LAUSANNE, Switzerland and IRVINE, California, November 9 /PRNewswire-FirstCall/ -- IsoTis S.A. , the orthobiologics company, today reported its results for the third quarter and nine months ended September 30, 2006. Revenues were $10.2 million for the third quarter of 2006, representing a 25% increase over revenues of $8.1 million for the third quarter of 2005. For the first nine months of 2006, revenues were $30.8 million, representing a 31% increase over revenues of $23.5 million for the same period in 2005.
Revenue Analysis
IsoTis' chief distribution channels are its U.S. network of independent agents and its network of international distributors, while the remaining portion of its revenues is derived from private label agreements. In the third quarter of 2006, revenues from the U.S. network grew 19% to $6.0 million compared to $5.0 million in the third quarter of 2005, while in the nine months of 2006, revenues from the U.S. network grew 18% to $18.0 million, compared to $15.2 million in the first nine months of 2005. In the third quarter of 2006, international revenues grew 44% to $2.4 million compared to $1.7 million in the third quarter of 2005, while in the nine months of 2006 international revenues grew 43% to $7.4 million, compared to $5.2 million in the nine months of 2005.
Results Comparison & Cash Position
The loss from operations for the third quarter of 2006 was $3.1 million, compared to $2.3 million for the third quarter of 2005. In the nine months of 2006, the loss from operations was $7.8 million, compared to $7.1 million in the nine months of 2005. Net loss for the third quarter of 2006 totaled $1.9 million or $0.03 per diluted share as compared with a net loss of $1.5 million or $0.02 per diluted share for the third quarter of 2005. The net loss for the nine months ended September 30, 2006 was $11.9 million or $0.17 per share due in part to the $4.6M negative impact of foreign currency movements on intercompany loans. For the nine months ended September 30, 2005 net income was $2.4 million or $0.03 per share which was primarily due to an $8.6 million favorable impact of foreign currency movements on intercompany loans.
At September 30, 2006, IsoTis had cash and cash equivalents and restricted cash of $20.0 million.
Highlights Third Quarter
- Sale of dental assets to Keystone Dental Inc. for $7.4 million
- Secured $5 million credit line with SVB Silicon Valley Bank
- Appointed Gene Reu. as VP of Operations
- Private label agreement with Alphatec Spine
Pieter Wolters, President and CEO of IsoTis said, "I am pleased with our performance in the third quarter. We are reporting our eighth consecutive quarter of revenue growth. With the sale of our dental assets and the credit line, we have considerably strengthened our cash position. We believe our continued growth and our improved financial position provide a solid foundation for our intention to become a U.S. company with a single listing on NASDAQ that we announced earlier this week. We believe that the NASDAQ listing, will allow us to continue to accelerate and sustain our growth. Meanwhile, we reiterate our 2006 guidance of achieving between 25% and 30% revenue growth."
Business Outlook for 2006
- IsoTis anticipates total revenues for full year 2006 to grow by between 25% and 30%
- IsoTis continues its product and business development efforts aimed at introducing new products
- IsoTis intends to become a U.S. company with a single NASDAQ listing in Q1 of 2007
Conference Call
IsoTis will conduct a conference call today at 4.30 p.m. CET/10.30 a.m. ET/7.30 a.m. PT. Dial: +41 91 610 5609 (Europe); +44-20-7107-0613 (UK); +1-866-865-5144 (toll free dial in US/Canada); no password required. Digital playback is available for 24 hours after the conference starting at 6.30 p.m. until November 10, 2006, 6.30 p.m. CET, dial: +41-91-612-4330 (Europe); +44-20-7108-6233 (UK); +1-866-416-2558 (US/Canada); playback ID: 711#. The call will also be webcast live on the IsoTis website at www.isotis.com. The webcast will remain available on IsoTis' website through December 31, 2006.
IsoTis has a product portfolio with several innovative and proprietary natural and synthetic bone graft substitutes on the market and others in development, an established North American independent distribution network and an expanding international presence. IsoTis' main commercial operations are based in Irvine, California, and its international sales headquarters are based in Lausanne, Switzerland.
Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including those that refer to management's plans and expectations for future operations, prospects and financial condition. Words such as "strategy," "expects," "plans," "anticipates," "believes," "will," "continues," "estimates," "intends," "projects," "goals," "targets" and other words of similar meaning are intended to identify such forward-looking statements. One can also identify them by the fact that they do not relate strictly to historical or current facts. Such statements are based on the current expectations of the management of IsoTis only. Undue reliance should not be placed on these statements because, by their nature, they are subject to known and unknown risks and can be affected by factors that are beyond the control of IsoTis. Actual results could differ materially from current expectations due to a number of factors and uncertainties affecting IsoTis' business, including, but not limited to, failure to obtain sufficient shareholder support for the exchange offer, inability to list the IsoTis Inc, shares on NASDAQ in a timely manner, if at all, a competitive sales and marketing environment, the timely commencement and success of IsoTis' clinical trials and research endeavors, delays in receiving U.S. Food and Drug Administration or other regulatory approvals (a.o. EMEA, CE), market acceptance of IsoTis' products, effectiveness of IsoTis' distribution channels, development of competing therapies and/or technologies, the terms of any future strategic alliances, the need for additional capital, the inability to obtain, or meet, conditions imposed for required governmental and regulatory approvals and consents. IsoTis expressly disclaims any intent or obligation to update these forward-looking statements except as required by law. For a more detailed description of the risk factors and uncertainties affecting IsoTis, refer to IsoTis' Annual Report on Form 20-F for the fiscal year ended December 31, 2005, filed with the SEC and to IsoTis' reports filed from time to time with the Swiss Stock Exchange (SWX), Euronext Amsterdam N.V., SEDAR at www.sedar.com and the Toronto Stock Exchange (TSX).
IsoTis S.A.
Consolidated Statements of Operations-Unaudited
US Dollars
Three Months Ended Nine Months Ended
30-Sep-06 30-Sep-05 30-Sep-06 30-Sep-05
- - - -
Revenues
Product sales $ 10,161,972 $ 8,146,900 $ 30,729,113 $ 23,450,049
Other revenue - - 35,816 38,825
- - - -
Total revenues 10,161,972 8,146,900 30,764,929 23,488,874
- - - -
Operating expenses
Costs of sales 3,630,693 3,261,653 11,304,813 9,183,912
Research and
development 1,983,751 1,735,114 5,591,768 4,171,131
Marketing and
selling 4,667,770 3,315,938 13,200,975 9,310,025
General and
administrative 2,978,011 2,152,586 8,445,734 7,938,321
- - - -
Total operating
expenses 13,260,225 10,465,291 38,543,290 30,603,389
- - - -
Loss from
operations (3,098,253) (2,318,391) (7,778,361) (7,114,515)
Interest income 161,784 131,427 440,021 385,975
Interest expense (75,735) (31,807) (132,219) (156,555)
Foreign exchange
gain/(loss) 941,506 301,706 (4,568,038) 8,625,190
Other 146,019 431,548 142,100 663,351
- - - -
Net (loss)
income before
taxes (1,924,679) (1,485,517) (11,896,497) 2,403,446
Provision for
income taxes - - - -
- - - -
Net (loss)
income $ (1,924,679) $ (1,485,517) $ (11,896,497) $ 2,403,446
- - - -
Basic and diluted
net (loss) income per
share $ (0.03) $ (0.02) $ (0.17) $ 0.03
- - - -
Weighted average
common shares
outstanding
Basic 70,940,713 70,681,023 70,918,356 70,349,586
Diluted 70,940,713 70,681,023 70,918,356 72,407,899
IsoTis S.A.
Consolidated Balance Sheets
------------------ -----------------
September 30, 2006 December 31, 2005
------------------ -----------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 16,909,442 $ 15,714,442
Restricted cash 1,634,357 2,184,063
Trade receivables, net 7,548,822 6,306,518
Inventories 12,921,460 10,020,906
Unbilled receivables 74,069 295,115
Value added tax receivable 120,944 95,505
Prepaid expenses and other current assets 979,227 761,355
------------------ -----------------
Total current assets 40,188,321 35,377,904
Non-current assets:
Restricted cash 1,500,000 2,250,000
Property, plant and equipment, net 3,420,410 1,359,280
Goodwill 16,383,069 16,383,069
Intangible assets, net 11,659,113 13,585,250
------------------ -----------------
Total non-current assets 32,962,592 33,577,599
------------------ -----------------
Total assets $ 73,150,913 $ 68,955,503
------------------ -----------------
Liabilities and shareholders' equity
Current liabilities:
Trade payables $ 5,234,565 $ 2,910,114
Accrued liabilities 7,727,924 6,680,989
Deferred revenue 1,342,797 344,719
Current portion of interest-bearing
loans and borrowings 2,217,473 1,015,471
------------------ -----------------
Total current liabilities 16,522,759 10,951,293
------------------ -----------------
Non-current liabilities:
Interest-bearing loans and borrowings 2,083,692 2,043,781
Deferred revenue 5,132,910 -
Other long term liabilities 133,266 -
------------------ -----------------
Total non-current liabilities 7,349,868 2,043,781
------------------ -----------------
50,716,173 50,644,949
106,655,281 106,212,297
17,631,722 12,932,003
(125,724,890) (113,828,820)
------------------ -----------------
Total shareholders' equity 49,278,286 55,960,429
------------------ -----------------
Total liabilities and shareholders'
equity $ 73,150,913 $ 68,955,503
IsoTis S.A.
Consolidated Statements of Cash Flows-Unaudited
US Dollars
Nine Months Ended
30-Sep-06 30-Sep-05
- -
Cash flows from operating activities
Net (loss) income from continuing
operations $ (11,896,497) $ 2,403,446
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization 2,516,901 2,405,608
Bad debt expense 213,709 141,535
Gain (loss) on sale of assets 17 (659,898)
Stock-based compensation expense 413,598 479,719
Foreign currency transaction (gain) loss 4,568,038 (8,625,190)
Change in operating assets and liabilities:
Inventories (2,863,302) (204,946)
Trade receivables (1,399,926) (1,895,226)
Other current assets 47,521 646,321
Deferred revenue (414,257) 136,910
Trade and other payables 2,854,413 (833,008)
Other long term liabilities 133,266 -
Restructuring provision - (673,197)
-------------- ------------
Net cash flows used in operating activities (5,826,519) (6,677,926)
Cash flows from investing activities
Purchase of property, plant and equipment (2,633,905) (439,516)
Proceeds from sale of dental assets 6,984,277
Proceeds from sale of property, plant and
equipment and assets 22,411 2,590,700
Change in restricted cash 1,378,164 1,381,372
-------------- ------------
Net cash flows provided by investing
activities 5,750,947 3,532,556
Cash flow from financing activities
Proceeds from issuance of common
shares 100,610 865,689
Proceeds from interest-bearing loans and
borrowings 2,000,000 -
Repayment of interest-bearing loans
and borrowings (762,090) (6,190,650)
-------------- ------------
Net cash flows provided by (used in)
financing activities 1,338,520 (5,324,961)
(Loss) on cash held in foreign currency (67,948) (30,701)
-------------- ------------
Net increase/(decrease) in cash and cash
equivalents 1,195,000 (8,501,032)
Cash and cash equivalents at the
beginning of the period 15,714,442 25,539,602
-------------- ------------
Cash and cash equivalents at the end of
the period $ 16,909,442 $ 17,038,570
IsoTis OrthoBiologics