Biotech Values

[DewDiligence]

QLTI Eyes (hehe) Buyback to Boost Flagging Shares

[BusyAnt: I can’t tell from your recent post whether you are still in this issue. Are you?]

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060727:MTFH45342_2...

>>
Thu Jul 27, 2006 12:41 PM ET
By Scott Anderson

TORONTO, July 27 (Reuters) - QLT Inc. <QLTI> said on Thursday it plans to buy back a portion of its shares to prop up its floundering stock price, hurt by declining sales of its lead drug Visudyne and disappointing earnings.

The Vancouver, British Columbia-based pharmaceutical company said it will buy up to 13 million common shares, or 15 percent, in a Dutch auction to a value of $104 million.

Under the Dutch auction method in which the price is gradually lowered until it meets an acceptable bid, shareholders can tender shares at a price in the range of $7.00 to $8.00. The offer is expected to run from Aug. 3 to Sept. 8.

The shares were up 41 cents, or 6.2 percent, at $7.07 on Nasdaq. In Toronto, they gained 39 Canadian cents, or 5.1 percent, to C$8.00 after rising as high as C$8.30 earlier in the session.

Bob Butchofsky, president and chief executive at QLT, said the company eyed a number of options to boost the flagging stock before settling on the repurchase plan.

"We decided to take this action now because we believe QLT is undervalued," Butchofsky said during a conference call.

"Our board and management strongly believe that our stock price does not reflect the underlying value of the company or the potential we have for creating shareholder value."

Butchofsky blamed a lack of "confidence in Visudyne's potential," which is used in the treatment of age-related macular degeneration, for the flagging stock price.

Visudyne sales have been hurt in recent quarters by the growing use of competing products and extended insurance coverage of a competing drug [off-label Avastin] in the U.S. market.

QLT said worldwide sales for Visudyne fell to $95.3 million in the quarter, from $129 million a year ago. Sales in the U.S. were $18.9 million, down 62.4 percent from a year earlier. [These figures were reported on July 17 by NVS.]

The company also cut its annual Visudyne sales outlook to a range of $370 million to $385 million, from $370 million to $400 million.

But Butchofsky said increasing interest from physicians and preliminary data on combination therapies raised hope of a turnaround for the drug. [I highly doubt there will ever be a meaningful turnaround.]

However, he cautioned that it is "too early" to reflect the results of the combination trials in the sales results.

The flagging sales of Visudyne helped cut into the company's second-quarter results, which were also released on Thursday.

QLT reported a profit of $7.5 million, or 8 cents a share, for the period ended June 30. That is down from $16.8 million, or 17 cents a share, for the same quarter a year earlier.

Revenues were down 19.8 percent to $47.8 million, from $59.6 million a year ago.

It forecast 2006 GAAP earnings per share to range from 30 cents to 39 cents a share and non-GAAP earnings of 33 cents a share to 42 cents a share.

Brian Bapty, an analyst at Raymond James in Vancouver, said he had mixed feelings on the buyback plan, noting that spending to boost the balance sheet was "probably a better move."

"I'm well aware that there are a lot of shareholders looking for some kind of return of capital and from that perspective I completely understand the pressure the company has been under," he said.
<<