Canada. Gelfoam® is a medical device approved in Canada and the United States for use in surgical procedures as a haemostatic agent, when control of capillary, venous, and arteriolar bleeding by pressure, ligature, and other conventional procedures is either ineffective or impractical. Gelfoam® is already used in hospitals and surgical centers across Canada and addresses a $30 million market. Stellar has begun promoting, selling and marketing Gelfoam®, while Pfizer is responsible for manufacturing, distribution, regulatory and medical activities. This marks Stellar’s first agreement with Pfizer.

Stellar has created synergies in its product mix designed to increase sales of all of its specialty care products including NeoVisc®, Uracyst®, Collatamp G®, which was acquired in the second quarter of 2012, and now Gelfoam. In the third quarter Stellar also prepared for the launch of CAMBIA®, which was introduced on October 1, 2012. CAMBIA® has the potential to gain a significant proportion of the $150 million Canadian migraine market. It is the only available prescription non-steroidal anti-inflammatory drug ("NSAID") available with an indication for the acute treatment of migraine attacks with or without aura in adults.


"We continue to execute on our growth strategy with revenues of over $9 million in the first nine months of 2012.  This is a strong foundation for what we believe will put us on a more accelerated path for growth," said Rob Harris, CEO of Stellar. "When our CFO Scott Langille and I merged our company, Tribute Pharmaceuticals, with Stellar, we came with a clear vision for evolving Stellar into a leading Canadian specialty care pharmaceutical company with global reach. Our goals, vision and strategy are very much aligned with and supported by Stellar’s board as well as our entire management and sales team. Having led significant growth and expanded business development activities at other pharmaceutical companies, we feel confident in our path and our ability to execute."

About Stellar Pharmaceuticals Inc.
Stellar  and its operating division, Tribute Pharmaceuticals, is an emerging Canadian specialty pharmaceutical company focused on the acquisition, licensing, development and management of pharmaceutical and healthcare products with its primary focus on the Canadian market.

Stellar also markets Bezalip® SR (bezafibrate), Soriatane® (acitretin), NeoVisc® (1.0% sodium hyaluronate solution) and Uracyst® (sodium chondroitin sulfate solution 2%), Collatamp G® and Gelfoam® in the Canadian market.   Additionally, NeoVisc® and Uracyst® are commercially available and are sold globally through various international partnerships.

For further information on Stellar visit the Company’s websites:, or

Stellar Pharmaceuticals' Forward Looking Statement
This press release contains certain forward-looking statements about Stellar  as defined in the Private Securities Litigation Reform Act of 1995, which statements can be identified by the use of forward-looking terminology, such as "may", "will", "expect", "intend", "anticipate", "estimate", "predict", "plan" or "continue" or the negative thereof or other variations thereon or comparable terminology referring to future events or results. Forward-looking statements, by their nature, are subject to risks and uncertainties, Stellar actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including general economic conditions, the ability of Stellar to successfully integrate operations, and the timing of expenditures and expansion opportunities, any of which could cause actual results to vary materially from current results or anticipated future results. See Stellar reports filed with the Canadian Securities Regulatory Authorities and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from results referred to in forward-looking statements. Stellar assumes no obligation to update the information contained in this press release to update forward-looking statements to reflect changed assumptions, the occurrence of anticipated events or changes in future operating results, financial condition or business over time.

Soriatane and Bezalip are registered trademarks and under license from Actavis Group PTC ehf
Cambia is a registered trademark and under license from Nautilus Neurosciences, Inc.
Collatamp G is a registered trademark and under license EUSA Pharma (Europe) Limited.
Gelfoam is a registered trademark of Pharmacia & Upjohn Company LLC, used under license by Pfizer Canada Inc.

For further information on Stellar, visit or contact:
Stellar Pharmaceuticals Inc.
Scott Langille
Hampton Growth
Andrew Haag


Arnold Tenney

(Expressed in Canadian dollars)

As at
September 30,
As at
December 31,
Cash and cash equivalents
  $ 2,608,651     $ 2,227,973  
Accounts receivable, net of allowance of $nil (2011 - $nil)
    1,208,042       763,810  
    861,138       870,630  
Taxes recoverable
    187,363       180,160  
Loan receivable
    15,814       15,814  
Prepaid expenses and other receivables
    348,955       124,101  
Total current assets
    5,229,963       4,182,488  
Property, plant and equipment, net
    1,174,888       1,207,462  
Intangible assets, net
    10,394,006       10,409,744  
    3,597,077       3,408,741  
Debt issuance costs, net
    358,516       -  
Total assets
  $ 20,754,450     $ 19,208,435  
Accounts payable and accrued liabilities
  $ 3,075,183     $ 2,684,542  
Amount payable and contingent consideration due
    486,222       1,624,289  
Current portion of long term debt
    1,183,514       -  
Warrant liability
    246,303       2,543  
Total current liabilities
    4,991,222       4,311,374  
Long term debt
    2,092,309       -  
Deferred tax liability
    793,800       1,524,200  
Total liabilities
    7,877,331       5,835,574  
Contingencies and commitments
Capital Stock
Common shares
    17,589,957       16,469,621  
Additional paid-in capital options
    1,738,162       1,277,830  
    (6,451,000 )     (4,374,590 )
Total shareholders’ equity
    12,877,119       13,372,861  
Total liabilities and shareholders’ equity
  $ 20,754,450     $ 19,208,435  



(Expressed in Canadian dollars)

For the Three Month Period
Ended September 30
For the Nine Month Period
Ended September 30
Licensed domestic product net sales
  $ 2,267,509     $ -     $ 6,104,160     $ -  
Other domestic product sales
    576,174       466,496       1,707,336       1,420,885  
International product sales
    369,816       217,368       1,193,219       960,799  
Royalty and licensing revenues
    -       5,298       -       14,226  
Total revenues
    3,213,499       689,162       9,004,715       2,395,910  
Operating costs and expenses
Licensor sales and distribution fees
    1,526,690       -       4,226,247       -  
Cost of products sold
    327,582       201,870       922,983       634,799  
Total cost of sales
    1,854,272       201,870       5,149,230       634,799  
Selling, general and administrative
    2,131,379       621,641       6,240,007       2,024,640  
    155,807       12,314       380,270       36,438  
Total cost and expenses
    4,141,458       835,825       11,769,507       2,695,877  
(Loss) from operations
    (927,959 )     (146,663 )     (2,764,792 )     (299,967 )
Non-operating income (expenses)
Change in warrant liability
    66,183       266,029       203,396       201,759  
Cost of extending the warrant  expiration
    -       -       (135,157 )     -  
Change in fair value of contingent        consideration
    -       -       79,724       -  
Research and development
    (6,590 )     (12,196 )     (14,916 )     (45,966 )
Accretion expense
    (45,826 )     -       (100,193 )     -  
Interest expense
    (103,551 )     -       (158,175 )     -  
Interest income
    12,150       5,091       12,150       11,945  
(Loss) income and comprehensive (loss) income before tax
    (1,005,593 )     112,261       (2,877,963 )     (132,229 )
Current income tax recovery
    71,153       -       71,153       -  
Deferred income tax recovery
    215,800       -       730,400       -  
Net (loss) income and comprehensive (loss) income for the period
  $ (718,640 )   $ 112,261     $ (2,076,410 )   $ (132,229 )
Deficit, beginning of period
    (5,732,360 )     (4,097,299 )     (4,374,590 )     (3,852,809 )
Deficit, end of period
  $ (6,451,000 )   $ (3,985,038 )   $ (6,451,000 )   $ (3,985,038 )
Basic and Diluted (Loss) Earnings per share
  $ (0.02 )   $ 0.00     $ (0.05 )   $ (0.01 )


(Expressed in Canadian dollars)

For the Nine Month Period
Ended September 30
Cash flows from (used in) operating activities
Net (loss)
  $ (2,076,410 )   $ (132,229 )
Items not affecting cash:
Deferred income tax recovery
    (730,400 )     -  
    412,490       78,889  
Change in warrant liability
    (203,396 )     (201,759 )
Cost of extending the warrant expiration
    135,157       -  
Change in fair value of contingent consideration
    (79,724 )     -  
Stock-based compensation
    460,332       138,327  
Unrealized foreign exchange
    (54,378 )     -  
Accretion expense
    100,193       -  
Issuance of equity instruments for services rendered
    -       14,467  
Change in non-cash operating assets and liabilities
    (249,493 )     (686,148 )
Cash flows (used in) operating activities
    (2,285,629 )     (788,453 )
Cash flows (used in) investing activities
Additions to property, plant and equipment
    (32,489 )     (5,008 )
Increase in intangible assets
    (32,270 )     (23,191 )
Cash cost of acquisition
    (425,000 )     -  
Cash flows (used in) investing activities
    (489,759 )     (28,199 )
Cash flows from (used in) financing activities
Financing costs deferred
    (343,934 )     -  
Long term debt issued
    3,500,000       -  
Share issuance costs
    -       (24,243 )
Cash flows from (used in) financing activities
    3,156,066       (24,243 )
Changes in cash and cash equivalents
    380,678       (840,895 )
Cash and cash equivalents, beginning of period
    2,227,973       4,352,285  
Cash and cash equivalents, end of period
  $ 2,608,651     $ 3,511,390