QLT to narrow focus, cut staff by up to 46%, reduce expenses 20% in response to Visudyne sales drop

By E. Janene Geiss

Philadelphia, Dec. 8 - QLT Inc. announced Thursday a repositioning plan that refocuses resources on key programs, calls for a reduction of staff by up to 46% and cuts sales, research and development and other operating expenses by 20% next year.

The plan is in response to challenges that the company said it faced over the past year, namely the impact of competition on the company's lead product Visudyne for age-related macular degeneration.

Near-term pressure on sales of Visudyne also prompted the company to reduce its 2005 sales guidance to a range of $480 million to $485 million from a range of $500 million to $530 million, according to a company news release.

Along with the reduction in sales estimates, the company said it will take actions that include:

• Restricting the company's focus to opthalmology and one other therapeutic area to be selected based on milestones in 2006;

• A reduction in employees that could total up to 46%, with about half of losing their jobs at the beginning of January and the remaining half affected through divestitures under consideration of non-core operations, assets and programs;

• A 20% reduction from 2005 levels in combined research and development, selling, general and administrative expenses in 2006 through reprioritization of the pipeline to focus on program with the greatest long-term potential; and

• Implementing new processes to ensure greater financial discipline and cost control and to streamline clinical development planning and management.

As part of the plan, the company said it intends to double the size of its previously announced share buyback program to $100 million from $50 million. The two-year program began in May 2005.

The share repurchases will be made as a normal course issuer bid in the open market through the facilities of the Toronto Stock Exchange or Nasdaq Stock Market.

A restructuring charge of $5 million to $6 million will be recorded in the fourth quarter of 2005.

The plan is expected to result in annual savings of about $10 million, officials said.

This repositioning was initiated by QLT's executive management team and Robert Butchofsky, who was named acting chief executive officer in September 2005.

The company also announced the resignation of Mohammad Azab, the company's executive vice president and chief medical officer.

Azab joined the company in 1997 and was promoted to executive vice president and chief medical officer in May 2003. He was instrumental in delivering approvals for Photofrin in oncology and Visudyne in opthalmology, officials said.

The resignation is effective January 2006, but officials said he has agreed to remain through a consultancy deal for the next 18 months.

QLT is a Vancouver, B.C., biopharmaceutical company specializing in developing treatments for eye diseases and dermatological and urological conditions.

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