LAUSANNE, Switzerland and IRVINE, California, August 2 /PRNewswire-FirstCall/ -- IsoTis S.A. , the orthobiologics company, today reported its results for the second quarter and six months ended June 30, 2006. Revenues were US$10.8 million for the second quarter of 2006, representing a 43% increase over revenues of US$7.5 million for the second quarter of 2005. For the first six months of 2006, revenues were US$20.6 million, representing a 34% increase over revenues of US$15.3 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 second quarter of 2006, revenues from the U.S. network grew 22% to US$6.7 million compared to US$5.5 million in the second quarter of 2005, while in the first six months of 2006, revenues from the U.S. network grew 18% to US$13.2 million, compared to US$11.2 million in the first six months of 2005. In the second quarter of 2006, international revenues grew 39% to US$2.5 million compared to US$1.8 million in the second quarter of 2005, while in the first six months of 2006 international revenues grew 43% to US$5.0 million, compared to US$3.5 million in the first six months of 2005.
Results Comparison & Cash Position
The loss from operations for the second quarter of 2006 was US$2.2 million, compared to US$2.5 million for the second quarter of 2005. In the first six months of 2006, the loss from operations was US$4.7 million, compared to US$4.8 million in the first six months of 2005.
Due in large part to the impact of foreign currency movements on intercompany loans, the net result for the second quarter and first half of 2006 was a loss of US$6.2 million and US$10.0 million respectively.
At June 30, 2006, IsoTis had cash and cash equivalents and restricted cash of US$15.0 million.
Highlights
- Private label agreement with Alphatec Spine
- Appointed Jim Poser, Ph.D. as VP of Research and Development and Chief Technology Officer
- Elected professor Barbara Boyan to the Board of Directors
Pieter Wolters, President and CEO of IsoTis said, "I am very pleased with our revenue performance and improved operational results. This quarter was the seventh consecutive quarter of revenue growth. We believe this demonstrates the increasing acceptance of our proprietary Accell product family by orthopedic surgeons. As a result of our performance year to date and our expectations for the next two quarters, we decided to increase our guidance for 2006 to revenue growth between 25% and 30%. As we continue to improve sales traction in our distribution channels, we remain focused on strategic marketing and product development to support our further 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.
Conference Call
IsoTis will conduct a conference call today at 1.30 p.m. CET/7.30 a.m. ET/4.30 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 3.30 p.m. until August 3, 2006, 3.30 p.m. CET, dial: +41-91-612-4330 (Europe); +44-20-7108-6233 (UK); +1-866-416-2558 (US/Canada); playback ID: 507#. The call will also be webcast live on the IsoTis website at www.isotis.com. The webcast will remain available on IsoTis' website through September 30, 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, 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 Six Months Ended
30-Jun-06 30-Jun-05 30-Jun-06 30-Jun-05
Revenues
Product sales US$10,788,776 US$7,495,931 US$20,567,141 US$15,303,149
Other revenue - 38,825 35,816 38,825
Total revenues 10,788,776 7,534,756 20,602,957 15,341,974
Operating expenses
Costs of sales 3,980,292 2,988,246 7,674,120 5,922,259
Research and
development 1,894,196 1,320,286 3,608,017 2,436,017
Marketing and selling 4,219,415 2,995,043 8,533,205 5,994,087
General and
administrative 2,860,528 2,759,351 5,467,723 5,785,735
Total operating
expenses 12,954,431 10,062,926 25,283,065 20,138,098
Loss from operations (2,165,655) (2,528,170) (4,680,108) (4,796,124)
Interest income 137,402 124,975 278,237 254,548
Interest expense (25,703) (70,873) (56,484) (124,748)
Foreign exchange
(loss) gain (4,106,757) 5,184,543 (5,509,544) 8,323,484
Other (6,840) 229,641 (3,919) 231,803
Net income(loss)
before taxes (6,167,553) 2,940,116 (9,971,818) 3,888,963
Provision for
income taxes - - - -
Net income(loss) US$(6,167,553) US$2,940,116 US$(9,971,818) US$3,888,963
Basic and diluted
net income(loss)
per share US$ (0.09) US$ 0.04 US$ (0.14) US$ 0.06
Weighted average
common shares
outstanding
Basic 70,940,455 70,248,226 70,906,992 70,181,120
Diluted 70,940,455 71,849,650 70,906,992 71,782,544
IsoTis S.A.
Consolidated Balance Sheets - Unaudited
June 30, 2006 December 31, 2005
Assets
Current assets:
Cash and cash equivalents US$11,579,019 US$15,714,442
Restricted cash 1,638,831 2,184,063
Trade receivables, net 7,153,018 6,306,518
Inventories 11,164,580 10,020,906
Unbilled receivables 297,649 295,115
Value added tax receivable 158,605 95,505
Prepaid expenses and other current assets 864,013 761,355
Total current assets 32,855,715 35,377,904
Non-current assets:
Restricted cash 1,750,000 2,250,000
Property, plant and equipment, net 1,891,402 1,359,280
Goodwill 16,383,069 16,383,069
Intangible assets, net 12,312,737 13,585,250
Total non-current assets 32,337,208 33,577,599
Total assets US$65,192,923 US$68,955,503
Liabilities and shareholders' equity
Current liabilities:
Trade payables US$3,505,013 US$2,910,114
Accrued liabilities 7,026,763 6,680,989
Deferred revenue 130,000 344,719
Current portion of interest-bearing
loans and borrowings 1,008,493 1,015,471
Total current liabilities 11,670,269 10,951,293
Non-current liabilities:
Interest-bearing loans and borrowings 1,547,242 2,043,781
Total non-current liabilities 1,547,242 2,043,781
Total shareholders' equity 51,975,412 55,960,429
Total liabilities and shareholders' equity US$65,192,923 US$68,955,503
IsoTis S.A.
Consolidated Statements of Cash Flows-Unaudited
US Dollars
Six Months Ended
June 30, 2006 June 30, 2005
Cash flows from operating activities
Net (loss) income from
continuing operations US$(9,971,818) US$3,888,963
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization 1,669,722 1,317,992
Bad debt expense 191,348 25,663
Gain on sale of assets (642) (228,128)
Stock-based compensation expense 251,073 385,862
Foreign currency transaction loss (gain) 5,509,544 (8,323,484)
Change in operating assets and liabilities:
Inventories (1,019,815) (22,857)
Trade receivables (862,124) (932,587)
Other current assets (87,752) 1,007,608
Deferred revenue (217,830) 146,910
Trade and other payables 547,870 (1,997,339)
Restructuring provision - (673,197)
Net cash flows used in operating activities (3,990,424) (5,404,594)
Cash flows from investing activities
Purchase of property, plant and equipment (883,073) (398,477)
Change in restricted cash 1,128,164 1,125,661
Proceeds from sale of property,
plant and equipment and assets - 966,288
Net cash flows provided by (used in)
investing activities 245,091 1,693,472
Cash flow from financing activities
Proceeds from issuance of common shares 100,610 591,404
Repayment of interest-bearing
loans and borrowings (507,895) (3,863,230)
Net cash flows used in financing activities (407,285) (3,271,826)
Gain (loss) on cash held in foreign currency 17,195 (372,277)
Net decrease in cash and cash equivalents (4,135,423) (7,355,225)
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 US$11,579,019 US$18,184,377
IsoTis OrthoBiologics