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QLT announces first quarter results for 2009

VANCOUVER, April 28 /PRNewswire-FirstCall/ - QLT Inc. (NASDAQ: QLTI; TSX: QLT) ("QLT" or the "Company") today reported financial results for the first quarter ended March 31, 2009. Unless specified otherwise, all amounts are in U.S. dollars and in accordance with U.S. GAAP.

"We are pleased to report another quarter of profitability, driven by our revenue streams from Visudyne(R) and Eligard(R)," said Bob Butchofsky, President and Chief Executive Officer of QLT. "Our main driver this year however, continues to be our ophthalmology-focused clinical programs and we look forward to sharing the results from our on-going Phase II punctal plug program in the third quarter. In addition, in the second quarter we are anticipating 12-month results from our RADICAL Visudyne combination study and the Novartis-sponsored MONTBLANC Visudyne combination study, which could help drive Visudyne usage."


    Worldwide Product Sales

Visudyne sales for the first quarter were $27.8 million, a decrease of 23.9% from sales in the first quarter of 2008. Sales in the U.S. were $8.7 million, down 6.1% from the prior-year first quarter, while sales outside the U.S. were $19.0 million, down 30.0% from the prior year. The drop in Visudyne sales was primarily due to the approval and reimbursement in Europe of alternative therapeutics for age-related macular degeneration.

Worldwide Eligard sales in the first quarter were $58.6 million, an increase of 16.4% over the first quarter of 2008. U.S. sales of $21.1 million were up 8.2% from last year's first quarter, while sales outside the U.S. increased 21.5% to $37.4 million.

QLT Revenues

For the first quarter, total revenue of $30.1 million was up 12.7% from the first quarter of 2008 due to the increase in revenue related to Eligard. Revenue from Visudyne was $11.8 million in the quarter, down only 1.1% from the prior-year first quarter despite the 23.9% drop in Visudyne sales, as QLT's share of profit from Visudyne sales was 30.3% compared to 21.5% a year ago. The increase in profitability resulted because the reduction in Visudyne marketing and distribution expenses was greater than the drop in top-line product sales. Revenue related to Eligard (royalty and product revenue combined) was $17.9 million, up 24.5% from the first quarter of 2008.

QLT Expenses

For the first quarter of 2009, Research and Development (R&D) expense was $5.9 million compared to $8.0 million in the same period of 2008, while Selling General and Administrative (SG&A) expense was $5.2 million, down from $7.2 million last year. Combined, spending of $11.1 million was down 27.1% from last year as operating savings realized from the restructuring and streamlining efforts initiated in the first quarter of 2008 more than offset higher spending related to our punctal plug program.

Operating Income/Loss

Operating income for the first quarter was $5.5 million, compared to an operating loss of $8.9 million in the prior-year first quarter. Last year's first quarter loss was driven by a $7.6 million restructuring charge. Excluding that charge, there was still a significant improvement in operating income year-over-year, driven by lower operating expenses and higher revenue related to Eligard.

Earnings Per Share (EPS)/Loss Per Share

EPS of $0.02 in the first quarter compared to a loss per share of $0.14 in the prior-year quarter. The improvement was driven by the restructuring charge in last year's loss, as well as lower operating expenses and higher revenue related to Eligard in the first quarter this year. The effective tax rate for the quarter was high, and is expected to remain high throughout the year, since we are providing a valuation allowance against the tax benefit of punctal plug development expenditures. The effective tax rate also includes a provision for income taxes on the earnings of our QLT USA subsidiary, even though on a cash basis loss carryforwards are expected to be available to offset a portion of its taxable income.

In the first quarter, non-GAAP EPS was $0.02, as licensing and milestone revenue, stock compensation expense, litigation charges, a restructuring adjustment, and interest income related to a tax refund were backed out of GAAP EPS. The full reconciliation of GAAP to non-GAAP EPS for the first quarter is provided in Exhibit 1.

Cash and Short-Term Investments

The Company's consolidated cash balance at March 31, 2009 consisted of $130.1 million of cash and cash equivalents and $124.8 million of restricted cash. The restricted cash balance related to the bond posted to stay the execution of the July 17, 2007 judgment in the Massachusetts Eye and Ear Infirmary ("MEEI") litigation. Subsequent to quarter-end, we completed payment of the judgment liability to MEEI, totaling $127.1 million, which was funded from restricted cash plus $2.2 million of cash and cash equivalents.


    -   Announced the results from a Phase Ia trial of QLT091001 in healthy
        adult volunteers. The trial demonstrated the drug is safe and well-
        tolerated and achieved its primary goal of estimating an appropriate
        dose for studies in patients. QLT091001 is an orally administered
        synthetic retinoid replacement for 11-cis-retinal and is being
        developed for the potential treatment of Leber's Congenital Amaurosis
        (LCA), an inherited progressive retinal degenerative disease that
        leads to retinal dysfunction and visual impairment beginning at

    -   Announced the appointment of Ms. Kathryn Falberg to the Company's
        board of directors and audit committee, effective March 25, 2009. Her
        appointment brings the board membership to seven directors who will
        all stand for re-election at the Annual General Meeting of
        Shareholders on May 5, 2009.

    -   Announced that the United States Court of Appeals for the First
        Circuit (the "Court of Appeals") denied our Petition for Panel
        Rehearing and Rehearing En Banc ("QLT Petition") of the January 12,
        2009 Court of Appeals decision in our litigation with MEEI. The QLT
        Petition was filed on January 26, 2009. The January 12, 2009 Court of
        Appeals decision upheld the liability and damages aspect of the 2007
        judgment of the United States District Court for the District of
        Massachusetts in the lawsuit brought against us by MEEI.

    -   Announced that QLT was the defendant in a lawsuit filed by
        Massachusetts General Hospital (MGH) in Massachusetts state court.
        MGH alleges that it entered into a written agreement with QLT that
        requires QLT to pay MGH the same royalties that it pays MEEI on sales
        of Visudyne, as determined by the District Court and affirmed by the
        Court of Appeals.

    -   Announced the final results of a modified Dutch Auction tender offer
        whereby QLT accepted for purchase and cancellation 20,000,000 of its
        common shares at a price of $2.50 per share, for a total cost of
        $50.0 million.

    Conference call information

QLT Inc. will hold an investor conference call to discuss first quarter 2009 results on Tuesday, April 28, 2009 at 8:30 a.m. ET (5:30 a.m. PT). The call will be broadcast live via the Internet at To participate on the call, please dial 1-800-319-4610 (North America) or 604-638-5340 (International) before 8:30 a.m. ET. A replay of the call will be available via the Internet and also via telephone at 1-800-319-6413 (North America) or 604-638-9010 (International), access code 7157, followed by the "number" sign.

About QLT

QLT Inc. is a global biopharmaceutical company dedicated to the discovery, development and commercialization of innovative therapies. Our research and development efforts are focused on pharmaceutical products in the field of ophthalmology. In addition, we utilize three unique technology platforms, photodynamic therapy, Atrigel(R) and punctal plugs with drugs, to create products such as Visudyne(R) and Eligard(R) and future product opportunities. For more information, visit our web site at

    QLT Inc. - Financial Highlights
                                                          Three months ended
                                                              March 31,
    (In thousands of United States dollars,
     except per share information)                        2009          2008
      Net product revenue                           $   20,817    $   20,016
      Royalties                                          8,907         6,301
      Licensing, milestones and other                      367           377
                                                    $   30,091    $   26,694

    Costs and expenses
      Cost of sales(1)                                  12,998        11,757
      Research and development                           5,886         8,048
      Selling, general and administrative                5,202         7,164
      Depreciation                                         344         1,022
      Litigation                                           334             -
      Restructuring                                       (123)        7,599
                                                        24,641        35,589

    Operating income (loss)                              5,450        (8,895)

    Investment and other income (expense)
      Net foreign exchange gains                            49           254
      Interest income                                    1,377         2,318
      Interest expense                                  (1,503)       (3,028)
      Other                                                 64           153
                                                           (13)         (303)

    Income (loss) from continuing
     operations before income taxes                      5,437        (9,198)

    Recovery of (provision for) income taxes            (4,136)          164

    Income (loss) from continuing operations             1,301        (9,034)

    Loss from discontinued operations,
     net of income taxes                                     -        (1,437)
    Net  income (loss)                              $    1,301    $  (10,471)

    Basic net income (loss) per common share
      Continuing operations                         $     0.02    $    (0.12)
      Discontinued operations                                -         (0.02)
      Net income (loss)                             $     0.02    $    (0.14)

    Diluted net income (loss) per common share
      Continuing operations                         $     0.02    $    (0.12)
      Discontinued operations                                -         (0.02)
      Net income (loss)                             $     0.02    $    (0.14)

    Weighted average number of
     common shares outstanding (in thousands)
      Basic                                             61,287        74,620
      Diluted                                           61,287        74,620

    (1)  Includes amount accrued on Visudyne sales pursuant to judgment
     rendered in the MEEI litigation.

    QLT Inc.
    (In accordance with United States generally accepted accounting
                                                      March 31,  December 31,
    (In thousands of United States dollars)               2009          2008
    Current assets
      Cash and cash equivalents                     $  130,149    $  165,395
      Restricted cash                                  124,847       124,578
      Accounts receivable                               24,634        31,096
      Income taxes receivable                           47,009        50,899
      Inventories                                        9,105        11,633
      Current portion of deferred
       income tax assets                                 7,683         9,835
      Other                                              8,581        11,144
                                                       352,008       404,580

    Property, plant and equipment                        2,753         3,184
    Deferred income tax assets                          29,319        30,216
    Goodwill                                            23,145        23,145
    Mortgage receivable                                  9,525         9,834
    Long-term inventories and other assets              21,574        20,799
                                                    $  438,324    $  491,758

    Current liabilities
      Accounts payable                              $    8,701    $    9,115
      Accrued restructuring charge                         177           726
      Accrued liabilities                              129,804       129,512
      Current portion of deferred revenue                5,245         5,673
                                                       143,927       145,026

    Uncertain tax position liabilities                   1,815         2,033
    Deferred revenue                                     1,102         1,469

                                                       146,844       148,528

    Common shares                                      514,009       702,221
    Additional paid-in capital                         267,906       123,367
    Accumulated deficit                               (578,263)     (579,564)
    Accumulated other comprehensive income              87,828        97,206
                                                       291,480       343,230
                                                    $  438,324    $  491,758

    As at March 31, 2009, there were 54,620,328 issued and outstanding common
shares and 5,103,929 outstanding stock options.

    QLT Inc.
    2009 First Quarter Reconciliation of GAAP Earnings to
    Adjusted Non-GAAP Earnings                                     Exhibit 1
    (In millions of            Three months                     Three months
     United States dollars,           ended                            ended
     except per share        March 31, 2009                   March 31, 2009
     information)                      GAAP      Adjustments      Non-GAAP(1)

      Net product revenue           $  20.8    $     -               $  20.8
      Royalties                         8.9          -                   8.9
      Licensing, milestones
       and other                        0.4       (0.4)   (a)              -
                                       30.1       (0.4)                 29.7

    Cost and expenses
      Cost of sales                   (13.0)       0.0    (b)          (13.0)
      Research and development         (5.9)       0.2    (b)          ( 5.7)
      Selling, general and
       administrative                  (5.2)       0.3    (b)           (4.9)
      Depreciation                     (0.3)         -                 ( 0.3)
      Litigation                       (0.3)       0.3    (c)              -
      Restructuring                     0.1       (0.1)   (d)              -
                                      (24.6)       0.8                 (23.9)

    Operating income                    5.5        0.4                   5.8

    Investment and other
     income (expense)
      Net foreign exchange gains        0.1          -                   0.1
      Interest income                   1.4       (0.7)   (e)            0.7
      Interest expense                 (1.5)         -                  (1.5)
      Other                             0.1          -                   0.1
                                       (0.0)      (0.7)                 (0.7)

    Income from continuing
     operations before income taxes     5.4       (0.3)                  5.1

      Recovery of (provision for)
       income taxes                    (4.1)       0.2    (f)           (3.9)

    Income from continuing operations   1.3       (0.1)                  1.2

    Income from discontinued
     operations, net of income taxes      -          -                     -

    Net income                      $   1.3     $ (0.1)              $   1.2
    Basic net income per
     common share:
      Continuing operations         $  0.02                          $  0.02
      Discontinued operations             -                                -
      Net income                    $  0.02                          $  0.02

    Diluted net income per
     common share:
      Continuing operations         $  0.02                          $  0.02
      Discontinued operations             -                                -
      Net income                    $  0.02                          $  0.02

    Weighted average number of
     common shares outstanding
     (in millions)

      Basic                            61.3                             61.3
      Diluted                          61.3                             61.3

      (a) Remove licensing and milestone revenue.
      (b) Remove stock-based compensation.
      (c) Remove litigation expense.
      (d) Remove restructuring adjustment.
      (e) Remove interest income related to income tax refund.
      (f) Remove income tax impact of the above adjustments.

    (1) The adjusted non-GAAP financial measures have no standardized meaning
    under GAAP and are not comparable between companies. Management believes
    that the adjusted non-GAAP financial measures are useful for the purpose
    of financial analysis. Management uses these measures internally to
    evaluate the Company's operating performance before items that are
    considered by management to be outside of the Company's core operating

A full explanation of how QLT determines and recognizes revenue resulting from Visudyne sales is contained in the financial statements contained in the periodic reports on Forms 10-Q and 10-K, under the heading "Significant Accounting Policies - Revenue Recognition." Visudyne sales are product sales by Novartis under its agreement with QLT.

    QLT Plug Delivery, Inc. is a wholly-owned subsidiary of QLT Inc.
    Atrigel is a registered trademark of QLT USA, Inc.
    Visudyne is a registered trademark of Novartis AG.
    Eligard is a registered trademark of Sanofi-aventis.

QLT Inc. is listed on The NASDAQ Stock Market under the trading symbol "QLTI" and on The Toronto Stock Exchange under the trading symbol "QLT."

Certain statements in this press release constitute "forward looking statements" of QLT within the meaning of the Private Securities Litigation Reform Act of 1995 and constitute "forward looking information" within the meaning of applicable Canadian securities laws. Forward looking statements include, but are not limited to: our expectations for the development of our punctal plug platform; our expectations for timing to receive results from our on-going Phase II punctal plug study; our expectations for timing to receive results relating to our Visudyne RADICAL combination study and the Novartis sponsored MONTBLANC Visudyne combination study; our expectation that positive data from the combination studies could help drive Visudyne sales; and statements which contain language such as: "assuming," "prospects," "future," "projects," "believes," "expects" and "outlook." Forward-looking statements are predictions only which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed in such statements. Many such risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, the following: the Company's future operating results are uncertain and likely to fluctuate; uncertainties relating to the timing and results of the clinical development and commercialization of our products and technologies (including Visudyne and our punctal plug technology) and the associated costs of these programs; the timing, expense and uncertainty associated with the regulatory approval process for products; uncertainties regarding the impact of competitive products and pricing; risks and uncertainties associated with the safety and effectiveness of our technology; risks and uncertainties related to the scope, validity, and enforceability of our intellectual property rights and the impact of patents and other intellectual property of third parties; and general economic conditions and other factors described in detail in QLT's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the U.S. Securities and Exchange Commission and Canadian securities regulatory authorities. Forward looking statements are based on the current expectations of QLT and QLT does not assume any obligation to update such information to reflect later events or developments except as required by law.

Copyright©2009 PR Newswire.
All rights reserved

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