FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
------------------------
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2002
AETERNA LABORATORIES INC.
-----------------------------------------------
(Translation of registrant's name into English)
1405, boul. du Parc-Technologique
Quebec, Quebec
Canada, G1P 4P5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F Form 40-F X
------ ------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes No X
------ ------
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-__
EXHIBIT INDEX
-------------
EXHIBIT DESCRIPTION Page
------------------- ----
1. AEterna Interim Report 2002 - First Quarter (Q1) 1
Aeterna Interim Report 2002 - Q1
Dear Shareholders,
This quarter was marked by repeated support from our financial and strategic
partners and by sales from our subsidiary, Atrium, that exceeded our
expectations. The private placements of SGF Sante, Solidarity Fund QFL and Acqua
Wellington will enable us to accelerate the realization of our acquisition
projects and the further development of Neovastat. Our pharmaceutical partner,
Grupo Ferrer, extended its network to cover Latin America in preparation for the
market development of Neovastat.
I am also proud to entrust the Company's presidency to Gilles Gagnon, a seasoned
executive with the experience and expertise needed to ensure smooth functioning
of the company's business, while simultaneously continuing to maintain relations
with present and future pharmaceutical partners. Furthermore, Dr. Claude
Hariton, has been appointed Chief Medical Officer (CMO) and will oversee the
management of our future clinical projects. While still assuming my role as both
Chairman and Chief Executive Officer of AEterna, this new corporate structure
will enable me to invest all my energy in our acquisition plan that will turn
AEterna into a powerhouse in the development of multiple innovative cancer
therapies, at the international level.
OVERVIEW
ATRIUM RESULTS
Atrium's sales increased from $2.8 million to $25.3 million, in comparison to
the same quarter last year. The consolidated profits of Atrium before income tax
and non-controlling interest reached $3.2 million, an increase of 89%.
PRIVATE PLACEMENTS OF $57 MILLION
Initial investment of $57 million, accompanied by warrants exercisable at $13
and $20 per share, with SGF Sante, Solidarity Fund QFL and Acqua Wellington,
Ltd. From this amount, approximately $35 million will be used for the
acquisition of innovative technologies or companies in cancer, $20 million for
further development of Neovastat, which has reached the final stage of clinical
studies in kidney and lung cancer, and $2 million for general corporate
purposes. This initial $57 million investment, combined with the full exercise
of warrants, could represent a total investment of approximately $180 million
over the next 20 months.
STRATEGIC ALLIANCE
The strategic alliance with Grupo Ferrer Internacional of Barcelona, which
already covered Southern Europe, has been extended. The Spanish pharmaceutical
company has been granted the additional territories of France and Belgium,
together with all of Central and South America. Our strategic partnerships with
Grupo Ferrer and Medac now represent more than 30% of the worldwide market and
more than $45 million in milestone payments, not to mention double-digit
royalties on sales of Neovastat.
APPOINTMENTS
o Gilles Gagnon, AEterna's Vice President and Chief Operating Officer
has been appointed President of the Company and member of AEterna's
Board of Directors.
o Dr. Eric Dupont remains Chairman of the Board of Directors and Chief
Executive Officer of AEterna.
o Dr. Claude Hariton, Vice President, Clinical and Regulatory Affairs,
has been named Chief Medical Officer (CMO).
o Lee S. Rosen, MD, assistant professor of the Department of Medicine at
the University of California, Los Angeles (UCLA), has joined AEterna's
Scientific Advisory Board.
o Alain Bouchard, Chairman of the Board, President and Chief Executive
Officer of Alimentation Couche-Tard, has been elected member of
Atrium's Board of Directors.
o Dr. Francis Bellido, President and Chief Operating Officer of SGF
Sante, was appointed to AEterna's Board of Directors
OUTLOOK
On the clinical side, we are still expecting to complete our Phase III trial in
renal cell carcinoma by early 2003. This study represents the last clinical step
before Neovastat may be approved for commercial production.
Our growth strategy will be dedicated to the diversification of our product
portfolio and the pursuit of other alliances with pharmaceutical partners.
Dr. Eric Dupont
Chairman of the Board and Chief Executive Officer
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The following analysis explains the variations in the Company's results of
operations, financial condition and cash flow. This discussion should be read in
conjunction with the information contained in AEterna Laboratories Inc.'s
interim consolidated financial statements and related notes for the three month
period ended March 31, 2002. All figures are in Canadian dollars.
RESULTS OF OPERATIONS
REVENUES
Company revenues come from the subsidiary Atrium Biotechnologies Inc. (Atrium)
whose consolidated sales reached $25.3 million, compared to $2.8 million for the
corresponding quarter last year. This increase can be primarily attributed to
the sales generated by Unipex Finance S.A. (Unipex), a French company acquired
by Atrium in July 2001.
OPERATING EXPENSES
The cost of sales during this quarter amounted to $19.7 million compared to
$0.4 million for the same quarter in 2001. These costs are in direct proportion
to corresponding revenues and the percentage of these costs against revenues
varied significantly, as a result of the operations in which Unipex operates.
Selling and administrative expenses amounted to $2.2 million during this quarter
compared to $0.8 million in 2000. Again the acquisition of Unipex explains these
variations with last year.
Research and Development (R&D) investments amounted to $7.4 million during this
quarter in comparison with $7.2 million last year. This slight increase in
expenses can be attributed to the costs related to the follow-up of patients
enrolled in our clinical studies and also to the costs incurred in undertaking
preliminary steps required for the registration of Neovastat with regulatory
authorities.
R&D tax credits and grants reached $0.5 million for this quarter compared with
$2 million in 2001. The decrease of the eligible expenses of current grant
programs explain this situation.
Interest income was $0.5 million for the three months period ended March 31,
2002 in comparison with $1.1 million for the same period last year. Cash used in
R&D investments and for the Unipex acquisition explains the decrease of interest
income for this quarter.
The income tax expense for this first quarter came from Atrium and its
subsidiaries. No income tax expense was recorded for the corresponding quarter
last year.
The net loss for this quarter amounted to $5.7 million or $0.17 per share in
2002 compared to a net loss of $3.2 million or $0.11 per share for the same
quarter in 2001. This increase is mainly due to the reduction of grants related
to R&D expenses. Furthermore, following the amendment to the shareholder's
agreement of Atrium in May 2001 and the acquisition of 70.2 % of Unipex shares,
we have to record a non-controlling interest in Atrium which amounted to
$0.9 million for this quarter.
LIQUIDITY AND CAPITAL RESOURCES
The cash position of the Company as at March 31, 2002 remains strong with
$44 million in cash and short-term investments compared with $54.1 million as
at December 31, 2001. Moreover, in taking into account the private placements
of $57 million realized on April 9, 2002, the Company has $101 million in liquid
assets. From this amount, about $55 million are earmarked for the development of
Neovastat, $35 million for AEterna's acquisition program, and $11 million for
Atrium's acquisition program and general corporate purposes.
During this quarter, an amount of $7.6 million was used in operating activities
while $0.8 million was used in financing activities mainly to reimburse the
long-term debt. Regarding the investments activities, the fluctuation in
short-term investments provided $8 million whereas acquisition of long-lived
assets amounted to $1.5 million.
RISK FACTORS
Economic and sector related risks are the same as those identified in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in the Company's 2001 Annual Report.
Dennis Turpin, CA
Vice President and Chief Financial Officer
This report contains forward-looking statements, which are made pursuant to the
safe harbor provisions of the U.S. Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
which could cause the Company's actual results to differ materially from those
in the forward-looking statements. Such risks and uncertainties include, among
others, the availability of funds and resources to pursue R&D projects, the
successful and timely completion of clinical studies, the ability of the Company
to take advantage of the business opportunities in the pharmaceutical industry,
uncertainties related to the regulatory process and general changes in economic
conditions. Investors should consult the Company's ongoing quarterly and annual
filings with the Canadian and U.S. securities commissions for additional
information on risks and uncertainties relating to the forward-looking
statements. Investors are cautioned not to rely on these forward-looking
statements. The Company does not undertake to update these forward-looking
statements.
GENERAL INFORMATION
1405 Parc-Technologique Blvd.
Quebec, Quebec, Canada G1P 4P5
Tel. : (418) 652-8525
Fax : (418) 652-0881
E-mail :aeterna@aeterna.com
Web site : www.aeterna.com
---------------
STOCK SYMBOL
TXE : AEL
NASDAQ : AELA
Share outstanding: 32.9 millions
AETERNA LABORATORIES INC.
CONSOLIDATED BALANCE SHEETS
(expressed in Canadian dollars)
AS AT AS AT
MARCH 31, DECEMBER 31,
2002 2001
------------------------------------------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,970,911 $ 11,993,502
Short-term investments 34,050,709 42,070,976
Accounts receivable 30,437,503 23,361,630
Income taxes recoverable - 154,684
Research and development tax
credits recoverable 1,710,000 1,295,000
Inventory 6,929,185 8,303,697
Prepaid expenses 1,617,796 1,161,587
------------------------------------------------------------------------------
84,716,104 88,341,076
PROPERTY, PLANT AND EQUIPMENT 16,443,526 15,403,984
INTANGIBLE ASSETS AND GOODWILL 24,176,481 24,252,487
FUTURE INCOME TAX ASSETS 5,649,054 6,354,170
------------------------------------------------------------------------------
$130,985,165 $134,351,717
==============================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 25,915,741 $ 23,429,717
Income taxes 114,648 -
Current portion of long-term debt 2,497,052 3,447,688
------------------------------------------------------------------------------
28,527,441 26,877,405
LONG-TERM DEBT 10,263,789 10,400,969
EMPLOYEE FUTURE BENEFITS 130,409 115,952
NON-CONTROLLING INTEREST 19,088,436 18,338,602
------------------------------------------------------------------------------
58,010,075 55,732,928
------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 97,573,664 97,513,214
DEFICIT (24,733,856) (19,082,451)
CUMULATIVE TRANSLATION ADJUSTMENT 135,282 188,026
------------------------------------------------------------------------------
72,975,090 78,618,789
------------------------------------------------------------------------------
$130,985,165 $134,351,717
==============================================================================
THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
AETERNA LABORATORIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE PERIODS ENDED MARCH 31, 2002 AND 2001
(expressed in Canadian dollars)
QUARTERS ENDED MARCH 31,
------------------------------------------------------------------------------
UNAUDITED 2002 2001
------------------------------------------------------------------------------
REVENUES $ 25,348,771 $ 2,766,625
------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of sales 19,682,794 443,653
Selling and administrative 2,249,380 833,648
Research and development costs 7,443,345 7,214,218
Research and development tax credits
and grants (497,081) (2,042,000)
Depreciation and amortization
Property, plant and equipment 331,730 291,816
Intangible assets and goodwill 101,030 83,651
------------------------------------------------------------------------------
29,311,198 6,824,986
------------------------------------------------------------------------------
OPERATING LOSS (3,962,427) (4,058,361)
INTEREST INCOME 530,596 1,075,599
INTEREST EXPENSE (182,756) (262,100)
-------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (3,614,587) (3,244,862)
INCOME TAX EXPENSE (1,164,736) -
NON-CONTROLLING INTEREST (872,082) -
------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD $ (5,651,405) $ (3,244,862)
==============================================================================
BASIC AND DILUTED NET LOSS PER SHARE $ (0.17) $ (0.11)
==============================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING $ 32,851,019 $30,114,062
==============================================================================
CONSOLIDATED STATEMENTS OF DEFICIT
FOR THE PERIODS ENDED MARCH 31, 2002 AND 2001
(expressed in Canadian dollars)
QUARTERS ENDED MARCH 31,
UNAUDITED 2002 2001
------------------------------------------------------------------------------
BALANCE - BEGINNING OF PERIOD $(19,082,451) $(15,613,749)
Net loss for the period (5,651,405) (3,244,862)
------------------------------------------------------------------------------
BALANCE - END OF PERIOD $(24,733,856) $(18,858,611)
==============================================================================
THE ACCOMPANYING NOTES ARE INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS
AETERNA LABORATORIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED MARCH 31, 2002 AND 2001
(expressed in Canadian dollars)
QUARTERS ENDED MARCH 31,
UNAUDITED 2002 2001
------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $(5,651,405) $(3,244,862)
Items not affecting cash and
cash equivalents
Depreciation and amortization 432,760 375,467
Interest expense - 262,100
Future income taxes 704,469 (67,375)
Employee future benefits 17,072 -
Non-controlling interest 872,082 -
Change in non-cash operating working
capital items
Accounts receivable (7,454,093) (2,044,705)
Income taxes recoverable 155,302 -
Research and development tax
credits recoverable (400,000) (278,000)
Inventory 1,255,738 (69,715)
Prepaid expenses (458,377) (560,394)
Accounts payable and
accrued liabilities 2,808,247 (360,864)
Income taxes 116,879 (533,000)
------------------------------------------------------------------------------
(7,601,326) (6,521,348)
------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt (895,950) (122,953)
Issuance of share capital,
net of related expenses 60,450 439,232
------------------------------------------------------------------------------
(835,500) 316,279
------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments 8,020,267 7,788,698
Purchase of property, plant and equipment (1,395,835) (119,972)
Additions to intangible assets and goodwill (87,302) (111,012)
------------------------------------------------------------------------------
6,537,130 7,557,714
------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,899,696) 1,352,645
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (122,895) -
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD 11,993,502 7,260,582
------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 9,970,911 $ 8,613,227
==============================================================================
ADDITIONAL INFORMATION
Interest paid $ 53,156 -
==============================================================================
Income taxes paid $ 201,731 $ 600,375
==============================================================================
AETERNA LABORATORIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 2002 AND 2001
(expressed in Canadian dollars)
UNAUDITED
------------------------------------------------------------------------------
1 BASIS OF PRESENTATION
These unaudited interim financial statements as at March 31, 2002 and for the
periods ended March 31, 2001 and 2002, are unaudited. They have been prepared by
the Company in accordance with Canadian generally accepted accounting principles
for interim financial information. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations and
cash flows for these periods have been included.
The accounting policies and methods of computation adopted in these financial
statements are the same as those used in the preparation of the Company's most
recent annual consolidated financial statements. All disclosures required for
annual financial statements have not been included in these financial
statements. These consolidated financial statements should be read in
conjunction with the Company's most recent annual consolidated financial
statements. These interim results of operations are not necessarily indicative
of the results for the full year.
2 NEW ACCOUNTING STANDARDS
The Company adopted on January 1st, 2002, section 3062 issued by the CICA
"Goodwill and Other Intangible Assets". This section broadens criteria for
recording intangible assets separately from goodwill. Section 3062 requires the
use of a non-amortization approach to account for purchased goodwill and
indefinite-lived intangibles. Under the non-amortization approach, goodwill and
indefinite-lived intangibles will not be amortized, but instead would be
reviewed annually for impairment, and writedowns are charged to earnings in the
period in which the recorded value of goodwill and indefinite-lived intangibles
exceeds their fair value. The amortization of the goodwill for the three months
ended March 31, 2001 amounted approximately to $22,000.
The Company also adopted on January 1st, 2002, section 3870 issued by the CICA
"Stock-Based Compensation and Other Stock-Based Payments". The new section
applies to awards granted on or after the date of adoption, and requires that
stock-based payment to non-employees be accounted for using a fair value-based
method. For awards to employees, the CICA recommends their accounting using a
fair value-based method without rendering it mandatory. The Company not having
adopted this method is nevertheless required to make pro-forma disclosures of
net earning (loss), basic net earnings (loss) per share and diluted net earnings
(loss) per share as if the fair value based method of accounting had been
applied. The adoption of this standard does not have a significant impact on the
Company's financial statements and that is why the pro-forma information is not
provided.
AETERNA LABORATORIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 2002 AND 2001
(expressed in Canadian dollars)
UNAUDITED
------------------------------------------------------------------------------
3 SEGMENT INFORMATION
The company manages its business and evaluates performance based on three
operating segments, which are the biopharmaceutical segment, the cosmetics and
nutrition segment and the distribution segment. The accounting principles used
for these three segments are consistent with those used in the preparation of
these consolidated financial statements.
QUARTER ENDED MARCH 31
2002 2001
------------------------------------------------------------------------------
REVENUES
Cosmetics and nutrition $ 3 183 333 $ 2 766 625
Distribution 22 165 438 -
Biopharmaceutical - -
Consolidated adjustments - -
------------------------------------------------------------------------------
$ 25 348 771 2 766 625
==============================================================================
NET EARNINGS (LOSS) FOR THE PERIOD
Cosmetics and nutrition $ 792 543 1 418 056
Distribution 329 616 -
Biopharmaceutical (6 792 961) (4 662 918)
Consolidated adjustments 19 398 -
------------------------------------------------------------------------------
$ (5 651 405) $(3 244 862)
==============================================================================
4 SUBSEQUENT EVENT
On April 9, 2002, the company issued under private placements 7.6 million
subordinate voting shares for a total cash consideration of $57 million. The
company also issued 7.5 million warrants with the following conditions:
3.8 million exercisable at $13 per share maturing on March 31, 2003 and
3.7 million exercisable at an initial price of $20 per share maturing
initially on December 31, 2003, subject to certain conditions.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AETERNA LABORATORIES INC.
Date: May 30, 2000 By: /s/ Claude Vadboncoeur
-------------- ---------------------------------------
Claude Vadboncoeur
Vice President, Legal Affairs and
Corporate Secretary