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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
PURSUANT to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the Month of August, 2000
Commission File Number 0-30860
Axcan Pharma Inc.
--------------------------
(Exact Name of Registrant)
597, boul, Laurier, Mont-Saint-Hilaire (Quebec), Canada J3H 6C4
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover 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]
This Form 6-K consist of:
Interim financial statements for the third quarter ended June 30, 2000.
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SIGNATURES
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.
AXCAN PHARMA INC.
Date: August 15, 2000 By: /s/ Jean Vezina
-------------------------------------
Name: Jean Vezina
Title: Vice-President, Finance and Chief
Financial Officer
DEAR SHAREHOLDERS
The third quarter of fiscal 2000 has been extremely encouraging, since
Axcan significantly increased both revenues and earnings.
Not only have we listed our shares on NASDAQ, but we succeeded in
concluding important new financing, acquired a promising new product,
PHOTOFRIN(R), and have put in place the management structure necessary to assure
future growth.
HIGHLIGHTS OF THE QUARTER
NASDAQ Listing
During the third quarter, Axcan listed its common shares on NASDAQ
National Market and completed the first tranche of a financing in the United
States totalling US$40.1 million. The proceeds were used to reimburse a loan
contracted for the acquisition of Scandipharm and for general corporate
purposes.
PHOTOFRIN(R) ACQUISITION
AND DEVELOPMENTS
On June 9, Axcan also concluded the acquisition of PHOTOFRIN(R) from
QLT Inc. PHOTOFRIN(R) is the first drug approved in any jurisdiction as a
photodynamic therapy for the treatment of certain cancers. Terms of the
transaction included a cash payment of CDN$2.5 million and the issuance of
1,283,333 common shares of Axcan at CDN$15.00 each, as well as milestone
payments, contingent on future product and treatment approvals. Currently
approved indications include the treatment of esophageal, bladder and non-small
lung cancers. Axcan believes that PHOTOFRIN(R) may also be extremely useful in
the treatment of dysplaslia and metaplaslia associated with Barrett's esophagus,
a condition that results from prolonged heartburn and is often a precursor of
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cancer. Axcan recently completed the enrolment of 260 patients for a privotal
phase III study for this indication.
Following the close of the quarter, Axcan announced marketing approvals
for PHOTOFRIN(R) in Sweden, Ireland and Italy for the palliative treatment of
esophageal and non-small lung cancer. As a result, the treatment can now be
marketed in 11 European countries including France, Finland, Germany, the
Netherlands, Portugal and the United Kingdom. In addition, Axcan concluded an
agreement with Grupo Ferrer, a company based in Barcelona, with expertise in the
fields of gastroenterology and oncology, for the distribution of PHOTOFRIN(R) in
Spain, Portugal, Greece and all of Central and South America.
The Company also signed at the beginning of August, a development and
supply agreement with Diomed Inc. of Andover, Massachusetts, to provide a new
compact diode laser that is the key to developing PHOTOFRIN(R) photodynamic
therapy as an alternative treatment for certain cancers.
Sale of Althin Biopharm Inc.
On May 31, Axcan completed the sale to Baxter Corporation of its 50%
interest in Althin Biopharm Inc., a company active in the field of hemodialysis,
for US$5 million in cash. This sale allowed Axcan to reduce its long-term debt
and to continue to pursue its objective of focusing efforts on gastroenterology.
New Management Structure
In order to keep pace with the Company's rapid growth in the United
States, its expanded pipeline and the acquisition of PHOTOFRIN(R) which will
require additional efforts in Europe, Axcan modified its management structure
somewhat in the past quarter.
Following the appointment of Mr. David W. Mims as Executive Vice
President and COO in the second quarter, the Company recently appointed Mr.
Patrick L. McLean, previously Vice President, Sales and Marketing, to the
position of Vice President and General Manager, Canada and Europe, to oversee
all of Axcan's operations in these two territories. Dr. Francois Martin was
appointed Senior Vice President, Scientific Affairs, and Dr. Patrick Colin was
named Vice President, Clinical Research, reflecting their additional
responsibilities as the Company's pipeline grows.
FINANCIAL RESULTS
Total revenues for the third quarter (all amounts are in U.S. dollars)
amounted to $22 million compared to $7 million for the same period last year.
This increase is primarily due to the acquisition of Scandipharm Inc. and the
acquisition of the 50%
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interest in Axcan Schwarz, LLC ("Axcan Schwarz") that Axcan did not already own.
For the first nine months of fiscal 2000, revenues amounted to $63.5 million
compared to $19.8 million for the first nine months of the previous fiscal year.
Much of Axcan's recent sales growth is derived from sales in the United
States. Revenue from U.S. sales of Axcan's products was $50.9 million for the
first nine months compared to $8.7 million for the same period last year.
The cost of goods sold was $5.4 million for the quarter ended June 30,
2000, compared to $1.7 million for the corresponding period in 1999. For the
first nine months, the cost of goods sold amounted to $16.2 million compared to
$5.4 million for the same period last year. As a percentage of revenue, cost of
goods sold decreased to 25% for the first nine months of the fiscal year, from
27% a year earlier. This decrease was primarily due to increased sales in the
United States where margins are usually higher.
Selling and administrative expenses amounted to $8.4 million for the
quarter and to $23.6 million for the first nine months of fiscal 2000.
Corresponding amounts for last year were $3.4 million for the third quarter and
$10.4 million for the first nine months of the year. The increase is mainly due
to the inclusion of expenses of Axcan Scandipharm, following its acquisition in
August 1999.
Research and development expenses rose to $1.7 million in the third
quarter from $0.7 million for the same quarter last year and to $4.0 million
from $1.7 million for the first nine months. This increase is primarily due to
the cost of the pivotal phase III studies of HELICIDE(TM), which began in
September 1999.
Financial expenses amounted to $2.0 million for the quarter compared to
$0.1 million for the corresponding period in fiscal 1999. For the first nine
months they amounted to $7.8 million compared to $0.5 million for the same
period last year. The significant increase in these expenses compared to last
year is primarily due to interest paid on loans used to finance the acquisition
of Scandipharm and the purchase of the other 50% interest in Axcan Schwarz, the
former joint venture to market Urso(R) in the United States.
Depreciation and amortization costs rose significantly following the
acquisitions of Scandipharm and of the other 50% interest in Axcan Schwarz. For
the quarter they amounted to $2.6 million compared to $0.5 million for the same
period last year, and for the first nine months they were $7.6 million compared
to $1.5 million a year earlier.
At the end of the quarter, Axcan's cash, cash equivalents and
short-term investments amounted to $8.1 million compared to $16.0 million one
year earlier. On July 7, 2000, Axcan received $15 million, the remaining portion
of the $40.1 million public offering in the United States, bringing cash, cash
equivalents and short-term investments to $23 million.
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Net earnings for the three months ended June 30, 2000, amounted to $2.9
million, or $0.11 per share, compared to $0.4 million, or $0.03 per share, for
the corresponding period of fiscal 1999. Net earnings for the quarter ended June
30, 2000 include earnings from discontinued operations of $1.5 million, or $0.06
per share, following the sale of Axcan's share in Althin Biopharm, which
resulted in a net gain on disposal of assets of $1.4 million. For the first nine
months, net earnings amounted to $4.3 million, or $0.18 per share compared to
$0.3 million, or $0.02 per share, for the corresponding period one year earlier.
/s/ Leon F. Gosselin
-------------------------------------
Leon F. Gosselin (signed)
Chairman of the Board,
President and Chief Executive Officer
August 2000
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CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
JUNE 30
-----------------------
in thousands of U.S. dollars 2000 1999
$ $
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents 8,139 1,356
Short - term investments, at cost -- 14,602
Accounts receivable 12,622 5,845
Income taxes receivable 4,716 --
Inventories 12,636 6,428
Prepaid expenses and deposit 1,549 1,161
Future income taxes 2,422 132
--------- --------
42,084 29,524
Investments in companies subject
to significant influence 1,232 2,297
Investment in a private company, at cost 1,156 --
Investments in bonds, at amortized cost -- 1,634
Other investments, at cost 216 533
Capital assets 163,042 23,490
Future income taxes 7,911 3,794
Debt issue costs -- 57
New product acquisition costs,
at amortized cost 583 638
Goodwill, at amortized cost 22,295 1,183
--------- --------
238,519 63,150
--------- --------
Liabilities
Current liabilities
Accounts payable and
accrued liabilities 10,642 3,303
Payable to a joint venturer -- 8,132
Income taxes payable 3,831 600
Installments on
long-term debt 11,054 34
Future income taxes 301 146
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25,828 12,215
Long-term debt 37,076 2,184
Contingency provisions 5,378 --
Future income taxes 25,528 783
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93,810 15,182
--------- --------
Shareholders' Equity
Equity component of deferred
purchase price 2,704 --
Capital stock 137,603 44,778
Retained earnings 5,540 3,190
Accumulated foreign currency translation adjustments (1,138) --
--------- --------
144,709 47,968
--------- --------
238,519 63,150
--------- --------
</TABLE>
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CONSOLIDATED CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
THREE-MONTHS PERIODS NINE-MONTHS PERIODS
ENDED JUNE 30 ENDED JUNE 30
---------------------- ----------------------
in thousands of U.S. dollars 2000 1999 2000 1999
$ $ $ $
<S> <C> <C> <C> <C>
Operations
Earnings from continuing operations 1,411 285 2,515 59
Dividends from a company subject to
significant influence -- -- -- 17
Non-cash items
Depreciation and amortization 2,639 476 8,069 1,437
Foreign currency fluctuation -- -- (154) 82
Future income taxes (414) 102 (1,669) 8
Shares in earnings of companies subject to
significant influence (1,068) 54 (969) 131
Changes in working capital items from continuing
operations 1,940 (236) 1,120 (1,850)
------- ------ ------- ------
Cash flow from continuing operations 4,508 681 8,912 (116)
Cash flow from discontinued operations 220 (63) 400 178
------- ------ ------- ------
Cash flow from operating activities 4,728 618 9,312 62
======= ====== ======= ======
Financing
Repayment of notes payable (25,000) -- (92,164) --
Repayment of long-term debt (2,359) 4 (13,023) 9
Issue of shares 25,075 -- 60,039 23
Shares issue expenses (2,132) -- (3,853) --
Cash flows from discontinued operations (3) (4) (12) (13)
------- ------ ------- ------
Cash flow from financing activities (4,419) -- (49,013) 19
======= ====== ======= ======
Investment
Acquisition of short-term investments -- (4,303) 19,300 (1,029)
Disposal of short-term investments 4,588 -- 4,588 --
Acquisition of investments (581) (100) (619) (99)
Disposal of investments 1,516 (37) 1,837 (37)
Acquisition of capital assets (1,952) (229) (2,761) (619)
Net cash use by a business disposal -- (24) -- (24)
Cash flows from discontinued operations 7 34 22 18
Other (659) -- (2,158) --
------- ------ ------- ------
Cash flow from investment activities 2,919 (4,659) 20,209 (1,790)
======= ====== ======= ======
Foreign exchange gain on cash held in foreign currency 25 -- 72 --
------- ------ ------- ------
Net increase (decrease) in cash 3,253 (4,041) (19,420) (1,709)
Cash and cash equivalents, beginning of period 4,886 5,397 27,559 3,065
------- ------ ------- ------
Cash and cash equivalents, end of period 8,139 1,356 8,139 1,356
------- ------ ------- ------
</TABLE>
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CONSOLIDATED EARNINGS (unaudited)
<TABLE>
<CAPTION>
THREE-MONTHS PERIODS NINE-MONTHS PERIODS
ENDED JUNE 30 ENDED JUNE 30
--------------------------- ---------------------------
in thousands of U.S. dollars, 2000 1999 2000 1999
except amounts per share $ $ $ $
<S> <C> <C> <C> <C>
Revenue 22,015 7,035 63,543 19,821
========== ========== ========== ==========
Cost of goods sold 5,406 1,697 16,150 5,375
Selling and administrative expenses 8,406 3,395 23,635 10,378
Research and development expenses 1,714 693 4,033 1,737
---------- ---------- ---------- ----------
15,526 5,785 43,818 17,490
---------- ---------- ---------- ----------
6,489 1,250 19,725 2,331
========== ========== ========== ==========
Financial expenses 1,992 139 7,846 544
Depreciation and amortization 2,628 480 7,582 1,461
---------- ---------- ---------- ----------
4,620 619 15,428 2,005
---------- ---------- ---------- ----------
Earnings before income taxes 1,869 631 4,297 326
Income taxes 458 346 1,782 268
---------- ---------- ---------- ----------
Earnings from continuing operations 1,411 285 2,515 58
Earnings from discontinued operations 1,529 134 1,796 263
---------- ---------- ---------- ----------
Net earnings 2,940 419 4,311 321
---------- ---------- ---------- ----------
Per common share:
Earnings from continuing operations 0.05 0.02 0.11 (0,00)
---------- ---------- ---------- ----------
Earnings from discontinued operations 0.06 0.01 0.07 0.02
---------- ---------- ---------- ----------
Net earnings 0.11 0.03 0.18 0.02
---------- ---------- ---------- ----------
Weighted average number of common shares 26,934,912 15,766,054 23,976,323 15,763,853
---------- ---------- ---------- ----------
</TABLE>
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