Readers are referred to the cautionary notes regarding Forward-looking Information and non-IFRS Financial Measures at the end of this release

Listed TSX, Symbol:  CNJ

TORONTO & WINNIPEG, Oct. 25, 2011 /CNW/ - Cangene Corporation today reports financial results for the fiscal year ended July 31, 2011, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. Prior periods have also been restated to reflect the adoption of IFRS with effect from August 1, 2009, which includes the transition to reporting in U.S. dollars as the functional currency (dollar amounts in this release are in U.S. dollars).

"Our financial performance in 2011 continues to reflect our investment in infrastructure and pipeline development to support our growing emphasis on our commercial business. We have a solid cash position, we remain debt-free, and we finished the year with a strong quarter," says John Sedor, President and CEO of Cangene. "As the new president and CEO at Cangene, I intend to focus the Company and build on our strengths. I see this as the beginning of an exciting new chapter."

Revenues for the year were $149.7 million, compared with $150.5 million last year. While the consolidated revenues were consistent year-over-year, there was a change in the mix with a $4.1-million increase in biopharmaceutical-operations revenues and a $4.8-million decrease in contract-services revenues. During the 2011 fiscal year, product-sales revenues in the biopharmaceutical segment were not shared; however, during a portion of fiscal 2010, product-sales revenues were shared with distribution partners. Since bringing both its commercial products in-house for sale by its own sales and marketing department, Cangene records marketing costs directly into its sales, general and administrative ("SG&A") expense. Biopharmaceutical revenues for the year also include $8.5 million in sales of non-specialty plasma; however, it did not contribute to gross profit for the year.

The majority of revenue in the contract-services segment in both fiscal years has been generated through deliveries on U.S. government biodefence-related stockpiling contracts, which contributed $64.3 million in 2011, compared with $75.2 million in 2010. Delivery of product on one of these contracts was completed in 2011. There was a large delivery on the second contract during the fourth quarter of 2011 resulting in the highest quarterly revenue in the last two years; however, the delivery schedule for this product has been spread out to 2018, which will reduce the related annual revenue flow.

Cangene has been investing in its commercial business and despite a shutdown for a scheduled expansion, its commercial contract-manufacturing subsidiary, Cangene bioPharma, Inc., generated $24.6 million in product-services revenue during fiscal 2011, compared with $20.0 million a year earlier.

Cangene has been receiving royalty revenues based on sales of a product by its majority shareholder, the Apotex Group. Fiscal 2011 is the final year for these royalties that have been phased out over the last three years; the decreased royalty rate in 2011, resulted in a $3.8-million drop in royalty revenue in fiscal 2011.

Net income for the year was $1.5 million, or $0.02 per share, compared with $16.5 million, or $0.24 per share, a year earlier. The decrease in net income in the 2011 year results from a combination of factors, including:

• reduced royalty revenues, which are all profit;
• increased independent R&D expense as Cangene invested in pipeline development (primarily its immune globulin intravenous product);
• increased SG&A, mainly due to the addition of the in-house sales force;
• asset impairments in the Cangene Plasma Resources cash generating unit; and
• a significant foreign-exchange loss.

Cash provided by operating activities was $15.7 million in 2011, compared with $21.7 million in the prior year, while cash used in investing and financing activities, which primarily consists of capital expenditures and share repurchases, decreased to $10.9 million in 2011 from $33.4 million last year.

The Company had $45.2 million in cash at the year end, compared with $40.4 million last year. At July 31, 2011 and July 31, 2010, Cangene had no debt.

Cangene will not host a conference call to discuss these financial results. It plans to resume its practice of holding conference calls within the coming fiscal year. New president and CEO, John Sedor, is familiarizing himself with the Company, and the management team is developing a strategy for short-, mid- and long-term growth, which it looks forward to discussing at a later date. Readers are reminded that the full, audited financial statements and associated notes, along with the management's discussion and analysis of financial condition and results of operations will be available on SEDAR at www.sedar.com.

Readers are referred to the cautionary notes regarding forward-looking information and non-IFRS financial measures at the end of this release. Certain comparative figures in the following financial statements have been reclassified to conform to the current year's presentation.

Cangene Corporation
Incorporated under the laws of Ontario

Cangene Corporation

Cangene Corporation

Cangene Corporation

1. Amounts paid and received for interest were reflected as operating cash flows in the consolidated statements of cash flows.
2. Amounts paid and received for income taxes were reflected as either operating or investing cash flows in the consolidated statements of cash flows, depending upon the nature of the underlying transaction.

About Cangene Corporation

Cangene is one of Canada's largest and earliest biopharmaceutical companies. It was founded in 1984 and is headquartered in Winnipeg, Manitoba. Cangene has approximately 700 employees in six locations across North America and its products are sold worldwide. It operates manufacturing facilities in Winnipeg, Manitoba and Baltimore, Maryland where it produces its own products and undertakes contract manufacturing for a number of companies. Cangene operates three U.S. and one Canadian plasma-collection facilities branded as Cangene Plasma Resources (www.cangeneplasma.com). In addition, it has a regulatory affairs, sales and corporate communications office in Toronto, Ontario.

Cangene is focused on developing therapeutics for infectious diseases, and the Company uses patented manufacturing processes to produce plasma-derived and recombinant therapeutic proteins. Cangene has four FDA and/or Health Canada-approved hyperimmune products. In addition, the Company has several more products in development at various stages. Three of Cangene's products have been accepted into the U.S. Strategic National Stockpile—botulism antitoxin (investigational product), anthrax immune globulin (investigational product) and a vaccinia immune globulin, a product that may be used to counteract certain complications that may arise from smallpox vaccination. Capitalizing on its drug manufacturing expertise, Cangene also operates a significant contract-research and manufacturing business using the resources of Baltimore, Maryland-based Cangene bioPharma, Inc. (a wholly-owned subsidiary; formerly Chesapeake Biological Laboratories, Inc.; www.cangenebiopharma.com). Cangene's website, www.cangene.com, includes product and investor information, including past news releases.

Forward-looking and risk information

The reader should be aware that Cangene's businesses are subject to risks and uncertainties that cannot be predicted or quantified; consequently, actual results may differ materially from past results and those expressed or implied by any forward-looking statements. Factors that could cause or contribute to such risks or uncertainties include, but are not limited to: the regulatory environment including the difficulty of predicting regulatory outcomes; changes in the value of the Canadian dollar; the Company's reliance on a small number of customers including government organizations; the demand for new products and the impact of competitive products, service and pricing; availability and cost of raw materials, especially the cost, availability and antibody concentration in plasma; fluctuations in operating results; government policies or actions; progress and cost of clinical trials; reliance on key strategic relationships; costs and possible development delays resulting from use of legal, regulatory or legislative strategies by the Company's competitors; uncertainty related to intellectual property protection and potential costs associated with its defence; the Company's exposure to lawsuits; and other matters beyond control of management. Risks and uncertainties are discussed more extensively in the Company's most recent annual financial statements and management's discussion and analysis, which are available on the Company's website or on SEDAR at www.sedar.com.

The preceding cautionary statements should be considered in connection with all written or oral statements, especially forward-looking statements, that are made by the Company or by persons acting on its behalf and in conjunction with its periodic filings with Securities Commissions, including those contained in the Company's news releases and most recently filed annual information form. Forward-looking statements can be identified by the use of words such as "expects", "plans", "will", "believes", "estimates", "anticipates", "intends", "may", "bodes" and other words of similar meaning (including negative and grammatical variations). Should known or unknown risks or uncertainties materialize, or should management's assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly make or update any forward-looking statements, except as required by applicable law.

Cautionary Note Regarding Non-IFRS Financial Measures

This news release may contain non-IFRS financial measures. Terms by which non-IFRS financial measures are identified include but are not limited to "net cash", "total assets", "sales" and other similar expressions. Non-IFRS financial measures are used to provide management and investors with additional measures of performance. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Please refer to the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS.

"Cangene" is a trademark belonging to Cangene Corporation.