Angiotech Pharmaceuticals, Inc. announces results for the fourth
quarter ended September 30, 2003 VANCOUVER, Nov. 17
/PRNewswire-FirstCall/ -- Angiotech Pharmaceuticals, Inc.
(NASDAQ:ANPI; TSX:ANP) today reported financial results for the
fourth quarter ended September 30, 2003. Amounts, unless specified
otherwise, are in Canadian dollars. At September 30, 2003, the
exchange rate was approximately U.S. $1.00 equals CDN $1.3504. TEXT
OF Q4 LETTER TO SHAREHOLDERS: "This past quarter we continued to
make progress as we position ourselves as a leader in the emerging
field of drug-coated medical devices and drug- coated surgical
implants. Results from the pivotal TAXUS IV paclitaxel-eluting
stent trial were announced by our corporate partner, Boston
Scientific. We also learned that the FDA will convene a panel
meeting on November 20th, 2003 regarding Boston Scientific's
application to market TAXUS(TM) Express2(TM) in the United States.
The TAXUS IV results were released at the Transcatheter
Cardiovascular Therapeutics (TCT) conference on September 15, 2003,
Boston Scientific reported a target lesion revascularization (TLR)
rate of 3.0 percent in the paclitaxel-eluting stent group compared
with 11.3 percent in the bare metal stent control group. TLR is an
important clinical measure of the performance of the drug-eluting
stent since it represents the number of times that a lesion has to
be retreated. In other words, 97% of patients did not require
further treatment at the site of the paclitaxel-eluting stent.
Significantly more patients in the control group required
retreatment by Coronary Artery By- Pass Surgery compared with the
treated group (3.1% in the control group vs 0.6% of patients in the
paclitaxel-eluting stent group). High-risk patients in the TAXUS IV
study appeared to have enjoyed the same benefits from the
paclitaxel-eluting stents as the most favorable-risk patients.
Patients with diabetes, small vessel disease and large lesions
historically have had higher failure rates with bare-metal stents.
While all patients responded favorably in the treated group,
insulin dependent diabetics, which have the most aggressive
lesions, had a restenosis rate of 7.7% in the treated group versus
38.1% in the control group. This observation suggests that
paclitaxel overcomes the biological responses that limit the
effectiveness of a well-engineered coronary stent. The
anti-proliferative characteristics of paclitaxel appear to address
the underlying pathology of restenosis, one that is most pronounced
in diabetics. TAXUS IV is the most comprehensive TAXUS study
performed to date by Boston Scientific and may represent an
important benchmark over the next several years. We have increased
the pace of new clinical studies with our internal programs. So far
this year, we have initiated pivotal studies in Europe for
CoSeal(R) to test its safety and effectiveness as a pulmonary
sealant and, in this quarter, we commenced an Adhibit anti-adhesion
trial in women undergoing fibroid removal. In the pharmaceutical
program, we are near completion of enrollment of our PAXCEED(TM)
clinical trial for rheumatoid arthritis and, earlier in the year,
we announced positive results of our phase I study of PAXCEED(TM)
in severe psoriasis. Subsequent to the quarter, we commenced a
Canadian feasibility study evaluating Adhibit(TM) for prevention of
adhesions following surgery in women for endometriosis. Finally,
the paclitaxel-loaded surgical vascular wrap study commenced
enrollment in September for patients undergoing peripheral vascular
by-pass graft surgery below the knee. Earlier this year, we
acquired Cohesion Technologies which provides multiple
opportunities for long term benefits to our shareholders. These
benefits include; experienced management, commercially approved
products, intellectual property and drug loadable biomaterials. In
October 2003, we raised a net of approximately US$238 million to
give us the financial leverage to develop products from our
existing candidate pipeline and to acquire strategic assets in
order to grow the business. On November 14, 2003, we entered into
an agreement to acquire STS Biopolymers, Inc., a privately owned
company located in Henrietta, NY for approximately US$23 million.
STS specializes in the development of state-of-the-art
biocompatible coatings for medical devices. We believe these and
future acquisitions will provide us with new business development
opportunities and enable us to leverage our research and
development in next-generation drug-loaded surgical biomaterials
and medical devices. Our team is committed to building long term
sustainable shareholder value and I am privileged to have the
confidence of our board and our shareholders in fulfilling this
vision. Thank you for your continued support." - William L. Hunter,
MD, MSc, President and Chief Executive Officer. CONDENSED FINANCIAL
RESULTS The loss for the fourth quarter was $8.1 million ($0.23
loss per common share), as compared to a loss of $1.9 million
($0.06 loss per common share) in the fourth quarter of the prior
year. Revenue of $5.9 million for the fourth quarter includes $2.5
million from sales of Cohesion's approved products. In addition, we
recognized $1.6 million of deferred revenue related to amortization
of upfront license fees and $1.8 million of royalty income from our
collaborators under the drug-coated stent co-exclusive license.
Royalty income includes $894,000 of the deferred sales milestone
received from Boston Scientific in May 2003. Research and
development expenditures increased to approximately $5.0 million
during the quarter compared to $2.4 million for the same period in
2002. This net increase is partially due to the inclusion of
Cohesion's research and development costs of $1.5 million
consisting primarily of salaries and clinical trial expenditures on
the Adhibit(TM) and CoSeal(R) Lung clinical programs. The remainder
of the increase relates to license and royalty payments of $1.1
million in the current quarter, which are due to licensors based on
net royalty revenue received for the period. Selling, general and
administrative expenses for the current quarter decreased slightly
to $3.9 million from $4.0 million for the same period in the prior
year. The decrease is primarily due to a decrease in professional
fees of $1.0 million almost entirely offset by the inclusion of
Cohesion's sales and marketing and general and administration
expenditures of $970,000 for the quarter. Amortization increased to
$2.9 million compared to $803,000 in the same period in 2002
primarily due to $1.8 million of amortization on the identifiable
intangible assets acquired in the acquisition of Cohesion. The loss
for the quarter includes a foreign exchange loss of $397,000
compared to a foreign exchange gain of $4.4 million for the same
period in the prior year. This change is directly related to the
fluctuations in the Canadian dollar currency against its U.S.
counterpart in the current quarter as compared to the same period
in the prior year. Investment and other income decreased by
$167,000 compared to the same period in the prior year due to the
decline in U.S. market yields available on our short-term
investments together with a decrease in the balance of cash and
short-term investments. The loss for the twelve month period was
$46.5 million ($1.38 loss per common share), as compared to a loss
of $20.1 million ($0.64 loss per common share) for the same period
in the prior year. The loss for the twelve months ended September
30, 2003 includes a foreign exchange loss of $14.9 million ($0.44
loss per share) compared to a foreign exchange gain of $629,000
($0.02 earnings per share) for the twelve month period ended
September 30, 2002. Again, this increase is a direct result of the
increasing spread of the Canadian dollar currency on the U.S.
dollar currency. The increasing strength in the Canadian dollar
currency against its U.S. counterpart is subject to the current
economic and political climates that we cannot control. We do not
use derivatives to hedge against exposures to 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 for
the year to date is comprised of $7.7 million from sales of
Cohesion approved products, $4.3 million from amortization of
deferred revenue related to upfront license fees and $2.2 million
from royalty revenue from licensees on the commercial sales of
drug-coated stents using our technology. Cost of goods sold,
relating to the Cohesion products, as a percentage of sales was
approximately 63%. Research and development costs decreased by
$684,000 to $15.6 million for the twelve month period ended
September 30, 2003 when compared to the same period in the prior
year. The decrease is primarily due to the discontinuation of the
secondary progressive multiple sclerosis clinical trial program in
the comparative prior period and a decrease in payments of
milestones and royalty fees due to licensors upon receipt of
milestone payments. The decrease was partially offset by the
research and development costs included for Cohesion. Selling,
general and administration costs increased by $6.1 million to $18.2
million for the twelve month period ended September 30, 2003
primarily due to the inclusion of Cohesion's expenditures of $6.7
million including selling and marketing costs for approved
products. At the end of the quarter, the Company's financial
position was strong with available cash balances of approximately
$124.8 million. Of that amount, approximately $95.4 million (U.S.
$70.6 million) was denominated in U.S. currency, which will be used
to meet our anticipated U.S. dollar expenditures in future periods.
In October 2003, we completed a public offering of 5,750,000 common
shares resulting in net proceeds of $321 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. Our fiscal year end is changing from September 30 to
December 31. Accordingly, for the current fiscal year we will
report consolidated financial results for the fifteen month period
ending December 31, 2003. ANGIOTECH PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months
Ended Twelve Months Ended September 30, September 30, (In thousands
of Canadian $, except per share data) 2003 2002 2003 2002 ---- ----
---- ---- (Audited) Revenue Product sales 2,514 - 7,694 - License
and research contract fees 1,593 154 4,323 7,322 Royalty revenue
1,760 8 2,246 8
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Total revenue 5,867 162 14,263 7,330 Expenses Cost of goods sold -
product sales 2,194 - 4,870 - Research and development 5,012 2,354
15,627 16,311 Selling, general and administration 3,928 3,976
18,236 12,104 Amortization 2,876 803 9,047 3,141
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Operating loss (8,143) (6,971) (33,517) (24,226) Foreign exchange
(loss) gain (397) 4,361 (14,914) 629 Investment and other income
515 682 2,008 3,454 Interest expense - capital lease (28) - (101) -
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Loss for the period (8,053) (1,928) (46,524) (20,143)
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Basic and diluted loss per common share $(0.23) $(0.06) $(1.38)
$(0.64)
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Weighted average shares outstanding (in thousands) 35,205 31,401
33,753 31,266
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ANGIOTECH PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (In
thousands of Canadian $) September 30, September 30, 2003 2002
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(Unaudited) (Audited) Assets Current assets: Cash and short-term
investments 124,809 136,350 Other current assets 9,086 1,570
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Total current assets 133,895 137,920
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Capital assets, net 12,370 8,958 Intangible assets, net 32,804
4,687 Goodwill 32,592 - Other assets 3,055 -
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214,716 151,565
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Liabilities and Shareholders' Equity Accounts payable and accrued
liabilities 8,073 8,898 Deferred revenue 13,903 718 Capital lease
obligation 1,453 - Deferred leasehold inducement 2,718 2,537
Shareholders' equity 188,569 139,412
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214,716 151,565
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This press release contains the condensed financial statements. If
you require a copy of Angiotech's unaudited interim consolidated
financial statements for the quarter ended September 30, 2003,
please contact the Company or visit our website at
http://www.angiotech.com/. A conference call on Angiotech's 4th
Quarter Financials will be held on Monday, November 17, 2003 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 (800) 724-7043. 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
Monday, November 24, 2003 by calling (800) 558-5253 and entering
Access Code 21163996. Statements in this press release regarding
future financial and operating results of the combination of
Angiotech and Cohesion, benefits and synergies of the combination,
future opportunities for the combined company, discovery and
development of products, potential acquisitions, strategic
alliances and intellectual property, and any other statements about
Angiotech or Cohesion managements' future expectations, beliefs,
goals, plans or prospects constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. In addition, statements regarding the proposed transaction
between Angiotech and STS, the expected timetable for completing
the transaction, future financial and operating results, benefits
and synergies of the transaction, future opportunities for the
combined company, discovery and development of products, potential
acquisitions, strategic alliances and intellectual property, and
any other statements about Angiotech or STS managements' future
expectations, beliefs, goals, plans or prospects should also be
considered to be forward-looking statements. 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 realize anticipated synergies and cost savings; 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. Company
Contacts: Ian Harper (Investors) ext.6996 Rui Avelar (Media) ext.
6901 Phone: (604) 221-7676 DATASOURCE: Angiotech Pharmaceuticals,
Inc. CONTACT: Ian Harper (Investors) ext.6996; Rui Avelar (Media)
ext. 6901, Phone: 604-221-7676
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