Angiotech Pharmaceuticals, Inc. announces results for the quarter
and year ended December 31, 2003 VANCOUVER, March 16
/PRNewswire-FirstCall/ -- Angiotech Pharmaceuticals, Inc.
(NASDAQ:ANPI; TSX:ANP) today reported financial results for the
quarter and year ended December 31, 2003. Amounts, unless specified
otherwise, are in Canadian dollars. At December 31, 2003, the
exchange rate was approximately U.S. $1.00 to CDN $1.29. The
Company changed its fiscal year end from September 30 to December
31 effective as of December 31, 2003. Accordingly, for the period
ending December 31, 2003, the Company has reported its consolidated
financial results for the three and fifteen month periods ended
December 31, 2003. We have provided comparative results for the
three month period ended December 31, 2002 and the twelve month
period ended September 2002 (fiscal 2002). As previously announced,
in March 2003, the shareholders authorized a 2 for 1 stock split of
the Company's common share capital. In January2004, the
shareholders authorized a second 2 for 1 stock split of the
Company's common share capital and approved a new stock option
plan. All share amounts including the weighted average shares
outstanding and the basic and fully diluted loss per common share
have been retroactively adjusted to give effect to the two stock
splits. The Company prospectively adopted the expensing of stock
based compensation for Canadian and U.S. GAAP effective October 1,
2002 (the beginning of the current reporting period). This resulted
in additional compensation expense of $2.0 million for the quarter
ended December 31, 2003 and $4.0 million for the fifteen month
period ended December 31, 2003. Stock based compensation expense in
future periods will vary depending upon the number of options
granted and the assumptions used to determine the fair value
calculations. CONDENSED FINANCIAL RESULTS Quarter results The
operating loss for the three month period ended December 31, 2003,
before the reported foreign exchange loss and other income, was
$7.8 million ($0.09 loss per common share) compared to $6.2 million
($0.10 loss per common share) for the same period in the prior
year. The loss for the three month period ended December 31, 2003
was $19.1 million ($0.23 loss per common share), as compared to a
loss of $6.0 million ($0.09 loss per common share) for the same
period in the prior year. The increase in the loss for the period
is primarily a result of a $13.0 million foreign exchange loss
recorded foraccounting purposes during the current quarter. The
reported foreign exchange loss is a combined result of the
appreciating Canadian dollar in comparison to the U.S. dollar (from
1.35:1 to 1.29:1) during the quarter as applied to our U.S. dollar
denominated cash and cash equivalents and a significant increase in
the U.S. dollar denominated cash and cash equivalents held during
the period. In October 2003 a public offering of 11,500,000 common
shares resulted in net proceeds of $320.4 million (U.S. $238
million). The proceeds of the offering are expected to be used to
fund our clinical studies, research and product development,
working capital, and general corporate purposes including
acquisitions, most of which are expected to be denominated in U.S.
dollars. Of the total proceeds received from the public offering,
$178.6 million was maintained in U.S. dollar denominations in
addition to the significant U.S. dollar cash and cash equivalent
balances normally held. As at December 31, 2003, U.S. $221.9
million was maintained in U.S. dollars and was not converted into
Canadian dollars, and therefore the Company did not incur actual
foreign exchange losses that would result upon converting U.S.
dollars into Canadian dollars. The reported foreign exchange loss
arose for accounting purposes by applying the decrease in the U.S.
dollar of Canadian $0.06 per U.S. dollar to the balance of U.S.
denominated cash and cash equivalents at December 31, 2003. We do
not use derivatives to hedge against exposuresto foreign currency,
interest rate and other market risks arising from our balance sheet
financial instruments because our future expenditures are
anticipated to be largely in U.S. denominated currency. Revenue of
$13.5 million for the three month period ended December 31, 2003
includes $3.4 million from sales of approved products by our
subsidiaries, Cohesion Technologies, Inc. ("Cohesion") and STS
Biopolymers, Inc. ("STS") acquired in January 2003 and December
2003 respectively. License fees include amortization into revenue
of upfront license payments of $3.9 million and a milestone payment
of $2.6 million earned upon successful transfer of manufacturing of
CoSeal(R) to Baxter Healthcare. Royalty revenue of $3.6 million
received during the current period was primarily derived from one
of our collaborators under the drug-coated stent co-exclusive
license for sales of the drug-coated stents in the three month
period ended September 30, 2003. Research and development
expenditures increased by approximately $3.4 million, or 139%,
during the quarter compared to the same quarter in 2002. This
increase is primarily due to the inclusion of Cohesion's research
and development costs of $2.4 million consisting mainly of salaries
and clinical trial expenditures on the Adhibit(TM) and CoSeal(R)
Lung clinical programs. In addition, clinical trial costs for the
rheumatoid arthritis phase II study resulted in an increase of
$445,000 and $392,000 was recognized in stock based compensation
expense for research and development employees compared to $17,000
for the three month period ended December 31, 2002. Selling,
general and administrative expenses for the current quarter
increased by $4.0 million compared to the same quarter in the prior
year. The increase is primarily due to recording the fair value of
the stock based compensation transactions, resulting in additional
compensation expense of $1.6 million compared to the three month
period ended December 31, 2002. Additional expenditure increases
were a result of the inclusion of Cohesion's and STS's sales and
marketing and general and administration expenditures of $1.1
million for the quarter, and increases in professional fees and
operating costs. Amortization increased by $4.5 million during the
quarter primarily due to amortization on the identifiable
intangible assets acquired in the acquisition of Cohesion, which
are being amortized in proportion to the revenue earned from a
license agreement in relation to these intangible assets.
Investment and other income increased by $1.1 million for the three
month period ended December 31, 2003 compared to the same period in
the prior year due to the amount of cash and cash equivalents, and
short-term and long-term investments held during the last quarter
of the year as a result of the public offering. The increase in
investment and other income in the last quarter of the year
resulted in a slight increase for the fifteen month period ended
December 31, 2003 over fiscal 2002 despite a declinein market
yields available on short-term investments, declining to an average
investment yield of 1.6% for the fifteen month period ended
December 31, 2003, compared to 2.4% in fiscal 2002. Annual results
The operating loss for the fifteen month period ended December 31,
2003, before the reported foreign exchange loss, other income and
interest expense, was $43.3 million ($0.61 loss per common share).
The loss for the fifteen month period ended December 31, 2003 was
$67.6 million ($0.96 loss per common share), as compared to a loss
of $20.1 million ($0.32 loss per common share) for the twelve month
period ended September 30, 2002. The loss for the fifteen month
period ended December 31, 2003 includes a foreign exchange loss of
$27.9 million (impact on loss per share of $0.40) compared to a
foreign exchange gain of $629,000 (impact on earnings per share of
$0.01) for the twelve month period ended September 30, 2002. Again,
this increase is a direct result of the appreciation of the
Canadian dollar currency relative to the U.S. dollar currency (from
1.59:1 to 1.29:1 for the fifteen month period ended December 31,
2003) combined with an increase in the amount of U.S. dollar
denominated currency held. Revenue of $27.8 million for the fifteen
month period ended December 31, 2003 is comprised of $11.1 million
from sales of Cohesion and STS's approved products, $10.9 million
from amortization of deferred revenue related to upfront license
fees and milestone payments, and $5.8 million from royaltyrevenue
from licensees on the commercial sales of drug-coated stents using
our technology. Cost of goods sold, relating to the approved
products, as a percentage of sales was approximately 60%.
Expenditures for the fifteen month period ended December 31, 2003
increased due to the inclusion of an extra three month period of
operations, the inclusion of Cohesion's and STS's expenditures from
the dates of acquisition, total prospective stock based
compensation expense of $4.0 million and an increase in research
and development and corporate activities. The Company's financial
position was strong at the end of the year, with available cash
balances, including cash and cash equivalents and short-term and
long-term investments, of approximately $403.9 million. Of that
amount, approximately $286.8 million (U.S. $221.9 million) was
denominated in U.S. currency, which will be used to meet our
anticipated U.S. dollar expenditures in future periods. In February
2004, the Company received U.S. $3.8 million in royalty revenue
from its drug-eluting stent corporate partners. These royalties are
based upon approximately U.S. $83.5 million in net sales of the
drug-eluting stent for the period October 1, 2003 to December 31,
2003 as reported by the Company's licensees. This includes sales
from products being sold in certain countries in the world where
the Company's licensees have approval and are selling the
paclitaxel-coated drug-eluting stent. The Company records royalty
revenue as received until a history of royalty revenue has been
established in order to more accurately estimate amounts due.
Royalty revenue is expected to increase throughout 2004 now that
Boston Scientific received FDA approval for its paclitaxel coated
drug eluting stent on March 4, 2004. Effective January 1, 2004, the
Company changed its functional and reporting currency to the U.S.
dollar from the Canadian dollar and has also elected to report its
consolidated financial statements in accordance with U.S. GAAP.
Supplemental information is attached to assist in comparing the
Canadian dollar and Canadian GAAP information presented in this
press release to the U.S. dollar and U.S. GAAP information that
will be presented as comparative information in the future.
ANGIOTECH PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS CANADIAN $ AND CANADIAN GAAP Fifteen Twelve Three
Months Months Months Ended Ended Ended September (In thousands of
Canadian $, December 31, December 31 30 except per share data) 2003
2002 2003 2002
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Revenue: Product sales 3,436 - 11,130 - License fees 6,536 154
10,859 7,322 Royalty revenue 3,563 16 5,809 8
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Total revenue 13,535 170 27,798 7,330 Expenses: Cost of goodssold -
product sales 1,785 - 6,655 - License and royalty fees on royalty
revenue 1,269 31 2,603 - Research and development 5,902 2,471
21,027 16,311 Selling, general and administration 6,791 2,776
26,214 12,104 Amortization 5,570 1,071 14,617 3,141
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Operating loss (7,782) (6,179) (43,318) (24,226) Other (expenses)
income: Foreign exchange (loss) gain (13,028) (416) (27,942) 629
Investment and other income 1,737 613 3,745 3,454 Interest expense
- capital lease - - (101) -
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Loss for the period (19,073) (5,982) (67,616) (20,143)
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Basic and diluted loss per common share $(0.23) $(0.09) $(0.96)
$(0.32)
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Weighted average shares outstanding (in thousands) 82,637 63,028
70,580 62,532
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ANGIOTECH PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS
CANADIAN $ AND CANADIAN GAAP (In thousands of Canadian $) December
31, 2003 September 30, 2002
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Assets Current assets: Cash and short-term investments 383,577
136,350 Other current assets 14,003 1,570
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Total current assets 397,580 137,920
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Long-term investments 21,230 - Capital assets, net 13,100 8,958
Intangible assets, net 47,150 4,687 Goodwill 40,913 - Other assets
743 -
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520,716 151,565
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Liabilities and Shareholders' Equity Accounts payable and accrued
liabilities 9,401 8,898 Deferred revenue 8,217 718 Deferred
leasehold inducement 2,937 2,537 Future income tax liability 4,674
- Shareholders' equity 495,487 139,412
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520,716 151,565
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This press release contains the condensed financial statements
derived from the unaudited consolidated interim financial
statements for the three months ended December 31, 2003 and the
audited consolidated financial statements for the fifteen month
period ended December 31, 2003. If you require a copy of
Angiotech's audited consolidated financial statements for the
fifteen month period ended December 31, 2003, please contact the
Company or visit our website at http://www.angiotech.com/. A
conference call on Angiotech's Financials will be held on Tuesday,
March 16, 2004 at 2 PM PST (5 PM EST). The call will be webcast on
Angiotech's website at http://www.angiotech.com/ under Investor
Relations or by dialing toll-free at (888) 484-0390. Please note
this is an analyst call and at the end of the presentation we will
invite questions from the analysts only. A recording of the call
will be available until Tuesday, March 23, 2004 by calling (800)
558-5253 and entering Access Code 21186356. Statements in this
press release (including the supplemental information) regarding
future financial and operating results of Angiotech and its
subsidiaries, future opportunities for the companies, discovery and
development of products, potential acquisitions, strategic
alliances and intellectual property, and any other statements about
Angiotech or its subsidiaries' managements' future expectations,
beliefs, goals, plans or prospects constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Any statements that are not statements of
historical fact (including statements containing the words
"believes," "plans," "anticipates," "expects," estimates and
similar expressions) should also be considered to be
forward-looking statements. There are a number of important factors
that could cause actual results or events to differ materially from
those indicated by such forward-looking statements, including: the
inability to obtain assignment for licenses with third parties;
adverse results in drug discovery and clinical development
processes; failure to obtain patent protection for discoveries;
commercialization limitations imposed by patents owned or
controlled by third parties; dependence upon strategic alliance
partners to develop and commercialize products and services based
on our work; difficulties or delays in obtaining regulatory
approvals to market products and services resulting from the
combined company's development efforts; the requirement for
substantial funding to conduct research and development and to
expand commercialization activities; general economic and business
conditions, both nationally and in regions in which Angiotech
operates; technology changes; 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;
liability and other claims asserted against Angiotech or its
subsidiaries; other factors referenced in Angiotech's regulatory
filings withthe United States Securities and Exchange Commission or
the Canadian securities regulators and any other factors that may
affect performance. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements. Angiotech and its subsidiaries 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
herein to reflect future results, events or developments.
SUPPLEMENTAL INFORMATION ANGIOTECH PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS DATA RECONCILIATION U.S. $
AND U.S. GAAP (In thousands of U.S. $, except Three Twelve Fifteen
per share data) months months months ended ended ended Dec 31, Dec
31, Dec 31, 2003 2003 2003 US GAAP US GAAP US GAAP US$ US$ US$
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(unaudited) (unaudited) (unaudited) Revenue Product sales 2,615
8,027 8,027 License fees 4,977 7,970 8,069 Royalty revenue 2,714
4,343 4,353
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10,306 20,340 20,449
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Expenses Cost of goods sold - product sales 1,360 4,825 4,825
License and royalty fees on royalty revenue 966 1,909 1,929
Research and development 4,517 13,531 15,128 Selling, general and
administration 5,166 16,767 18,536 Amortization 6,949 15,043 15,390
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18,958 52,075 55,808
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Operating loss (8,652) (31,735) (35,359)
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Other (expenses) income: Foreign exchange (loss) gain (9,889)
(19,899) (20,155) Investment and other income 1,321 2,327 2,718
Interest expense - capital lease - (90) (90)
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Total other (expenses) income (8,568) (17,662) (17,527)
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Loss for the period (17,220) (49,397) (52,886) Other comprehensive
income 6 118 274
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Comprehensive income (17,214) (49,279) (52,768)
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Basic and diluted loss per common share $(0.21) $(0.73) $(0.75)
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Weighted average shares outstanding (in thousands) 82,637 67,506
70,580
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See accompanying discussion regarding the basis of presentation.
SUPPLEMENTAL INFORMATION ANGIOTECH PHARMACEUTICALS, INC. CONDENSED
BALANCE SHEET DATA RECONCILIATION U.S. $ AND U.S. GAAP December 31,
(in thousands of $) 2003 U.S. GAAP US$
---------------------------------------------------- (unaudited)
Assets Current assets: Cash and short-term investments 296,794
Other current assets 10,836
---------------------------------------------------- Total current
assets 307,630 ----------------------------------------------------
Long term investments 16,801 Capital assets, net 10,136 Intangible
assets, net 30,094 Goodwill 31,657 Other assets 575
---------------------------------------------------- 396,893
----------------------------------------------------
---------------------------------------------------- Liabilities
and Shareholders' Equity Accounts payable and accrued liabilities
7,275 Deferred revenue 6,358 Deferred leasehold inducement 2,272
Future income tax liability 3,617 Shareholders' equity 377,371
---------------------------------------------------- 396,893
----------------------------------------------------
---------------------------------------------------- Basis of
Presentation The condensed consolidated financial statement data of
the Company were prepared by management to provide additional
information to readers of the statutory consolidated financial
statements of the Company for the fifteen month period ended
December 31, 2003, which are prepared under Canadian GAAP ("CDN
GAAP") and reconciled to U.S. generally accepted accounting
standards ("U.S. GAAP"). The condensed consolidated balance sheet
and statements of loss and deficit for the year ended December 31,
2003 have been derived from the audited financial statements of the
Company for the fifteen month period ended December 31, 2003 and
should be read in conjunction with the Company's December 31, 2003
financial statements including the notes thereto. Effective January
1, 2004, the Company changed its functional and reporting currency
to the U.S. dollar from the Canadian dollar and has also elected to
report its consolidated financial statements in accordance with
U.S. GAAP. The Company changed its functional and reporting
currency to U.S. dollars in order to more accurately represent the
currency of the economic environment in which it operates. The
Company will also adopt U.S. GAAP in order to provide information
on a more comparable basis with the majority of the companies in
its peer group. The financial information for the year ended
December 31, 2003 which has been derived from the consolidated
financial statements for the fifteen month period ended December
31, 2003, is presented in U.S. dollars and in accordance with U.S.
GAAP as if the U.S. dollar had been used as the reporting currency
during the period ended December 31, 2003. As at December 31, 2003
the functional currency of the Company was the Canadian dollar and
the reporting currency for the purpose of these condensed
consolidated financial statements is the U.S. dollar. Accordingly
these condensed consolidated financial statements of the Company
are translated into U.S. dollars using the current rate method.
Assets and liabilities are translated at the rate of exchange
prevailing at the balance sheet date. Shareholders' equity is
translated at the applicable historical rate. Revenue and expenses
are translated at a weighted average rate of exchange for the
period. Exchange rates used on revenue and expenses vary based on
the relative weightingduring the period of exchange. The cumulative
foreign currency translation adjustment is reported as a component
of shareholders' equity. DATASOURCE: Angiotech Pharmaceuticals,
Inc. CONTACT: Analysts: Rui Avelar, Angiotech Pharmaceuticals,
Inc., (604) 221-7676 ext 6996; Investors: Ian Harper, Angiotech
Pharmaceuticals, Inc., (604) 221-7676 ext 6933; Media: Eric
Starkman, Starkman & Associates, (212) 252-8545 ext 12
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