Associate

QLT Inc. raised $150 million through the sale of convertible senior notes and intends to use a sizable portion of proceeds to purchase its own shares on the open market.

The notes, due 2023, will bear interest at 3 percent per year, payable semi-annually. Under certain circumstances, the notes will be convertible into QLT shares at an initial rate of about 56.2 shares per $1,000 of notes. That translates to a conversion price of $17.80 per share - a 30 percent premium to QLT's closing price Monday of $13.69. Initial purchasers of the notes have an option to buy another $22.5 million worth of notes on the same terms.

The transaction is expected to close Friday. QLT's stock (NASDAQ:QLTI) rose 48 cents Tuesday to close at $14.20.

On or after Sept. 15, 2008, QLT can redeem all or a portion of the notes for cash at 100 percent of the principal amount, plus accrued and unpaid interest. Also, on Sept. 15 in 2008, 2013 and 2018, holders may require QLT to purchase all or a portion of their notes under the same guidelines.

QLT could not comment on the offering due to quiet-period regulations, but in a prepared statement it said it planned to use proceeds for working capital and other general corporate purposes, including buying $50 million of its own stock through open-market purchases.

QLT had $268.5 million in cash, cash equivalents and short-term securities as of June 30. For the second quarter, the company reported net income of $11.2 million, or earnings per share of 16 cents, based mainly on sales of Visudyne, approved for predominantly classic subfoveal choroidal neovascularization due to age-related macular degeneration in both the U.S. and Europe. The product did $89.2 million in sales in the second quarter, of which about $35.2 made its way to QLT. The product is partnered with Novartis Ophthalmics, the eye health unit of Novartis AG, of Basel, Switzerland.

Because of strong second-quarter sales, QLT raised its estimate for the drug's sales to $335 million to $350 million for the full year.

QLT and Novartis are planning a Phase III trial for minimally classic age-related macular degeneration this quarter. Results from a Phase III early re-treatment trial are expected to be available in the fourth quarter. A Visudyne Phase III trial in occult conditions is expected to complete enrollment in the third quarter. The company said discussions are ongoing with regulators in Japan and timing was on track for Visudyne approval there before the end of 2003.

In May, Phase III trials of tariquidar in non-small-cell lung cancer were stopped due to a recommendation from the Independent Data Safety Monitoring Committee, which was concerned with toxicity issues. Enrollment in a Phase II refractory breast cancer study with the drug is complete at 17 patients, but preliminary data showed that reversal of resistance was achieved in only one patient, QLT said. It said it will not enroll new patients in the breast cancer trial and has no specific plans on the development of the product because the analysis of P-glycoprotein expression in the lung cancer studies is still pending. (See BioWorld Today, May 14, 2003.)

A Phase III trial of verteporfin in multiple basal cell carcinoma is under way and a launch is expected in 2007, it said.

QLT0074, being studied in a Phase I/II trial in benign prostatic hyperplasia and a Phase IIb androgenetic alopecia trial, is on track, it said. Enrollment is scheduled to begin for the alopecia trial in the third quarter.