VANCOUVER, May 9 /PRNewswire-FirstCall/ -- Angiotech
Pharmaceuticals, Inc. (NASDAQ: ANPI; TSX: ANP) today announced
financial results for the first quarter ended March 31, 2006.
Highlights included: - The announcement and closing of the
acquisition of American Medical Instruments Holdings (AMI) for
$787.9 million in cash, plus acquisition costs of $8.2 million.
With the completion of the AMI acquisition on March 23rd, the
quarter ending March 31, 2006 will be the final quarter to report
Angiotech earnings without the operating results of AMI. - Revenues
of $41.9 million, with $39.4 million of total revenues representing
royalties derived from sales by Boston Scientific (BSC) of
paclitaxel-eluting coronary stent systems. - EPS according to GAAP
was $0.09 per common share. - Adjusted EPS was $0.16 per common
share. Excluding litigation expenses, Adjusted EPS was $0.19 per
common share. - The announcement and closing of $425 million of
senior secured credit facilities and $250 million in aggregate
principal amount of Senior Subordinated Notes to finance the
acquisition of AMI. - Independently sponsored clinical data was
released from the STENT Registry at the American College of
Cardiology in Atlanta, GA that continues to support the efficacy
and safety of the TAXUS(R) Stent System. - Announcement of
additional positive clinical data regarding our non- drug loaded
Adhibit(TM) sprayable biomaterial adhesion barrier product
candidate presented at the 19th Annual Congress of Obstetrics and
Gynecology in Torino, Italy. - Announcement of a license agreement
between Surgical Specialties Corporation (a subsidiary of
Angiotech) and Collagen Matrix Technologies Inc. for Dermalogen(TM)
injectable dermal filler products. Condensed Financial Results
--------------------------- This press release contains the
condensed financial statements derived from the unaudited
consolidated interim financial statements for the three months
ended March 31, 2006 and the audited consolidated financial
statements for the year ended December 31, 2005. For a copy of our
full financial results for the first quarter, including
Management's Discussion and Analysis and Interim Financial
Statements, please visit our website at http://www.angiotech.com/.
The following discussion and analysis of results from our
operations excludes the financial results from our Dutch
subsidiaries (MCTec Holdings BV and MCTec BV) and NeuColl, Inc.
which are reported as discontinued operations. All discussions and
analyses pertain to continuing operations only, unless otherwise
noted. Due to the timing of the closing of the acquisition of AMI
in relation to the end of the March 31, 2006 reporting period, the
net earnings of AMI for the period from March 23 to March 31, 2006
did not significantly impact the Company's current period earnings
and will be included in the net earnings for the second quarter of
2006. Operating Income On a GAAP basis, net income from continuing
operations for the quarter ended March 31, 2006 was $8.0 million
($0.09 basic net income per common share) compared to $19.2 million
($0.23 basic net income per common share) for the same quarter in
the prior year. Adjusted net income from continuing operations for
the quarter ended March 31, 2006 was $13.3 million ($0.16 adjusted
basic net income from continuing operations per common share),
compared to adjusted net income from continuing operations of $20.6
million ($0.25 adjusted basic net income from continuing operations
per common share) for the same quarter in the prior year. The
decrease in adjusted net income from continuing operations when
compared to the same quarter in the prior year was primarily a
result of a decrease in royalty revenue derived from the sale of
paclitaxel-eluting coronary stent systems by our partner BSC. The
decrease in royalty revenues, as compared to the same quarter of
2005, was the result of two primary factors: a reduction in our top
royalty rate applied to BSC end-user sales from 11% to 9% as a
result of BSC reaching designated total sales goals as defined in
our License Agreement with BSC, and lower end-user sales of
paclitaxel-eluting stents by BSC in the quarter ended December 31,
2005 as compared to the prior quarter ended December 31, 2004, from
which our first quarter royalty revenue amounts are derived.
Quarterly operating results were also impacted by increases in
litigation expenditures. Excluding litigation expenditures,
adjusted basic operating net income per common share for the
quarter would have been $0.19. Adjusted EBITDA for the quarter,
excluding litigation expenses, was $19.8 million, compared to $33.7
million during the same quarter of 2005. Revenue Revenue of $41.9
million for the quarter ended March 31, 2006 included royalty
revenue of $39.4 million derived from sales of paclitaxel-eluting
coronary stent systems by our partner BSC, and other royalty,
product and license-related revenue of $2.5 million.
Paclitaxel-eluting coronary stent system related royalties of $39.4
million received during the quarter were derived from $537 million
of worldwide paclitaxel-eluting coronary stent net sales, as
reported to us by BSC for their fourth quarter ended December 31,
2005. BSC's publicly reported worldwide paclitaxel-eluting stent
system sales of $606 million included sales of the balloon
component of the system for which we do not receive royalty
revenue. The royalty rate earned in the quarter on net stent sales
was 7.9% for sales in the U.S. and 6.3% for sales in other
countries. For the quarter ended March 31, 2006, BSC publicly
reported worldwide revenue from sales of paclitaxel-eluting
coronary stent systems of $633 million, of which $419 million was
revenue realized from sales of systems in the U.S. We expect to
realize royalties related to BSC's first quarter sales during our
second quarter ended June 30, 2006. Expenses Research and
development expenditures for the quarter totaled $9.5 million, an
increase of $2.0 million as compared to the same quarter in 2005.
The increase was primarily due to an increase in clinical trial
expenses relating to our Central Venous Catheter and Vascular
Wrap(TM) programs and higher salaries and benefits costs (including
stock-based compensation) due to the hiring of additional personnel
to support the continued progress of our research and development
programs. Total selling, general and administrative expenditures
for the quarter totalled $10.1 million, an increase of $3.6 million
when compared to the same quarter in 2005. The increase in
expenditures was primarily due to a $2.1 million increase in patent
and litigation related activities and higher salaries and benefits
costs reflecting an increase in the number of employees required to
support our growing operations. During the quarter ended March 31,
2006, we recorded in-process research and development expense of
$1.0 million relating primarily to a license payment due to
Poly-Med, Inc. as a milestone was met during the period. Investment
and Other Income Investment and other income increased by $0.9
million when compared to the same quarter in 2005, due to higher
cash balances available for investment and higher investment
yields. We also incurred a loss of $1.5 million in connection with
our redemption of certain of our long-term investments prior to
maturity during the quarter in order to use a portion of our excess
cash resources to finance the acquisition of AMI. During the
quarter ended March 31, 2006, we incurred interest expense of $1.0
million on our long-term debt obligations for the nine days from
March 23, 2006, the date the debt was issued, until March 31, 2006.
At March 31, 2006, we had working capital of $145.7 million and
cash resources of $134.9 million, consisting of cash, cash
equivalents and available-for-sale debt securities. In aggregate,
our cash resources decreased by $189.5 million from $324.4 million
at December 31, 2005, primarily due to the use of cash to finance
the AMI acquisition. Conference Call Information
--------------------------- A conference call to discuss these
financial results and other quarterly highlights will be held on
Tuesday, May 9, 2006 at 8 AM PST (11 AM EST). The call will be
webcast on Angiotech's website at http://www.angiotech.com/ under
Investor Relations or by dialling toll-free at 1-800-329-9097
(North America) or 617-614-4929 (International) and entering Access
Code 19972059. A recording of the call will be available until
Tuesday, May 16, 2006 by calling 1-888-286-8010 (North America) or
617-801-6888 (International) and entering Access Code 61788034.
Forward Looking Statements -------------------------- Statements
contained in this report that are not based on historical fact,
including without limitation statements containing the words
"believes," "may," "plans," "will," "estimate," "continue,"
"anticipates," "intends," "expects" and similar expressions,
constitute "forward-looking statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995 and
constitute "forward-looking information" within the meaning of
applicable Canadian securities laws. All such statements are made
pursuant to the "safe harbor" provisions of applicable securities
legislation. Forward- looking statements may involve, but are not
limited to, comments with respect to our objectives and priorities
for 2006 and beyond, our strategies or future actions, our targets,
expectations for our financial condition and the results of, or
outlook for, our operations, research development and product and
drug development. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, events or developments to be materially different
from any future results, events or developments expressed or
implied by such forward-looking statements. Such factors are taken
into account as part of our assumptions underlying these
forward-looking statements and include, among others, the
following: general economic and business conditions, both
nationally and in the regions in which we operate; technological
changes that impact our existing products or our ability to develop
future products; competition; changes in business strategy or
development plans; the ability to attract and retain qualified
personnel; existing governmental regulations and changes in, or the
failure to comply with, governmental regulations; adverse results
or unexpected delays in drug discovery and clinical development
processes; failure to obtain patent protection for discoveries;
loss of patent protection resulting from third party challenges to
our patents; commercialization limitations imposed by patents owned
or controlled by third parties; dependence upon, and relationships
with strategic alliance partners to develop and commercialize
products and services based on our work; our ability to obtain
rights to technology from licensors; liability for patent claims
and other claims asserted against us; the requirement for
substantial funding to conduct research and development and to
expand commercialization activities or consummate acquisitions;
other factors referenced in our annual information form and other
filings with the applicable Canadian securities regulatory
authorities or the Securities and Exchange Commission; and any
other factors that may affect performance. In addition, the actual
results expressed or implied by certain forward-looking statements
contained in this report may be affected by our acquisition of AMI,
which we completed on March 23, 2006 and the related transactions.
There can be no assurance that (i) the operational and other
synergies, (ii) the projected or expected financial or commercial
benefits, or (iii) the potential for future product sales or
product development activities all related to the acquisition of
AMI will be realized in the amounts or times contemplated. In
addition, our business is subject to certain operating risks that
may cause the actual results expressed or implied by the
forward-looking statements in this report to differ materially from
our actual results. These operating risks include: our ability to
successfully complete preclinical and clinical development of our
products; the ability to obtain and enforce timely patent and other
intellectual property protection for our technology and products;
decisions, and the timing of decisions, made by health regulatory
agencies regarding approval of our technology and products; the
ability to complete and maintain corporate alliances relating to
the development and commercialization of our technology and
products; market acceptance of our technology and products; the
competitive environment and impact of technological change; the
continued availability of capital to finance our activities; our
ability to integrate into our business the operations of AMI; and
our ability to achieve the operational and other synergies and the
other commercial or financial benefits expected as a result of the
acquisition of AMI. Given these uncertainties, assumptions and risk
factors, readers are cautioned not to place undue reliance on such
forward-looking statements. We disclaim any obligation to update
any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained in
this report to reflect future results, events or developments.
Financial Information and Certain Non GAAP Financial Measures
Amounts, unless specified otherwise, are expressed in U.S. dollars.
Financial results are reported under United States generally
accepted accounting principles ("U.S. GAAP") unless otherwise
noted. All per share amounts are stated on a basic basis unless
otherwise noted. Certain financial results presented in this press
release include non- GAAP measures that exclude certain items.
Adjusted net income from continuing operations and adjusted
earnings before interest, taxes, depreciation and amortization
("adjusted EBITDA") exclude acquisition related amortization
charges, acquired in-process research and development relating to
license agreements and acquisitions, stock based compensation
expense, foreign exchange gains or losses relating to translation
of foreign currency cash and investment balances and other
non-recurring items. Adjusted EBITDA also does not include
litigation expenses related to defending intellectual property
claims. Adjusted net income from continuing operations and adjusted
EBITDA do not have any standardized meaning prescribed by GAAP and
therefore may not be comparable to similar measures presented by
other issuers. Management uses these non-GAAP or adjusted operating
measures to establish operational goals, and believes that these
measures may assist investors in analyzing the underlying trends in
our business over time. Investors should consider these non-GAAP
measures in addition to, not as a substitute for, or as superior
to, financial reporting measures prepared in accordance with GAAP.
We have provided a reconciliation of adjusted net income from
continuing operations to net income according to GAAP, and have
provided a definition and a reconciliation of net income to
adjusted EBITDA, in the attached tables. About Angiotech
Pharmaceuticals Angiotech Pharmaceuticals, Inc. is a specialty
pharmaceutical company that discovers and develops innovative
treatment solutions for diseases or complications associated with
medical device implants, surgical interventions and acute injury or
trauma. To find out more about Angiotech Pharmaceuticals, Inc.
(NASDAQ:ANPINASDAQ:TSX:NASDAQ:ANP), please visit our website at
http://www.angiotech.com/. ANGIOTECH PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in
thousands of U.S.$, except Three Months Ended share and per share
data) March 31, 2006
-------------------------------------------------------------------------
Reported Adjustments Adjusted REVENUE Royalty revenue 41,090 41,090
Product sales 802 802 License fees 53 (53)(a) -
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41,945 (53) 41,892
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EXPENSES License and royalty fees 6,513 6,513 Cost of goods sold
634 634 Research and development 9,488 (454)(c) 9,034 Selling,
general and administrative 10,142 (647)(c) 9,495 Depreciation and
amortization 2,166 (1,563)(e) 603 In-process research and
development 1,042 (1,042)(f) -
-------------------------------------------------------------------------
29,985 (3,706) 26,279
-------------------------------------------------------------------------
Operating income 11,960 3,653 15,613
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange gain (loss) 171 (171)(g)
- Investment and other income 2,704 2,704 Interest expense on
long-term debt (989) 989 (h) - Loss on redemption of investments
(1,477) 1,477 (i) -
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409 2,295 2,704
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Income from continuing operations before income taxes 12,369 5,948
18,317 Income tax expense 4,389 655 (j) 5,044
-------------------------------------------------------------------------
Net income from continuing operations 7,980 5,293 13,273
-------------------------------------------------------------------------
Net loss from discontinued operations, net of income taxes (445)
445 -
-------------------------------------------------------------------------
Net income for the period 7,535 5,738 13,273
-------------------------------------------------------------------------
Basic net income per common share from continuing operations 0.09
0.16 Diluted net income per common share from continuing operations
0.09 0.16
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic 84,534 84,534
Weighted average shares outstanding (000's) - diluted 85,853 85,853
-------------------------------------------------------------------------
(in thousands of U.S.$, except Three Months Ended share and per
share data) March 31, 2005
-------------------------------------------------------------------------
Reported Adjustments Adjusted REVENUE Royalty revenue 51,274 51,274
Product sales 1,058 1,058 License fees 3,348 (3,348)(b) -
-------------------------------------------------------------------------
55,680 (3,348) 52,332
-------------------------------------------------------------------------
EXPENSES License and royalty fees 7,999 (425)(b) 7,574 Cost of
goods sold 945 945 Research and development 7,498 (513)(c) 6,085
(900)(d) Selling, general and administrative 6,548 (778)(c) 5,503
(267)(d) Depreciation and amortization 2,259 (1,558)(e) 701
In-process research and development 1,000 (1,000)(f) -
-------------------------------------------------------------------------
26,249 (5,441) 20,808
-------------------------------------------------------------------------
Operating income 29,431 2,093 31,524
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange gain (loss) (428) 428 (g)
- Investment and other income 1,829 1,829 Interest expense on
long-term debt - - Loss on redemption of investments - -
-------------------------------------------------------------------------
1,401 428 1,829
-------------------------------------------------------------------------
Income from continuing operations before income taxes 30,832 2,521
33,353 Income tax expense 11,598 1,147 (j) 12,745
-------------------------------------------------------------------------
Net income from continuing operations 19,234 1,374 20,608
-------------------------------------------------------------------------
Net loss from discontinued operations, net of income taxes (406)
406 -
-------------------------------------------------------------------------
Net income for the period 18,828 1,780 20,608
-------------------------------------------------------------------------
Basic net income per common share from continuing operations 0.23
0.25 Diluted net income per common share from continuing operations
0.23 0.24
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic 84,049 84,049
Weighted average shares outstanding (000's) - diluted 84,812 84,812
-------------------------------------------------------------------------
a. Non-recurring license fee revenue. b. License fee revenue
relating to license agreement with CABG Medical, Inc., net of
license fees due to licensors. c. Stock based compensation expense.
d. Termination costs relating to consolidation activities at Palo
Alto facility. e. Amortization of acquisition related intangible
assets and medical technologies. f. In-process research and
development expense, relating primarily to $1.0 million payment due
under license agreement with Poly-Med, Inc. g. Foreign exchange
fluctuations on foreign currency cash and investment balances. h.
Interest expense from March 23, 2006 to March 31, 2006 related to
the AMI transaction. i. Loss on early redemption of short-term and
long-term investments. j. Tax effects of adjustments a. through i.
ANGIOTECH PHARMACEUTICALS, INC. CALCULATION OF ADJUSTED EBITDA
(Unaudited) Three Months Ended March 31, (in thousands of U.S.$)
2006 2005
-------------------------------------------------------------------------
Net income on a GAAP basis 7,535 18,828 Interest expense on
long-term debt 989 - Income tax expense 4,389 11,429 Depreciation
and amortization 2,247 2,854
-------------------------------------------------------------------------
EBITDA 15,160 33,111
-------------------------------------------------------------------------
Adjustments: Loss from discontinued operations, excluding
depreciation, amortization and income tax expense included above
400 74 In-process research and development 1,042 1,000 Stock-based
compensation 1,101 1,291 Palo Alto consolidation expenses - 1,167
Non-recurring revenue, net of license fees (53) (2,923) Litigation
expenses 3,528 1,407 Foreign exchange gain (loss) (171) 428
Investment and other income (2,704) (1,829) Loss on redemption of
investments 1,477 -
-------------------------------------------------------------------------
Adjusted EBITDA 19,780 33,726
-------------------------------------------------------------------------
ANGIOTECH PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) As at March 31, December 31, (in thousands of
U.S.$) 2006 2005
-------------------------------------------------------------------------
ASSETS Cash and short-term investments 134,853 195,442 Accounts
receivable 27,271 3,377 Inventories 30,032 786 Other current assets
17,713 9,267
-------------------------------------------------------------------------
Total current assets 209,869 208,872
-------------------------------------------------------------------------
Long-term investments 51,118 170,578 Property and equipment, net
53,114 11,042 Intangible assets, net 256,062 45,447 Goodwill
628,039 46,071 Deferred income taxes 4,208 11,350 Deferred
financing costs 17,798 - Other assets 2,855 1,334
-------------------------------------------------------------------------
1,223,063 494,694
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LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 64,171
27,555 Long-term debt 596,500 - Deferred income taxes 73,490 -
Other long-term liabilities 4,354 4,459 Stockholders' equity
484,548 462,680
-------------------------------------------------------------------------
1,223,063 494,694
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For additional information, please contact: Janet Craig Vice
President, Investor Relations & Corporate Communications
Angiotech Pharmaceuticals, Inc. (604) 221-6933 or DATASOURCE:
Angiotech Pharmaceuticals, Inc. CONTACT: Janet Craig, Vice
President, Investor Relations & Corporate Communications,
Angiotech Pharmaceuticals, Inc., (604) 221-6933 or
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