April 25, 2008 / 12:13 PM / 10 years ago

Results, lack of clarity disappoint QLT investors

TORONTO (Reuters) - QLT Inc QLT.TO QLTI.O said on Friday it slipped to a first-quarter loss, hurt by a restructuring charge and slumping sales of its Visudyne anti-blindness treatment.

However, analysts were also disappointed that the biopharmaceutical company provided no clear update on its divestiture program, unveiled in January, in a bid to remake itself into a more narrowly focused company.

The restructuring includes the sale of QLT USA, whose primary assets are the Eligard product line for prostate cancer, Aczone, a dermatology product for the treatment of acne vulgaris, and the Atrigel drug delivery system.

It also planned to sell land and buildings at its corporate headquarters in Vancouver, British Columbia, and cut 115 jobs, with further reductions as assets are divested.

“The divestment process is well under way and is progressing in a reasonable time frame,” Chief Executive Bob Butchofsky said on a conference call.

The company said it took a charge of $7.4 million during the quarter related to the restructuring, but analysts wanted more details on the moves that would see it concentrate on ocular treatments including Visudyne and punctal plugs — tiny plugs inserted into the tear ducts to prevent drainage.

“There were no updates on the divestiture program, which I think everybody wanted to hear about and is the most important thing,” said John Maletic, an analyst at Scotia Capital.

The company said it lost $10.5 million, or 14 cents a share in the quarter ended March 31, compared with a profit of $4.9 million, or 6 cents a share, in the same period last year.

Revenue was $11.9 million, down 42 percent from $20.6 million, due mostly to the disappointing sales of Visudyne which is used to treat macular degeneration.

Adjusted to exclude items such as the $7.4 million restructuring charge, QLT reported a loss of $2.7 million, or 4 cents a share.

Analysts had expected an average profit of 1 cent a share, according to Reuters Knowledge.

“The results themselves were worse than expected, but there were extraneous items, that brought it down,” said Maletic. “If you dig into the details, I suppose you could read some negative into it, but nothing terribly surprising.”

QLT said sales of Visudyne were $36.5 million, down 40.4 percent from $61.2 million a year earlier. U.S. sales were $9.3 million, up 10.6 percent from $8.4 million.

The drop in Visudyne sales was primarily due to the approval and reimbursement in Europe of alternative therapeutics for age-related macular degeneration.

The company also repeated an earlier outlook that it sees 2008 Visudyne sales in a range between $145 million and $160 million and expects its share of the profit from Visudyne sales to be about 20 percent. QLT sells Visudyne in conjunction with global marketing partner Novartis NOVN.VX.

QLT shares were down 11 Canadian cents, or 2.7 percent, at C$3.91 on the Toronto Stock Exchange. On Nasdaq, they were off 5 cents at $3.85.

Maletic said the company is not expected to show any signs of a recovery for a few years yet as it struggles with the declining Visudyne sales and wraps up its divestitures.

“This company will essentially become a biotech company again. It is going to go into a loss-making position and not return probably until 2010,” he said.

“The strategy is to divest QLT USA assets that are making money, get the most value from them and shore up the balance sheet, and turn themselves back into a biotech company that is developing new products rather than an operating company that is trying to milk a fading asset.”

($1=$1.02 Canadian)

Reporting by Scott Anderson; editing by Rob Wilson

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