/C O R R E C T I O N -- Angiotech Pharmaceuticals, Inc./ In TO102,
Angiotech Pharmaceuticals, Inc. announces results for the second
quarter ended June 30, 2004, transmitted today at 16:01e, errors
occurred in the column headings of the first table. The first
column heading should have read "Three Months Ended June 30, 2004"
and not "Six Months Ended June 30, 2004". The second column heading
should have read "Three Months Ended June 30, 2003" and not "Six
Months Ended June 30, 2003". Corrected copy follows: VANCOUVER,
Aug. 9 /PRNewswire-FirstCall/ -- Angiotech Pharmaceuticals, Inc.
(NASDAQ:ANPINASDAQ:TSX:ANP) today announced financial results for
the second quarter ended June 30, 2004. Amounts, unless specified
otherwise, are expressed in U.S. dollars. Effective January 1,
2004, we changed our functional currency to the U.S. dollar from
the Canadian dollar in order to more accurately represent the
currency of the economic environment in which we operate. In
addition, we elected to report our consolidated financial
statements in accordance with U.S. GAAP and changed our reporting
currency to the U.S. dollar from the Canadian dollar. The
consolidated financial statements for the comparative periods ended
on or before December 31, 2003 which were based on a Canadian
functional currency, have been translated into the U.S. reporting
currency using the current rate method. CONDENSED FINANCIAL RESULTS
Adjusted operating net income for the quarter ended June 30, 2004
was $1.1 million ($0.01 income per common share), as compared to an
adjusted operating net loss of $5.0 million ($0.07 loss per common
share) for the same period in the prior year. The increase in the
income for the period was primarily a result of an increase in
royalty revenues partially offset by an increase in operating
expenditures. Financial results used in this press release include
non-GAAP measures that exclude certain charges. Adjusted operating
net income/loss excludes stock based compensation expense, foreign
exchange losses relating to our domiciling of cash balances,
acquisition related amortization charges and acquired in-process
research and development relating to license agreements and
acquisitions. Adjusted operating net income/loss does not have any
standardized meaning prescribed by GAAP and therefore may not be
comparable to similar measures presented by other issuers.
Management uses 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 operating net income to net
income according to GAAP in the attached tables. Net loss for the
quarter ended June 30, 2004 according to GAAP was $9.5 million
($0.11 loss per common share), as compared to a net loss according
to GAAP of $12.4 million ($0.18 loss per common share) for the same
period in the prior year. Included in the current quarter loss is a
$6.4 million expense ($0.08 loss per common share) for acquired
in-process research and development related to the Poly-Med license
agreement. Revenue of $13.4 million for the quarter ended June 30,
2004 included royalty revenue of $10.4 million, primarily derived
from royalties received from Boston Scientific under the
co-exclusive license agreement relating to sales of the TAXUS(TM)
Express(2)(TM) ("TAXUS") drug-eluting stent. Product sales included
sales of approved products by our subsidiaries of $3.0 million.
TAXUS related royalties of $10.0 million received during the second
quarter were based on $195.9 million of worldwide TAXUS net sales,
as reported to us by Boston Scientific for their first quarter
ended March 31, 2004. This sales amount included sales in the
United States from March 8, 2004 only, the date Boston Scientific
received U.S. FDA approval. The gross royalty rate earned in the
quarter was 5.0% for sales in the United States and 5.1% for sales
in other countries. The average royalty rate will continue to
increase as sales volumes increase due to the tiered royalty rate
calculations on net sales as provided for in the license agreement
and the growth in sales in the U.S. market now that FDA approval
has been received by Boston Scientific. For the quarter ended June
30, 2004 Boston Scientific publicly reported worldwide revenue of
TAXUS systems of $597 million, of which $468 million was revenue
realized from sales of systems in the U.S. We expect to realize
royalties related to Boston Scientific's second quarter TAXUS
system sales during our quarter ended September 30, 2004. Research
and development expenditures increased by approximately $3.4
million during the quarter compared to the same quarter in the
prior year. This increase was primarily due to an increase in
salaries and benefit costs of $1.3 million as a result of the
inclusion of STS research and development employees, an increase in
stock based compensation for research and development employees and
incremental costs associated with hiring new employees to support
our continued expanding research and development efforts. Selling,
general and administrative expenses for the current quarter
increased by $793,000 compared to the same quarter in the prior
year. The increase is mainly due to an increase in salaries and
benefits, primarily due to the inclusion of STS employees and an
increase in stock based compensation expense. The increases were
partially offset by the elimination of the sales and marketing
function at Cohesion in April 2003 which had expenditures of
$768,000 in the comparative period. In April 2004, we entered into
a license agreement with Poly-Med, Inc. and made an initial
up-front license payment of $6.4 million for acquired in-process
research and development. The license agreement grants us rights to
several of Poly-Med's key technologies, including a portfolio of
absorbable and biodegradable polymers and drug delivery
technologies. For the quarter ended June 30, 2004, the reported
foreign exchange loss of $2.1 million was due to a weaker Canadian
dollar relative to the U.S. dollar (from 0.763:1 to 0.746:1) during
the quarter as applied to our Canadian dollar denominated cash and
short-term investments. For the three month period ended June 30,
2003, the reported foreign exchange loss of $5.4 million is a
translation of the amount previously reported in Canadian dollars.
Investment and other income increased by $1.4 million for the three
month period ended June 30, 2004 compared to the same quarter in
the prior year due to the significant increase in cash and cash
equivalents and short-term and long-term investments received from
the public offering in October 2003 and the disposition of long
term assets held for sale. "During the second quarter of 2004, we
saw the TAXUS(TM) Express(2)(TM) coronary stent system, which is
the first medical device product to be approved for sale in the
United States utilizing our platform paclitaxel technology,
establish a significant market leadership position in the United
States," said Dr. William Hunter, President and CEO of Angiotech.
"The introduction of the TAXUS(TM) Express(2)(TM) system represents
one of the largest medical product launches in history, drug or
device. We are proud that our research and technology contributions
are a part of the product platform of choice for interventional
cardiologists and their patients." "We also announced several
significant transactions related to our growing orthopedics
initiatives during the second quarter of 2004, including the
acquisition of NeuColl, Inc. and a $25 million investment in
Orthovita, Inc. The Orthovita relationship also includes a
distribution partnership for Angiotech's hemostatic biomaterial
product CoStasis(R), which will be launched by Orthovita under the
brand name VITAGEL(TM) into the spine, hip and knee surgery markets
later this year. In the product development area, during the second
quarter of 2004 we completed enrollment in the European study of
our paclitaxel vascular wrap program, and on July 28th our partner
Cook announced commencement of the first trial of a
paclitaxel-eluting stent system in patients with peripheral
vascular disease. We look forward to continued progress on our
product and corporate development initiatives during the second
half of 2004." CONDENSED FINANCIAL RESULTS ANGIOTECH
PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND
DEFICIT (Unaudited) (in thousands of U.S.$, except Three Months
Ended Three Months Ended share and per June 30, 2004 June 30, 2003
share data) $ $ $ $ $ $
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Adjust- Repor- Adjust- Reported ments Adjusted ted(x) ments
Adjusted REVENUE Royalty revenue 10,408 10,408 318 318 Product
sales 2,958 2,958 1,751 1,751 License fees 42 42 1,338 1,338
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13,408 - 13,408 3,407 - 3,407
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EXPENSES License and royalty fees on royalty revenue 2,129 2,129
118 118 Cost of goods sold - product sales 1,353 1,353 1,432 1,432
Research and develop -ment 6,700 (604)a 6,096 3,262 (243)a 3,019
Selling, general and admini -strative 4,684 (679)a 4,005 3,891
(279)a 3,612 Amortiz -ation 1,624 (855)b 769 1,966 (1,503)b 463
Acquired in-process research and development 6,375 (6,375)c - - -
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22,865 (8,513) 14,352 10,669 (2,025) 8,644
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Operating loss (9,457) 8,513 (944) (7,262) 2,025 (5,237)
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Other (expenses) income: Foreign exchange loss (2,052) 2,052 d -
(5,419) 5,419 d - Investment and other income 1,648 1,648 285 285
Interest expense - capital lease - - (33) (33)
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Total other (expenses) income (404) 2,052 1,648 (5,167) 5,419 252
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Income (loss) for the period before income taxes (9,861) 10,565 704
(12,429) 7,444 (4,985) Income tax recovery 411 411 - -
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Income (loss) for the period (9,450) 10,565 1,115 (12,429) 7,444
(4,985)
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Basic income (loss) per common share (0.11) 0.01 (0.18) (0.07)
Diluted income (loss) per common share (0.11) 0.01 (0.18) (0.07)
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Weighted average shares outstanding (000's) - Basic 83,630 83,630
69,234 69,234 Weighted average shares outstanding (000's) - Diluted
86,839 86,839 n/a n/a
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(x) Restated to reflect change to U.S. dollar reporting currency
and U.S. GAAP a. Adjustment for stock based compensation expense b.
Adjustment for amortization of acquisition related intangible
assets and medical technologies c. Adjustment for in-process
research and development acquired d. Adjustment for foreign
exchange loss ANGIOTECH PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT (Unaudited) (in
thousands of U.S.$, except Six Months Ended Six Months Ended share
and per June 30, 2004 June 30, 2003 share data) $ $ $ $ $ $
-------------------------------------------------------------------------
Adjust- Repor- Adjust- Reported ments Adjusted ted(x) ments
Adjusted REVENUE Royalty revenue 14,897 14,897 338 338 Product
sales 7,080 7,080 3,579 3,579 License fees 3,307 3,307 1,838 1,838
-------------------------------------------------------------------------
25,284 - 25,284 5,755 - 5,755
-------------------------------------------------------------------------
EXPENSES License and royalty fees on royalty revenue 3,481 3,481
130 130 Cost of goods sold - product sales 3,513 3,513 1,874 1,874
Research and development 11,863 (1,226)a 10,637 5,839 (361)a 5,478
Selling, general and administrative 9,775 (1,234)a 8,541 8,510
(532)a 7,978 Amortization 5,811 (4,468)b 1,343 2,855 (2,059)b 796
Acquired in-process research and development 6,375 (6,375)c - 3,555
(3,555)c -
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40,818 (13,303) 27,515 22,763 (6,507) 16,256
-------------------------------------------------------------------------
Operating loss (15,534) 13,303 (2,231) (17,008) 6,507 (10,501)
-------------------------------------------------------------------------
Other (expenses) income: Foreign exchange loss (3,350) 3,350 d -
(9,711) (9,711)d - Investment and other income 2,921 2,921 604 604
Interest expense - capital lease - - (52) (52)
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Total other (expenses) income (429) 3,350 2,921 (9,159) (9,711) 552
-------------------------------------------------------------------------
Income (loss) for the period before income taxes (15,963) 16,653
690 (26,167) 16,218 (9,949) Income tax recovery 315 315 - -
-------------------------------------------------------------------------
Income (loss) for the period (15,648) 16,653 1,005 (26,167) 16,218
(9,949)
-------------------------------------------------------------------------
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Basic income (loss) per common share (0.19) 0.01 (0.38) (0.14)
Diluted income (loss) per common share (0.19) 0.01 (0.38) (0.14)
-------------------------------------------------------------------------
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Weighted average shares outstanding (000's) - Basic 83,506 83,506
69,379 69,379
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average shares outstanding (000's) - Diluted 86,715 86,715
n/a n/a
-------------------------------------------------------------------------
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(x) Restated to reflect change to U.S. dollar reporting currency
and U.S. GAAP a. Adjustment for stock based compensation expense b.
Adjustment for amortization of acquisition related intangible
assets and medical technologies c. Adjustment for in-process
research and development acquired d. Adjustment for foreign
exchange loss ANGIOTECH PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) In accordance with U.S.
generally accepted accounting principles (in thousands of U.S.$)
June 30, December 31, As at 2004 2003 $ $
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ASSETS (Restated)(x) Cash and short-term investments 236,225
296,794 Other current assets 7,505 10,836 Long-term investments
46,793 16,801 Property and equipment, net 11,092 10,136 Intangible
assets, net 25,626 30,094 Goodwill 28,940 30,486 Deferred income
taxes 6,465 - Restricted cash 25,000 - Other assets 892 575
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388,538 395,722
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LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 9,342
11,543 Deferred revenue - long term portion 2,000 2,090 Deferred
leasehold inducement 2,179 2,272 Deferred income taxes 5,206 2,446
Shareholders' equity 369,811 377,371
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388,538 395,722
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(x) Restated to reflect change to U.S. dollar reporting currency
and U.S. GAAP This press release contains the condensed financial
statements derived from the unaudited consolidated interim
financial statements for the three and six months ended June 30,
2004 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 Monday,
August 9, 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 dialling toll-free at (866) 761-0748 (North
America) or (617) 614-2706 (International) and entering Access Code
17568845. A recording of the call will be available until Monday,
August 16, 2004 by calling (888) 286-8010 (North America) or (617)
801-6888 (International) and entering Access Code 72689229.
Statements in this press release 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 with the 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. DATASOURCE: Angiotech Pharmaceuticals, Inc. CONTACT:
Analysts: Rui Avelar, Angiotech Pharmaceuticals, Inc., (604)
221-7676 ext 6996; Investors: Todd Young, Angiotech
Pharmaceuticals, Inc., (604) 221-7676 ext 6933; Media: Eric
Starkman, Starkman & Associates, (212) 252-8545 ext 12
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