VANCOUVER, Nov. 1 /PRNewswire-FirstCall/ -- Angiotech
Pharmaceuticals, Inc. (NASDAQ:ANPINASDAQ:TSX:NASDAQ:ANP), a global
specialty pharmaceutical and medical device company, today
announced its full financial results for the third quarter ended
September 30, 2007. "During this past quarter, there has been
significant progress made on several key products nearing
commercial launch, including FDA approval of the HemoStream(TM)
chronic dialysis catheter, FDA clearance and CE Mark approvals for
a variety of Quill(TM) SRS products, and positive results from our
pivotal CVC study," said Dr. William Hunter, President and CEO of
Angiotech. "After completing the build out of our U.S. surgical
sales force in the third quarter, we were in an excellent position
to showcase our Quill(TM) SRS product line at the recent Annual
Meeting of the American Society of Plastic Surgeons (ASPS), and we
were pleased to find that the response from physicians far exceeded
expectations." On October 19, 2007, immediately following the
release of BSC's third quarter 2007 financial results, Angiotech
released preliminary results for the third quarter of 2007 and
updated its 2007 outlook for royalty revenue, product sales, and
Adjusted EBITDA. Financial Update: The following includes
additional financial updates subsequent to the press release from
October 19, 2007: - GAAP net loss from continuing operations and
net loss per share from continuing operations were ($10.8) million
and ($0.13), respectively. Our GAAP results reflect several
non-cash, non-recurring items. - Adjusted net loss from continuing
operations and adjusted net loss per share from continuing
operations were ($3.1) million and ($0.04), respectively. - Our
revised outlook for 2007 adjusted net income per share is $0.07 to
$0.10. We caution that the information contained in the press
release concerning our revised outlook for 2007 is forward-looking
and, accordingly, actual results may differ materially. Financial
Information --------------------- This press release contains the
condensed financial statements derived from the unaudited
consolidated interim financial statements for the three- and
nine-month periods ended September 30, 2007, and audited
consolidated financial statements for the year ended December 31,
2006. Full unaudited consolidated interim financial statements and
Management's Discussion and Analysis for the three- and nine month
periods ended September 30, 2007, will be filed with the relevant
regulatory agencies, as well as posted on our website at
http://www.angiotech.com/. We completed the acquisition of the
operations of American Medical Instruments Holdings, Inc. ("AMI")
on March 23, 2006. Because of the timing of the AMI acquisition,
our operating results for the nine month period ended September 30,
2006 include AMI's results of operations from the period of March
24, 2006 to September 30, 2006, as compared to the current nine
month period which reflects combined results from the period of
January 1, 2007 to September 30, 2007. As a result, our results for
the nine months ended September 30, 2007 do not reflect a
comparable operating period as compared to the nine months ended
September 30, 2006. Amounts, unless specified otherwise, are
expressed in U.S. dollars. Financial results are reported under
GAAP unless otherwise noted. All per share amounts are stated on a
diluted basis unless otherwise noted. Use of Certain Non GAAP
Financial Measures ------------------------------------------
Certain financial results presented in this press release include
non-GAAP measures that exclude certain items. Adjusted net income
from continuing operations, adjusted net income per share from
continuing operations and adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA") exclude certain
non-cash and non-recurring items such as 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 net income from continuing
operations, adjusted net income per share from continuing
operations and Adjusted EBITDA also exclude litigation expenses
related to defending intellectual property claims. Revenue, as
adjusted, excludes non-recurring, non-operating revenue derived
from license agreements and other license revenue, net of license
fees due to licensors and excludes amounts accrued for costs
incurred, and potential future costs, related to our offer to
accept returns of Contour Threads brand product as part of our
announced brand name consolidation and discontinuation. Adjusted
net income from continuing operations, adjusted net income per
share from continuing operations, revenue from continuing
operations, as adjusted 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 these measures to GAAP in the attached
tables. The financial outlook referred to above presents certain
forward-looking, non-GAAP financial information for which at this
time there is no calculable comparable GAAP measure. As a result,
such non-GAAP financial information cannot be quantitatively
reconciled to comparable GAAP financial information. Specifically,
the adjusted net income per share amounts referred to above exclude
estimates of certain expenses that are inherently unpredictable or
subject to significant fluctuation for reasons unrelated to our
business performance, including stock-based compensation expenses,
certain litigation expenses and foreign exchange gains or losses.
Conference Call Information --------------------------- A
conference call to discuss these financial results will be held
today, Thursday, November 1, 2007 at 8:00 AM PT (11:00 AM ET).
Dial-in information: North America (toll free): (800) 901-5213
International: (617) 786-2962 Enter passcode: 75137732 A replay
archive of the conference call will be available until November 8,
2007 by calling (888) 286-8010 (in North America) or (617) 801-6888
(International) and entering Access Code 15190735. A live webcast
will be available to all interested parties through the Investors
section of Angiotech's website: http://www.angiotech.com/.
ANGIOTECH PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (Unaudited) (in thousands of U.S.$, except share and per
Three months ended Three months ended share data) September 30,
2007 September 30, 2006
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Reported Adjust- Adjusted Reported Adjust- Adjusted ments ments
REVENUE Royalty revenue 26,622 26,622 43,709 43,709 Product sales,
net 41,351 41,351 42,509 42,509 License fees 53 (53)a - 53 (53)a -
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68,026 (53) 67,973 86,271 (53) 86,218
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EXPENSES License and royalty fees 4,527 4,527 6,933 6,933 Cost of
products sold 23,384 (253)b 23,131 20,996 20,996 Research and
development 13,188 (542)c 12,646 11,740 (596)c 11,144 Selling,
general and administrative 24,715 (3,173)d 21,542 20,953 (2,817)d
18,136 Depreciation and amortization 8,119 (7,244)e 875 9,171
(8,215)e 956
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73,933 (11,212) 62,721 69,793 (11,628) 58,165
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Operating (loss) income (5,907) 11,159 5,252 16,478 11,575 28,053
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange gain (loss) (110) 110 f -
(528) 528 f - Investment and other income 2,073 2,073 977 (148)h
829 Interest expense on long-term debt (13,280) 558 g (12,722)
(11,325) 645 g (10,680)
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(11,317) 668 (10,649) (10,876) 1,025 (9,851)
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Income (loss) from continuing operations before income taxes
(17,224) 11,826 (5,397) 5,602 12,600 18,202 Income tax expense
(recovery) (6,392) 4,139 i (2,253) (1,802) 3,566 i 1,764
-------------------------------------------------------------------------
Net (loss) income from continuing operations (10,832) 7,688 (3,144)
7,404 9,034 16,438
-------------------------------------------------------------------------
Net loss from discontinued operations, net of income taxes (1,156)
1,156 - (478) 478 -
-------------------------------------------------------------------------
Net (loss) income for the period (11,988) 8,844 (3,144) 6,926 9,512
16,438
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Basic net (loss) income per common share from continuing operations
(0.13) (0.04) 0.09 0.19 Diluted net (loss) income per common share
from continuing operations (0.13) (0.04) 0.09 0.19
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Weighted average shares outstanding (000's) - basic 85,014 85,014
84,832 84,832 Weighted average shares outstanding (000's) - diluted
85,432 85,432 85,463 85,463
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a. Non-recurring, non-operating license revenue, net of license
fees due to licensors. b. Change in estimate of accounting for
excess and obsolete c. Stock-based compensation expense. d.
Selling, general and administrative adjustments:
---------------------------------------------------------------------
Three months Three months ended Sept 30, ended Sept 30, 2007 2006
----------------------------- Stock-based compensation expense
(811) (924) Termination and reorganization costs related to closure
of the Syracuse facility. (1,454) - Litigation expenses relating to
defending intellectual property claims (908) (1,893)
--------------------------------------------------------------------
Total (3,173) (2,817)
---------------------------------------------------------------------
e. Amortization of acquisition related intangible assets and
medical technologies. f. Foreign exchange fluctuations on foreign
currency net monetary assets. g. Amortization of deferred financing
costs. h. Gain on sale related to disposition of Neodisc technology
rights to NuVasive. i. Tax effects of adjustments a. through h. for
the period. Comparative for 2006 also includes non-recurring Quebec
retroactive tax adjustment of $8.7 million. ANGIOTECH
PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (in thousands of U.S.$, except share and per Nine
months ended Nine months ended share data) September 30, 2007
September 30, 2006
-------------------------------------------------------------------------
Reported Adjust- Adjusted Reported Adjust- Adjusted ments ments
REVENUE Royalty revenue 89,500 89,500 127,779 127,779 Product
sales, net 126,258 2,980 a 129,238 93,864 93,864 License fees 577
(577)b - 179 (179)b -
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216,335 2,403 218,738 221,822 (179) 221,643
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EXPENSES License and royalty fees 14,235 14,235 19,496 19,496 Cost
of products sold 71,261 (1980)c 69,281 45,663 45,663 Research and
development 40,407 (4,432)d 35,975 33,228 (1,990)d 31,238 Selling,
general and administrative 72,532 (13,194)e 59,338 54,505 (11,033)e
43,472 Depreciation and amortization 24,603 (21,978)f 2,625 21,726
(19,391)f 2,335 In-process research and development 8,000 (8,000)g
- 1,042 (1,042)h -
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231,038 (49,584) 181,454 175,660 (33,456) 142,204
-------------------------------------------------------------------------
Operating (loss) income (14,703) 51,987 37,284 46,162 33,277 79,439
-------------------------------------------------------------------------
Other income (expenses): Foreign exchange gain(loss) (514) 514 i -
1,778 (1,778)i - Investment and other income 9,881 (5,577)j 4,304
5,494 (833)k 4,661 Interest expense on long-term debt (38,975)
1,684 l (37,291) (23,611) 1,320 l (22,291) Loss on sale/write-down
of investments (8,157) 8,157 m - (413) 413 n -
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(37,765) 4,778 (32,987) (16,752) (878) (17,630)
-------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes and
cumulative effect of change in accounting (52,468) 56,765 4,297
29,410 32,399 61,809 Income tax expense (recovery) (21,331) 14,440
o (6,891) 12,256 1,053 o 13,309
-------------------------------------------------------------------------
Income (loss) from continuing operations before cumulative effect
of change in accounting (31,137) 42,325 11,188 17,154 31,346 48,500
-------------------------------------------------------------------------
Net loss from discontinued operations, net of income taxes (6,947)
6,947 - (1,265) 1,265 -
-------------------------------------------------------------------------
Cumulative effect of change in accounting 399 (399) -
-------------------------------------------------------------------------
Net (loss) income for the period (38,084) 49,272 11,188 16,288
32,212 48,500
-------------------------------------------------------------------------
Basic net (loss) income per common share from continuing operations
(0.37) 0.13 0.20 0.57 Diluted net (loss) income per common share
from continuing operations (0.36) 0.13 0.20 0.57
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - basic 85,010 85,010
84,674 84,674 Weighted average shares outstanding (000's) - diluted
85,477 85,477 85,484 85,484
-------------------------------------------------------------------------
-------------------------------------------------------------------------
a. Amounts accrued for costs incurred, and potential future costs,
related to our offer to accept returns of Contour Threads brand
product as part of a brand name consolidation and discontinuation
initiative. b. Non-recurring, non-operating revenue as derived from
license agreements with Histogenics Corporation ($0.4 million in
2007) and other license revenue, net of license fees due to
licensors. c. Change in estimate of accounting for excess and
obsolete inventory resulting from the alignment during the third
quarter of 2007 of inventory policies across our various
manufacturing operations, and non-recurring supply / distribution
agreement termination costs. d. Research and development
adjustments:
---------------------------------------------------------------------
Nine months Nine months ended Sept 30, ended Sept 30, 2007 2006
----------------------------- Stock-based compensation (1,515)
(1,990) License fees due to licensors related to non-recurring
license revenue (419) - Termination and reorganization costs
related to the integration of AMI (849) - Non-recurring supply /
distribution agreement termination costs (899) - Non-recurring
in-process research and development expense relating to the signing
of a technology and intellectual property license agreement with an
inventor (750) -
---------------------------------------------------------------------
Total (4,432) (1,990)
---------------------------------------------------------------------
e. Selling, general and administrative adjustments:
---------------------------------------------------------------------
Nine months Nine months ended Sept 30, ended Sept 30, 2007 2006
----------------------------- Stock-based compensation (2,203)
(2,810) Termination and reorganization costs related to the
integration of AMI and the closure of the Syracuse facility (4,839)
- Litigation expenses relating to defending intellectual property
claims (5,902) (8,223) Non-recurring supply / distribution
agreement termination costs (250) -
---------------------------------------------------------------------
Total (13,194) (11,033)
---------------------------------------------------------------------
f. Amortization of acquisition related intangible assets and
medical technologies. g. Non-recurring in-process research and
development expense relating to payments to CombinatorX Inc. and
Rex Medical Inc. h. Non-recurring in-process research and
development expense, relating primarily to a $1.0 million payment
due under license agreement with Poly-Med, Inc. i. Foreign exchange
fluctuations on foreign currency net monetary assets. j. Write off
of uncollectible tax receivable and write off of certain
capitalized costs, net of gain realized on recovery of investments.
k. Gain on sale of Palo Alto building - assets held for sale and
gain on sale related to disposition of Neodisc technology rights to
NuVasive. l. Amortization of deferred financing costs. m. Net
impact of loss and gain on redemption of investments of common
share holdings in Orthovita Inc. and NuVasive, Inc., respectively.
n. Loss on redemption of investments. o. Tax effects of adjustments
a. through n. for the period, including the reversal of tax
reserves previously booked. Comparative for 2006 also includes
non-recurring Quebec retroactive tax adjustment of $8.7 million
ANGIOTECH PHARMACEUTICALS, INC. CALCULATION OF ADJUSTED EBITDA
(Unaudited) Three months ended Nine months ended September 30,
September 30, (in thousands of U.S.$) 2007 2006 2007 2006
-------------------------------------------------------------------------
Net income on a GAAP basis (11,988) 6,926 (38,084) 16,288 Interest
expense on long-term debt 13,281 11,325 38,976 23,611 Income tax
(recovery) expense (7,055) (2,101) (25,885) 11,866 Depreciation and
amortization 9,228 10,554 28,003 24,392
-------------------------------------------------------------------------
EBITDA 3,466 26,704 3,010 76,157
-------------------------------------------------------------------------
Adjustments: Net loss from discontinued operations, excluding
depreciation, amortization and income tax expense included above
1,743 613 11,122 1,255 In-process research and development - -
8,000 1,042 Non-recurring research and development costs - - 750 -
Non-recurring revenue, net of license fees (54) (53) (160) (179)
Stock-based compensation 1,353 1,520 3,717 4,800 Litigation
expenses 908 1,893 5,902 8,223 Foreign exchange loss (gain) 110 528
514 (1,778) Investment and other income (2,073) (829) (4,304)
(4,661) Severance/restructuring costs 1,454 5,438
Supply/distribution agreement termination costs 2,199 E&O
inventory adjustment 253 1,180 Contour threads returns 2,980
Write-off of capitalized costs 280 Write-off of uncollectible tax
receivable 2,250 Gain on sale of sale of intangible assets (148)
(148) Gain on sale of Palo Alto building (685) Gain realized on
recovery of investment (7,510) (1,064) Accrued interest income
(597) Net loss on redemption of investments 8,157 1,477 Cumulative
effect of change in accounting policy (399)
-------------------------------------------------------------------------
Adjusted EBITDA 7,160 30,228 42,928 84,040
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ANGIOTECH PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) As at September 30, December 31, (in thousands
of U.S.$) 2007 2006
-------------------------------------------------------------------------
ASSETS Cash and short-term investments 98,720 108,617 Accounts
receivable 24,876 25,231 Inventories 35,149 33,619 Deferred income
taxes 11,363 5,372 Other current assets 6,504 6,303 Assets from
discontinued operations - 2,365
-------------------------------------------------------------------------
Total current assets 176,612 181,507
-------------------------------------------------------------------------
Long-term investments 32,478 53,840 Property and equipment, net
57,533 59,783 Intangible assets, net 229,409 244,954 Goodwill
641,943 630,770 Deferred income taxes 6,748 4,804 Deferred
financing costs 14,159 14,845 Other assets 678 255 Assets from
discontinued operations - 15,116
-------------------------------------------------------------------------
Total assets 1,159,560 1,205,874
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 77,886
67,950 Liabilities from discontinued operations - 4,226 Long-term
debt 575,000 575,000 Deferred income taxes 48,164 71,813 Other tax
liabilities 5,908 - Other long-term liabilities 4,116 4,052
Stockholders' equity 448,486 482,833
-------------------------------------------------------------------------
Total liabilities and stockholders' equity 1,159,560 1,205,874
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Forward Looking Statements -------------------------- Statements
contained in this press release 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 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. Many such risks, uncertainties and other 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; market demand;
technological changes that could impact our existing products or
our ability to develop and commercialize future products;
competition; 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; decisions, and the timing of decisions, made
by health regulatory agencies regarding approval of our technology
and products; the requirement for substantial funding to conduct
research and development and to expand commercialization activities
or consummate acquisitions; sales numbers and future guidance
publicly provided by Boston Scientific Corporation regarding sales
of their paclitaxel-eluting coronary stent products; and any other
factors that may affect performance. 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 attract and retain
qualified personnel; our ability to successfully complete
preclinical and clinical development of our products; changes in
business strategy or development plans; our 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; our ability to obtain rights to
technology from licensors; liability for patent claims and other
claims asserted against us; our ability to obtain and enforce
timely patent and other intellectual property protection for our
technology and products; the ability to enter into, and to
maintain, corporate alliances relating to the development and
commercialization of our technology and products; market acceptance
of our technology and products; our ability to successfully
manufacture, market and sell our products; the ability of Boston
Scientific Corporation to successfully manufacture, market and sell
their paclitaxel-eluting coronary stent products; the continued
availability of capital to finance our activities; our ability to
continue to integrate into our business the operations of American
Medical Instruments Holdings, Inc. ("AMI"); 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;
and any other factors referenced in our annual information form and
other filings with the applicable Canadian securities regulatory
authorities or the SEC. 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 press release to reflect future results, events or
developments. Quill(TM) is a trademark of Quill Medical, Inc., a
wholly-owned subsidiary of Angiotech Pharmaceuticals, Inc.
HemoStream(TM) is a trademark of Rex Medical, LP, used under
license by Angiotech. About Angiotech Pharmaceuticals Angiotech
Pharmaceuticals, Inc. is a global specialty pharmaceutical and
medical device company with over 1,500 dedicated employees.
Angiotech discovers, develops and markets innovative treatment
solutions for diseases or complications associated with medical
device implants, surgical interventions and acute injury. To find
out more about Angiotech (NASDAQ:ANPINASDAQ:TSXNASDAQ:ANP) please
visit our website at http://www.angiotech.com/. CONTACT: Media:
Jodi Regts, Senior Manager, Corporate Communications, Angiotech
Pharmaceuticals, Inc., (604) 221-7930, ; Analysts and Investors:
Deirdre Neary, Manager, Investor Relations, Angiotech
Pharmaceuticals, Inc., (604) 222-7056, DATASOURCE: Angiotech
Pharmaceuticals, Inc. CONTACT: Media: Jodi Regts, Senior Manager,
Corporate Communications, Angiotech Pharmaceuticals, Inc., (604)
221-7930, ; Analysts and Investors: Deirdre Neary, Manager,
Investor Relations, Angiotech Pharmaceuticals, Inc., (604)
222-7056,
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