RNS No 9061f
GYRUS GROUP PLC
23 September 1999
GYRUS GROUP PLC
("Gyrus" or the "Company)
ETHICON DIVISION OF JOHNSON & JOHNSON INVEST
$6 MILLION IN GYRUS TO FAST TRACK GROWTH OPPORTUNITIES IN ARTHROSCOPY
* Gyrus, the "PlasmaKinetic" endosurgical device company, announces a $6
million deal with Ethicon, a division of Johnson & Johnson, to support an
accelerated program of product development for the VAPR arthroscopy system.
* The product developments will focus on high growth opportunities within the
arthroscopic market. Arthroscopy involves the treatment of injuries to joints
of the body using minimal access techniques. These developments are projected
to both increase utilisation of the VAPR System and expand the market
potential by enabling new forms of arthroscopic treatment.
* The potential market for VAPR is estimated at $400-450 million and
continues to show strong growth as patients demand less traumatic surgery and
faster recovery. With the increasing activity of the population as a whole,
this demand will continue to fuel growth well into the next millennium.
* The first PlasmaKinetic system, the VAPR arthroscopy system, was launched
by Gyrus and Ethicon, in the second quarter of 1997, since when Gyrus has sold
more than 260,000 instruments. The launch of a range of small diameter
instruments for treating knee cartilage was recently announced.
Mark Goble, Managing Director, commented:
"This $6 million investment is a clear endorsement of the performance of our
technology over the competitors. It is further evidence of our intentions to
make VAPR the system of choice in arthroscopic surgery. We have the
technology, we have the investment and we have the World's largest medical
device company as our marketing partner."
ETHICON DIVISION OF JOHNSON & JOHNSON INVEST $6 MILLION IN GYRUS TO FAST TRACK
GROWTH OPPORTUNITIES IN ARTHROSCOPY
The Ethicon division of Johnson & Johnson is to invest $6 million in the
British medical devices company Gyrus to fast track development of a
market-led range of new arthroscopic products. These developments should
further accelerate growth of their PlasmaKinetic VAPR system, opening new
opportunities in the tissue treatment sector of the arthroscopy market, a
sector currently valued at between $400 and $450 million.
Arthroscopy - which involves the treatment of injuries to joints of the body
using minimal access techniques - continues to grow as patients demand less
traumatic more effective surgery, leading to a faster return to normal
activities.
The development programme announced today will focus on high growth areas
within this market segment as well as increasing the revenue derived from over
2,500 VAPR systems already installed worldwide.
A range of small diameter instruments launched earlier this month in the USA
have made it possible for surgeons to use Gyrus' innovative PlasmaKinetic
technology to treat difficult to access areas of damaged cartilage in the
knee. Additionally, the techniques may now be used in the emerging small
joint market, including elbows, wrists and ankles.
"This $6 million investment is a clear endorsement of the performance of our
technology over the competitors" said Dr Mark Goble, the Managing Director of
Gyrus, today. "It is further evidence of our intentions to make VAPR the
system of choice in arthroscopic surgery. We have the technology, we have the
investment and we have the world's largest medical device company as our
marketing partner."
The arthroscopy market is well established in the U.S. with approximately 95%
of procedures being performed on an outpatient basis. New technologies like
VAPR open new arthroscopic treatment options as well as continuing to reduce
costs and improve outcomes.
Procedure numbers are also increasing as the population as a whole becomes
more active and patients seek the most advanced treatments possible
particularly those which offer the fastest recovery. By combining knowledge
of these market dynamics with an indepth review of customer feedback received
during the two years VAPR has been on the U.S. market, Gyrus has now been able
to identify exciting new product opportunities. These have been reviewed with
Ethicon culminating in what has been code named the 'explosive growth'
initiative announced today.
Under the terms of a contract extension, the $6 million cost of developing the
identified product range over the next two years will be borne by Ethicon.
This development programme will run concurrently with those already planned
and includes the continued expansion of both the range, and applications, for
the small diameter VAPR instruments launched earlier this month. Research and
Development expenditure will therefore increase significantly with the
implementation of this exciting new growth initiative. Under the deal,
however, this increase will be recovered against development milestones
resulting in a neutral effect on profits for the current financial year. The
sales impact of the resultant products should start to be seen in the second
half of 2000.
The first PlasmaKinetic system, the VAPR arthroscopy system, was launched by
Gyrus via their U.S. partner Ethicon, a division of Johnson & Johnson, in the
second quarter of 1997. Since then more than 260,000 instruments have been
sold.
Gyrus Group PLC has its UK headquarters at Gyrus Group PLC, Fortran Road, St
Mellons, Cardiff, Wales CF3 0LT. Tel: (01222) 300100, fax: (01222) 300101.
You can also visit the company on the web at: www.gyrus.co.uk
FOR FURTHER INFORMATION
Gyrus Group PLC Tel: (01222) 300100
Dr Mark Goble, Managing Director Fax: (01222) 300118
John Bradshaw, Finance Director E-Mail: johnbradshaw@gyrus.co.uk
(Analyst, Broker, Financial
Institutions)
Jean Garon PR Tel: (01628) 483040
(Press Enquiries and interview Fax: (01628) 486796
requests) E-Mail: jean@garonpr.demon.co.uk
BACKGROUND NOTES
Gyrus has been at the leading edge of an evolution in the surgical treatment
of diseases using minimal access techniques for the last five years.
PlasmaKinetic surgery is the name given to its innovative radio-frequency
energy delivery system which makes it possible for surgeons to have the
ultimate in control when removing and modifying body tissues using minimal
access operations. PlasmaKinetic surgery has been rapidly adopted over the 2
years since its introduction. This first technology platform operates under
fluid distension of the surgical site and three systems have been launched
addressing the markets of arthroscopy, hysteroscopy and endourology.
Gyrus launched the VersaPoint hysteroscopic system in 1997 with Gynecare Inc,
now a division of Ethicon. The VersaPoint Resectoscopic System (VRS) was
launched earlier this year to accelerate the conversion from conventional open
hysterectomy to the minimally invasive hysteroscopic treatment in a market
estimated at $175 million.
The Gyrus Endourology System is the third system to use the company's
PlasmaKinetic technology. It is used to remove the enlarged portion of the
prostate gland which obstructs the normal flow of urine, a condition which
affects between 10-20% of men over 60 years of age. The market is currently
estimated at $150-$300 million and Gyrus recently announced FDA 510(k)
approval to commence sales in the USA and is now actively seeking a marketing
partner.
Development of a second technology platform is now well underway, which
extends the range of surgical specialities which can be addressed using
PlasmaKinetic techniques. Unlike the first technology platform this operates
in air or gas filled surgical sites. Pre-clinical trials on this
PlasmaKinetic II technology commenced earlier this year and potential US
alliances are being sought for selected market opportunities.
Gyrus employs 190 people at its headquarters and manufacturing plant near
Cardiff, Wales. The plant includes a 3,000sq. ft. Class 10,000 Clean Room
where the single use disposables for use with PlasmaKinetic systems are
produced. Grant support of #500,000 to develop an adjacent site - which will
increase production capacity significantly from the second quarter of 2000 -
has been approved and the company is now moving into its next rapid scale up
phase.
In the first half of the last financial year, Gyrus was able to report a 135%
leap in product sales (#4 million from #1.7 million), along with a sharp drop
in pre-tax losses (#0.9 million from #1.9 million). Results for the full
year to 30th June, 1999 are being announced today (23rd September). Earlier
this year, the company detailed settlement of its patent litigation with
Arthrocare Inc.
With Compliments
Jean Garon PR
Tel: (01628) 483040
Fax: (01628) 486796
E-Mail: jean@garonpr.demon.co.uk
GYRUS GROUP PLC
("Gyrus" or the "Company")
GYRUS ON TRACK TO DELIVER NEW PLASMAKINETIC SURGERY OPPORTUNITIES
Gyrus emerges in a strong position today as the company presents its Year End
Results.
* Group turnover to June 1999 up 65% to #9.4 million (#5.7 million in l998)
* Losses per share fell to 7.9p including exceptional items (14.9p in 1998)
* Preliminary injunction hearing in USA regarding patent litigation defeated,
leading to a commercial settlement
* Successful placing of 7.2 million shares, all the original venture capital
stock
* $6 million investment in Key Growth Projects implemented by Johnson &
Johnson
* New FDA regulatory requirements met, new approvals granted
* Presentations on Gyrus Endourology system endorse economic and clinical
benefits
* Trials on second technology platform open new growth areas for
PlasmaKinetic surgery
* Innovations in first generation products under development to expand
markets
* New 40,000 sq. ft facility to increase capacity nearing completion
Commenting on the results managing director, Dr Mark Goble, said:
"Over the three years since we signed our deal with Johnson & Johnson we have
seen a revenue growth of 600%. I consider that a very impressive performance.
On top of that we have now put a number of tough commercial issues behind us,
giving the business a strong foundation for continued growth."
CHAIRMAN'S STATEMENT
During 1998/99 Gyrus has overcome many of the significant challenges which
often face high growth technology companies in the early stages of their
development. I am delighted to say that we have emerged with a solid
foundation from which to continue building on the success of our PlasmaKinetic
technology in the marketplace.
At the beginning of the year the challenges focused on meeting the new
regulatory requirements of the FDA and defeating the preliminary injunction
hearing in the US patent litigation case brought against our partner, Johnson
& Johnson. Both of which we achieved.
In the second half, we placed the entire holding of the Company's original
venture capital investors, successfully performed proving trials on our second
technology platform, reached commercial settlement of the patent litigation
and the clinical acceptance of our Endourology system started to convert to
sales. Throughout the year margins have continued to improve, new products
have been introduced and the $6 million product development investment from
Johnson & Johnson, announced today, was negotiated.
Financials
Group turnover for the year ended 30 June 1999 rose 65% to #9.40 million
(1998: #5.71 million), comprising product sales and royalties of #9.09 million
and development fees of #0.30 million. The loss on ordinary activities before
exceptional items and taxation fell to #1.58 million (1998: #4 million). The
exceptional item relating to the cost of the settlement of the litigation was
#0.87 million and increased the loss for the financial year to #2.46 million
(1998: loss of #4 million). Losses per share fell to 5.1p before exceptional
items and 7.9p after exceptional items (1998: 14.9p). Cash and short term
investments at 30 June 1999 were #5 million (1998: #8.68 million).
Product Sales
The Mitek VAPR Arthroscopy System, marketed and sold worldwide by Ethicon Inc,
a Johnson & Johnson company, continues to reach sales targets. The product is
now installed in over 2,500 hospitals and during the year we sold in excess of
170,000 electrodes (1998: 90,000). A new Flex electrode was launched in
November 1998 and the VAPR System received marketing approval from the
Japanese authorities in December 1998. Earlier in September 1999 we announced
the launch of a new family of small diameter electrodes targeted at the
treatment of knee cartilage, the largest sector of the arthroscopy market, and
we announced today the implementation of a $6 million product development
investment with Ethicon. This aggressive product development program will
focus on high value opportunities within the arthroscopic market to increase
utilisation of the VAPR System and expand the market by enabling new forms of
arthroscopic treatment.
Gynecare's global sales of the VersaPoint System for the hysteroscopic
treatment of uterine conditions continue to meet expectations. Following
acquisition in 1997 by Ethicon, Gynecare has now been fully integrated and
continues to focus its activities on the growing women's healthcare market.
There are 300 generators installed in the field and during the year we sold
27,000 electrodes (1998:15,000). In February 1999 the VersaPoint
Resectoscopic System (VRS) was launched to help accelerate the conversion from
open hysterectomy to the minimally invasive hysteroscopic treatment.
Additions to the VRS product range are under development.
Following the launch of the Gyrus Endourology System for the treatment of
enlarged prostate glands, sales conversion has been slower than forecast.
Results obtained from 350 cases fully endorse the clinical and economic
benefits of the system. Surgeons have nonetheless been cautious about
committing without substantial clinical data. Sales were recorded in small
numbers in Spain, the UK and France. From the positive reaction to outcomes
data presented at recent surgical meetings, we fully anticipate a steady
increase in sales volumes during the forthcoming year. In June 1999 we
received FDA 510(k) approval to commence sales in the US and we are now
actively seeking a marketing partner.
Operations
Manufacturing has had an excellent year having maintained a high level of
customer service and significantly reduced the cost of manufacture. Gross
margins have improved from 29% in 1998 to 39% in 1999. Cost of manufacture
continues to be a major focus for management and a series of programs have
been established to improve margins further. We were successfully audited by
the FDA against the new Quality System Regulation and, subsequently, by
Johnson & Johnson against their qualified supplier requirements.
Work is well under way on a new 40,000 sq ft manufacturing, office and
warehousing facility adjacent to our current plant. The new facility will
provide a second clean room with the opportunity to improve productivity
further. The new facility is expected to be completed early in 2000 enabling
us to respond to continued sales growth and new product introductions.
New Product Development
The Design and Development Group has been actively developing the systems that
we have on the market. In the coming year the group will continue with these
activities in addition to the accelerated product development program for
Ethicon. The Technology Development Group has successfully brought our second
technology platform through proof of concept trials and is now in the process
of refining the technology against the specific performance needs of the
selected speciality markets, Cosmetic and Laparoscopic surgery. The first
products are expected to be launched in the second half of 2000.
Intellectual Property and Litigation Settlement
The preliminary injunction sought in the US patent litigation case brought
against Johnson & Johnson was denied and two of the eight claims were
withdrawn. Nonetheless, with the prospect of a jury trial, the Board took the
pragmatic decision that the risks of finding for the plaintiff in such a
complex technical case were considered such that we should seek to resolve
matters on a commercial basis. A settlement agreement was concluded in June
under which the patents in suit were licensed. Gyrus contributed towards the
settlement costs on a proportional basis, mirroring the terms of our supply
agreement with Johnson & Johnson. These settlement costs plus our direct
legal costs account for the #0.87 million exceptional charge.
A further consequence of the litigation has been to delay issuance of our US
patents. Several are now on notice of allowance and one has recently issued.
The administrative delays in issuance meant that we did not receive the $1.5
million patent milestone payment from Ethicon which we now anticipate
receiving in the current financial year.
Summary
During the year, the Company faced many of the hurdles that can so easily
deflect the management of a small healthcare company from its strategic
objectives. The resolution of the patent case was pragmatic since further
litigation could have been damaging and the result uncertain. With these
issues behind us we are now able to focus on realising new market
opportunities, encouraged by the acceptance and growth of our PlasmaKinetic
technology.
I expect 1999/2000 to be another year of significant achievement for Gyrus.
The Board wishes to thank the management, staff and investors for their
support and contribution to an excellent result during a challenging year.
Brian L Steer
Chairman
Gyrus Group PLC
Consolidated profit and loss accounts
Year ended 30 June
1999 1999 1999 1998
#000 #000 #000 #000
Before exceptional item Exceptional item Total
Product sales 8,297 - 8,297 5,089
Development fees 303 - 303 212
Royalties 796 - 796 408
Turnover - continuing operations 9,396 - 9,396 5,709
Cost of sales (5,697) - (5,697) (4,043)
Gross profit 3,699 - 3,699 1,666
Selling and distribution expenses (947) - (947) (717)
Research and development expenses (2,325) - (2,325) (2,319)
General and administrative expenses (2,389) (874) (3,263) (3,042)
Operating loss - continuing operations (1,962) (874) (2,836) (4,412)
Interest income, net 380 - 380 406
Loss on ordinary activities before
and after taxation, being the loss
for the financial year (1,582) (874) (2,456) 4,006)
Loss per ordinary share
Basic and diluted (5.1)p (2.8)p (7.9)p (14.9)p
There are no unrecognised gains or losses other than the loss for each of the
years stated above.
Gyrus Group PLC
Consolidated balance sheets
30 June 1999 30 June 1998
#000 #000
Tangible assets 1,376 1,773
Current assets
Stocks 2,376 1,550
Debtors 1,883 1,527
Investments 4,000 8,300
Cash at bank and in hand 972 378
9,231 11,755
Creditors: amounts falling
due within one year (2,403) (2,401)
Net current assets 6,828 9,354
Total assets less current liabilities 8,204 11,127
Creditors: amounts falling due after
more than one year (198) (291)
Deferred income - (749)
Net assets 8,006 10,087
Capital and reserves
Share capital 13,991 13,854
Merger reserve 3,561 3,561
Profit and loss account (9,546) (7,328)
Equity shareholders' funds 8,006 10,087
Reconciliation of movements in shareholders' funds
30 June 1999 30 June 1998
#000 #000
At beginning of year 10,087 159
Loss for the financial year attributable
to equity shareholders (2,456) (4,006)
New share capital issued 137 13,854
Share related awards 238 80
At end of year 8,006 10,087
Gyrus Group PLC
Consolidated cash flow statement
30 June 1999 30 June 1998
#000 #000
Net cash outflow from operating
activities (3,729) (5,207)
Returns on investment and servicing
of finance
Interest received 460 427
Interest paid (35) (67)
Interest element in finance lease rentals (27) (28)
Net cash flows from returns on investments
and servicing of finance 398 332
Taxation - -
Capital expenditure
Purchase of tangible fixed assets (311) (960)
Sale of tangible fixed assets 15 2
(296) (958)
Cash outflow before use of liquid
resources and financing (3,627) (5,833)
Management of liquid resources 4,300 (8,300)
673 (14,133)
Financing
Capital element of finance lease payments (113) (65)
Bank loan (36) (135)
Issue of share capital, net of issue costs 70 13,777
Net cash (outflow) inflow from financing (79) 13,577
Increase (decrease) in cash 594 (556)
Gyrus Group PLC
Reconciliation of net cash flow to movement in net funds
30 June 1999 30 June 1998
#000 #000
Increase (decrease) in cash in year 594 (556)
Cash outflow from decrease in debt and
lease financing 149 200
(Decrease) increase in liquid funds (4,300) 8,300
Changes in net funds resulting from
cash flows (3,557) 7,944
Inception of new finance leases (18) (71)
Change in net funds (3,575) 7,873
Net funds at beginning of year 8,253 380
Net funds at end of year 4,678 8,253
Analysis of net funds
At 1 July Cash flows Non-cash At 30 June
1998 movements 1999
#000 #000 #000 #000
Cash at bank and in hand 378 594 - 972
Debt due within one year (36) 36 (36) (36)
Debt due after one year (161) - 36 (125)
Finance leases (228) 113 (18) (133)
Current asset investments 8,300 (4,300) - 4,000
8,253 (3,557) (18) 4,678
Reconciliation of operating loss to cash flow from operating activities
30 June 1999 30 June 1998
#000 #000
Operating loss (2,836) (4,412)
Depreciation charges 707 505
Loss on disposal of fixed assets 4 -
Increase in stocks (826) (1,290)
Increase in debtors (375) (1,116)
Increase in creditors 108 1,633
Decrease in deferred income (749) (607)
Share related awards 238 80
(3,729) (5,207)
Gyrus Group PLC
Notes
1. Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 June 1999 or 1998. Statutory
accounts for 1998 have been delivered to the registrar of companies, and those
for 1999 will be delivered following the Company's annual general meeting.
The auditors have reported on those accounts; their reports were unqualified
and did not contain statements under section 237(2) or (3) of the Companies
Act.
The financial information set out above has been drawn up under the same
accounting policies as those used for the financial statements for the year
ended 30 June 1998.
2. Loss per share
The basic and diluted loss per ordinary share is based on losses attributable
to ordinary shareholders for the year of #2,456,000 (1998: #4,006,000) and on
the weighted average number of ordinary shares of 31,047,678 (1998:
26,834,016).
3. Dividend
The Directors do not recommend the payment of a dividend.
4. Approval
This statement was approved by the Board of Directors on 22 September 1999.
NOTES TO EDITORS
The breakthrough PlasmaKinetic surgery technology which Gyrus has pioneered
and successfully launched is now moving strongly forward, particularly in the
USA. By harnessing bipolar radiofrequency energy in this innovative form,
Gyrus has made it possible for surgeons to control the removal and
modification of body tissues with exceptional accuracy. A growing range of
intricate operations are now being undertaken using these minimal access
techniques and the benefits are both clinical and economic.
"Over the three years since we signed our deal with Johnson & Johnson we have
seen a revenue growth of 600%. I consider that a very impressive performance
" said Managing Director Dr Mark Goble today. "On top of that we have now put
a number of tough commercial issues behind us, giving the business a strong
foundation for continued growth."
In the first instance Gyrus proved its PlasmaKinetic technology by meeting new
regulatory requirements set by the FDA to underpin a strong position in the
USA being driven forward by their chosen commercial partner Ethicon Inc (a
Johnson & Johnson company) who are marketing the Mitek VAPR arthroscopy
system.
A further boost was ensured when the preliminary injunction hearing and patent
litigation case brought against Mitek and Gyrus was defeated, leading to a
commercial resolution. The removal of this uncertainty, and confirmation by
Johnson & Johnson of a $6 million development investment to fast track the
introduction of further new products, will strengthen the position of the
PlasmaKinetic VAPR system in a worldwide market valued between $400 and $450
million per annum.
There are now more than 2,500 hospitals at which surgeons regularly use the
VAPR and in excess of 170,000 single-use instruments were sold (90,000 in
1998). A new Flex instrument launched last November and was further
strengthened by the recent introduction of a new family of small diameter
instruments. These make it possible for surgeons to treat many more
conditions, particularly sports injuries involving cartilage in knees, ankles
and elbows where access is very restricted.
Sales of the VersaPoint system, marketed by another partner, Gynecare, for the
hysteroscopic treatment of uterine conditions are also moving ahead well. The
women's healthcare market is also very buoyant, lead by the innovative "see
and treat" PlasmaKinetic technique. There are currently 300 installed
generators with a further 100 in evaluation at any one time.
More than 27,000 new instruments were sold during the year (15,000 in 1998)
and a new VersaPoint resectoscopic system launched last February will
accelerate conversion from open hysterectomy to the minimally invasive
alternative. Other new products are in development.
Gyrus introduced their third development, the Gyrus Endourology system for the
treatment of enlarged prostates (BPH), themselves. Results from the 350 cases
now completed fully endorse the clinical and economic benefits initially
forecast. Whilst surgeons in Europe have initially been cautious to commit
ahead of results, interest has been encouraging and results from the
multi-centre trial scheduled to complete 3Q2000 should boost slow initial
acceptance.
Sales have been achieved in leading clinical centres in the UK, France and
Spain. Gyrus is also now in a position to choose a marketing partner in the
USA following the recent granting of FDA 510(k) approval for their Endourology
System.
BPH, a non cancerous enlargement of the prostate, is common in men over the
age of 45. Using the PlasmaKinetic surgery approach for these patients
exchanges the need for expensive long term pharmaceutical management for
instant cure and discharge from hospital in half the time normally needed for
conventional surgery. Patients feel better faster and the savings are in both
time and money for hard pressed health authorities.
With these results underpinning the business, Gyrus is continuing to invest
strongly in research and infrastructure. The technology department has
successfully brought a second technology platform through proof of concept
trials during the last twelve months making it possible for the company to now
plan entry into new speciality markets. Cosmetic and laparoscopic surgery are
likely to be initial targets when the first new products are launched in the
second half of 2000.
Investment in customer care and productivity programmes have also delivered
results, helping the company reduce manufacturing costs. Gross margins
improved from 29% in l998 to 39% in l999. Gyrus has been successfully audited
by the FDA during the course of the year against the new Quality System
Regulation, also by Johnson and Johnson against their qualified supplier
requirements.
In February, Gyrus announced that 7.198 million shares, representing the
entire holding of the company's original venture capitalist investors, were
successfully placed with a range of UK and Continental European institutions
by Nomura Securities.
Looking to the future, Gyrus is now building a new 40,000 square foot
manufacturing, warehousing and office facility adjacent to their Cardiff HQ.
Phased completion is anticipated during next year.
A copy of the Report & Accounts to 30th June is now available on request
together with further background information on the company.
Gyrus Group PLC have their UK Headquarters in Cardiff and the Sales &
Marketing Division in Bourne End. If you would like to interview Dr Mark
Goble, or require further information on the company, please contact Jean
Garon PR on (01628) 483040 Fax: (01628) 486796 E-Mail:
jean@garonpr.demon.co.uk or visit the Gyrus web site at: www.gyrus.co.uk
With Compliments
Jean Garon PR
Tel: (01628) 483040
Fax: (01628) 486796
E-Mail: jean@garonpr.demon.co.uk
END
FR ALLVTALIFFAA
Gyg (LSE:GYG)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Gyg (LSE:GYG)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
