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Closure Medical Corporation (CLSR) Reports Third Quarter 2004 Results


10/19/2005 5:11:50 PM

RALEIGH, N.C., Oct. 13 /PRNewswire-FirstCall/ -- CLOSURE Medical Corporation , a global leader in biomaterial-based medical devices, today announced results for the third quarter and nine months ended September 30, 2004.

Total revenues for the third quarter 2004 were $9.2 million compared to $8.9 million during the same period of 2003. For the nine months ended September 30, 2004, revenues increased 21 percent to $31.0 million, up from $25.5 million in the same period of 2003.

Net income for the third quarter 2004 was $2.0 million, or $0.14 per diluted share, compared to $2.0 million, or $0.13 per diluted share, in the prior year period. Net income for the nine months ended September 30, 2004, increased 28 percent to $7.1 million, or $0.46 per diluted share, up from $5.5 million, or $0.39 per diluted share, in the same period of 2003.

For the third quarter 2004, the Company increased its R&D and regulatory expenditures, which were $2.6 million, or 29 percent of revenues, versus $2.0 million, or 23 percent of revenues, during the 2003 period. The increased expenses were primarily for the vascular sealant clinical study and other regulatory preparation efforts for the product. Gross margins were 75 percent and 74 percent during the three- and nine-month periods ended September 30, 2004, compared to 76 percent during both periods of 2003. Gross margin improved sequentially from 72 percent for the second quarter 2004 primarily due to a product mix of greater than 80 percent of the higher-margin DERMABOND product. In addition, higher-than-normal royalty revenue, $373,000, contributed approximately 100 basis points of the improvement.

Daniel A. Pelak, President and CEO, commented, "The clinical trial of our vascular sealant product continues to make good progress. During the past month, we have applied for the European CE mark and expect a favorable response on this application prior to the end of the year. OMNEX(TM) Surgical Sealant has been selected as the commercial name for the vascular sealant product. In addition, we are in discussions with several major multi-national medical device companies that have an interest in partnering with us to distribute OMNEX(TM)."

Pelak added, "As we apply our core technology to a broader range of medical uses, our business will continue to expand. We are encouraged by the opportunities we see for our professional products, DERMABOND and OMNEX(TM), in surgery and other clinical uses. DERMABOND continues to experience attractive dollar volume growth at the end-user level, with current penetration of applicable U.S. procedures in the range of 12-15 percent. That leaves, we believe, plenty of room for market share expansion. In addition, we continue to deliver solid net margins in excess of 20 percent, while financing increased R&D and regulatory expense for new products."

General and administrative expense as a percentage of revenues decreased to 15 percent for the three- and nine-month periods ended September 30, 2004, compared to 19 percent for both 2003 periods. For the nine-month period, the Company's operating margin increased to 34 percent compared to 33 percent in the 2003 period.

At September 30, 2004, the Company had cash and investments of $46.1 million and net working capital of $40.0 million. Total assets were $64.6 million, up from $53.8 million at the beginning of the year, and stockholders' equity was $58.9 million. The Company had no outstanding debt and a $3.0 million available line of credit.

The Company expects fourth quarter revenues to be in the range of $9.0 to $10.0 million and earnings per diluted share to be in the range of $0.13 to $0.16. For the full year the Company reiterates the guidance provided in its press release dated September 29, 2004, which included total revenues in the range of $40.0 to $41.0 million and earnings per diluted share from $0.59 to $0.62.

About CLOSURE Medical Corporation

CLOSURE Medical Corporation is a global leader in the development and manufacture of innovative biomaterial-based medical devices that fulfill the needs of healthcare practitioners, patients and consumers.

For additional information on CLOSURE Medical visit its website at http://www.closuremed.com/ or visit the "Clients" section of the Allen & Caron website at http://www.allencaron.com/.

This release contains certain forward-looking statements which involve known and unknown risks, delays, uncertainties or other factors not under the Company's control which may cause actual results, performance or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to the early stage of commercialization of the Company's products; the ability of the Company to increase the efficiencies in its manufacturing processes; the effectiveness of initiatives launched in response to the Company's competitors' product introductions; the progress and success of its research and development programs for future products; the success of its clinical study for its vascular sealant product and future clinical studies; the successful enrollment of current and future clinical studies; the need for regulatory approval and effects of governmental regulation; technological uncertainties; the inventory management policies adopted by the Company's marketing partners; end-user growth for the products sold by the Company's marketing partners; the Company's success in securing marketing partners for future products; the satisfactory conclusion of negotiations with, and dependence on marketing partners, and dependence on patents and trade secrets, as well as those detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission. Although the Company believes that the expectations in the forward-looking statements are reasonable, the Company cannot guarantee such results. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

TABLES FOLLOW CLOSURE Medical Corporation Statements of Operations (In thousands, except per share data) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2004 2003 2004 2003 Product sales $9,181 $8,597 $30,605 $24,713 License and product development revenue 59 264 381 790 Total revenues 9,240 8,861 30,986 25,503 Cost of products sold 2,289 2,140 8,117 6,082 Gross profit 6,951 6,721 22,869 19,421 Research, development and regulatory affairs expenses 2,640 2,042 7,603 6,030 General and administrative expenses 1,431 1,657 4,730 4,876 Total operating expenses 4,071 3,699 12,333 10,906 Income from operations 2,880 3,022 10,536 8,515 Interest income, net 195 69 428 216 Income before income taxes 3,075 3,091 10,964 8,731 Provision for income taxes 1,070 1,140 3,890 3,190 Net income $2,005 $1,951 $7,074 $5,541 Shares used in computation of net income per common share: Basic 14,323 13,768 14,269 13,680 Diluted 14,778 14,746 15,344 14,071 Net income per common share: Basic $ 0.14 $ 0.14 $ 0.50 $ 0.41 Diluted $ 0.14 $ 0.13 $ 0.46 $ 0.39 CLOSURE Medical Corporation Balance Sheet Data (In thousands) September 30, December 31, 2004 2003 Cash, cash equivalents and investments $46,066 $33,427 Working capital $40,047 $30,974 Total assets $64,643 $53,768 Total debt obligations $ -- $ -- Total stockholders' equity $58,875 $47,428 Total shares outstanding 14,360 14,127

CLOSURE Medical Corporation

CONTACT: investors, Joe Allen, +1-212-691-8087, joe@allencaron.com, ormedia, Len Hall, +1-949-474-4300, len@allencaron.com, both of Allen & CaronInc, for CLOSURE Medical Corporation; or Benny Ward, CFO of CLOSURE MedicalCorporation, +1-919-876-7800


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