VANCOUVER, Oct. 27 /CNW/ - QLT Inc. (NASDAQ: QLTI; TSX: QLT) ("QLT" or the "Company") today reported financial results for the third quarter ended September 30, 2009. Unless specified otherwise, all amounts are in U.S. dollars and in accordance with U.S. GAAP.

"Our recently announced accomplishments mark a significant turning point for the Company, as we have fulfilled our vision of becoming a company focused solely in the ocular therapeutic area and will soon have a commercial presence in the U.S.," said Bob Butchofsky, President and Chief Executive Officer of QLT. "We are looking forward to advancing the punctal plug drug delivery platform and expect to report additional data in the first quarter next year."

2009 THIRD QUARTER FINANCIAL RESULTS

Financial Reporting

For the third quarter and nine months ended September 30, 2009, QLT is reporting the results of our divested QLT USA business as one line item called Income from Discontinued Operations on our statements of operations. This item captures in one line the net results of the entire QLT USA operation through September 30, 2009.

Worldwide Product Sales

Worldwide Visudyne(R) sales for the third quarter were $23.5 million, a decrease of 31.1% from sales in the third quarter of 2008. Sales in the U.S. were $6.2 million, down 32.5% from the prior- year third quarter, while sales outside the U.S. were $17.3 million, down 30.5% from the prior year. Worldwide Eligard(R) sales in the third quarter were $65.0 million, an increase of 18.8% over the third quarter of 2008. U.S. sales of $18.8 million were up 11.4% from last year, while sales outside the U.S. increased 22.1% to $46.1 million. All revenue items related to the Eligard product are included in the Income from Discontinued Operations line on the statements of operations.

QLT Revenues

Revenue is now comprised solely of revenue from Visudyne. For the third quarter, revenue of $8.8 million was down 19.2% from the third quarter of 2008 due primarily to the decrease in end-user Visudyne sales. QLT's share of profit from Visudyne sales was 28.9% in the quarter, up from 22.6% in the third quarter of 2008.

QLT Expenses

For the third quarter of 2009, Research and Development (R&D) expense was $7.4 million, up from $6.9 million in the same period of 2008 primarily due to increased spending on the punctal plug program. Selling, General and Administrative (SG&A) expense was $4.5 million, up slightly from $4.4 million last year.

Operating Income/Loss

Operating loss for the third quarter was $6.0 million, compared to operating income of $17.0 million in the prior-year third quarter. Last year's income included a $21.3 million gain from the sale of our corporate headquarters and surrounding land. Excluding that gain, the operating loss increased from last year due to the drop in Visudyne sales.

Earnings Per Share (EPS)/Loss Per Share

EPS of $0.16 in the third quarter compared to EPS of $1.97 in the prior-year quarter. The decline occurred because the 2008 third quarter results included a $134 million gain from the sale of Aczone(R) and Atrigel(R) (within discontinued operations) and the $21.3 million gain from the sale of our headquarters and land. In the third quarter, non-GAAP loss per share was $0.08, significantly lower than GAAP EPS primarily because the income from discontinued operations and a non-cash foreign exchange gain related to an intercompany loan were eliminated. A full reconciliation of GAAP to non-GAAP EPS for the third quarter and nine months is provided in Exhibits 1 and 2.

Cash and Short-Term Investments

The Company's consolidated cash and cash equivalents balance at September 30, 2009 was $194.0 million, up from $134.9 million at the end of the second quarter primarily due to collection of income tax refunds during the quarter. The cash and cash equivalents balance at September 30, 2009 did not include $20.0 million ($16.5 million net of transaction fees) that was paid to us on October 1, 2009 as the first installment of our sale of QLT USA.

2009 Guidance Update

- As previously announced, under the terms of our sale of QLT USA, we

expect to be paid up to an additional $200 million in quarterly

payments equal to 80% of the royalties paid to QLT USA under the

Sanofi and Medigene agreements. As a result of this transaction:

- In the fourth quarter we expect to record a gain of over $100

million within income from discontinued operations related to the

accounting gain on the sale, which represents the excess of the

estimated present value of all consideration expected to be

received under the deal compared to the net book value of the net

assets that were sold.

- We will have an asset on the balance sheet called Contingent

Consideration, which represents the estimated present value of the

expected remaining payments due from the $200 million of quarterly

payments mentioned above.

- Cash collected each quarter will not be recorded as revenue,

rather it will draw down the Contingent Consideration asset on the

balance sheet. In the fourth quarter we expect to collect

Contingent Consideration of approximately $8.4 million.

- Each period we will have to assess the fair value of the

Contingent Consideration and any changes will flow through the P&L

as gains or losses within Other Income and Expense.

- Guidance for Eligard sales was increased in our last earnings update

to $240-255 million. Given that we will no longer be reporting any

revenue from Eligard sales on our statements of operations, we are

discontinuing our guidance for end-user Eligard sales. However,

Eligard sales through the nine months ended September 30, 2009 of

$191.1 million were in line with the previous guidance.

- Guidance for R&D expense is $30-33 million and for SG&A expense is

$18-21 million, unchanged from previous guidance, although we do

expect that both line items will be near the bottom end of the

guidance ranges.

- Guidance for adjusted EBITDA (defined as operating income plus stock

compensation and depreciation expense and adjusted for other one- time

and non-cash items) was increased in our last earnings call to $15-20

million. As above, given that we will no longer be reporting revenue

from Eligard, we are discontinuing guidance for adjusted EBITDA.

However, through the nine months ended September 30, 2009 adjusted

EBITDA (including EBITDA associated with our discontinued operations)

was $18.3 million.

- The amendment to the Visudyne agreement does not take effect until

January 1, 2010, and therefore there is not expected to be any

material impact to our 2009 operating results. Beginning in 2010,

QLT's revenue from Visudyne will comprise: (i) end-user net sales of

Visudyne in the U.S., (ii) royalties in the amount of 20% of net

sales of Visudyne outside of the U.S., (iii) product revenue from

selling unlabelled Visudyne product to Novartis for its sale of the

product outside of the U.S., and (iv) reimbursement from Novartis for

the existing third party royalties we currently pay to University of

British Columbia and Massachusetts General Hospital for sales of

Visudyne outside the U.S. (no reimbursement will be received for the

ongoing damages paid to MEEI in the amount of 3.01% of Visudyne

sales).

In 2010, we will provide guidance on adjusted EBITDA plus the quarterly payments due for the sale of QLT USA (calculated as 80% of the Eligard royalty payments referenced above), because we believe this to be a more reflective measure of our cash-flow for the next several years.

RECENT COMPANY ANNOUNCEMENTS

- Announced the receipt of an income tax refund of Cdn$45.3 million

from the Canada Revenue Agency. The income tax refund resulted

primarily from a request to carryback losses the Company incurred in

2007 in connection with the judgment of the United States District

Court for the District of Massachusetts in favor of Massachusetts Eye

and Ear Infirmary.

- Announced the sale of all of the shares of QLT's wholly- owned U.S.

subsidiary, QLT USA, Inc. ("QLT USA"), to TOLMAR Holding, Inc.

("TOLMAR") for up to an aggregate US$230 million pursuant to a Stock

Purchase Agreement dated October 1, 2009. QLT USA's principal

operating asset is the Eligard line of products for the treatment of

prostate cancer. The Eligard line of products is currently

manufactured by TOLMAR, Inc., a wholly-owned subsidiary of TOLMAR.

- Announced that QLT has restructured its agreement with Novartis

Pharma AG to simplify the relationship, under which, effective

January 1, 2010, it will, among other things, receive exclusive U.S.

rights to the Visudyne patents to sell and market Visudyne in the

U.S.

About QLT

QLT Inc. is a global biopharmaceutical company dedicated to the discovery, development and commercialization of innovative ocular therapies. We utilize two unique technology platforms, photodynamic therapy (used in the Visudyne product) and punctal plugs which are currently under development for future product opportunities. For more information, visit our web site at www.qltinc.com.

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.