MONTREAL, CANADA--(Marketwire - March 31, 2009) - ART Advanced Research Technologies Inc. (“ART”) (TSX: ARA), a Canadian medical device company and a leader in optical molecular imaging products for the healthcare and pharmaceutical industries, announces its financial results for the fourth quarter and year ended December 31, 2008. ART reported revenues of $1,145,682 for the fourth quarter of 2008, compared to $1,384,014 for the same quarter of 2007. Revenues for the year ended December 31, 2008 increased by 137% to $4,954,828, compared to $2,087,920 for the year ended December 31, 2007. For the 2008 fourth quarter, the operating loss decreased by $331,346, or 19%, to $1,374,940 from $1,706,286 for the same period a year ago. As for the year ended December 31, 2008, the operating loss decreased by $3,746,797, or 40%, to $5,525,706 from $9,272,503 for the same period ended in 2007. ART incurred a net loss of $892,615 or $0.01 per share for the three-month period ended December 31, 2008, compared to a net loss of $1,683,593 or $0.02 per share for the three-month period ended December 31, 2007. The net loss for the year ended December 31, 2008, was $4,819,230 or $0.05 per share, compared to $8,623,447 or $0.13 per share for the year ended December 31, 2007. All dollar amounts referenced herein are in U.S. dollars, unless otherwise stated.
2008 Fourth Quarter Highlights
- Final scans using the SoftScan® device were completed for the treatment monitoring study at the Sunnybrook Health Sciences Centre in Toronto and, given how significant these results are, the team at Sunnybrook will be submitting them for publication in a peer-reviewed journal.
- An experimental probe being tested using the SoftScan device at Stanford University, displayed a high optical contrast ratio which means they could eventually be used for clinical applications in breast cancer diagnosis.
- ART added an additional three units to the worldwide installed base of Optix® systems, now standing at close to 60 units.
Post Quarter Event
- In January 2009, ART further reduced expenses and streamlined the Company, in response to the deteriorating global economic climate.
Revenues
For the three-month period ended December 31, 2008, revenues were $1,145,682, compared to $1,384,014 for the same quarter a year ago. For the year ended December 31, 2008, sales increased by 137% to $4,954,828, compared to $2,087,920 for the year ended December 31, 2007. The decrease in sales during the fourth quarter of 2008 compared to 2007 is mainly due to the fact that the Company had sold one more unit in the fourth quarter of 2007 compared to 2008. The increase in product sales in 2008 when compared to 2007 is explained by the Company’s transition, for its Optix product, from an exclusive distribution model to a direct sale model. By electing this new strategy, the Company was able to expand its revenue model by offering a wider range of services and a source of recurring revenue while providing higher gross margins per system sold. During the year ended December 31, 2008, ART sold the first SoftScan unit, eight Optix units, and add-ons for Optix systems. Also, the Company recognized revenues totaling $1,075,517 from services rendered primarily in past years on behalf of GE Healthcare (“GE”), as ART is completing the transition out of the Optix distribution agreement with GE. During the year ended December 31, 2007, sales resulting from services were not significant.
Gross Margin
During the three-month period ended December 31, 2008, ART generated a total gross margin of $662,940 or 62% from the sale of its products, compared to $757,287 or 56% for the same quarter of 2007. The gross margin generated on the sales of services and other revenues was $64,668 or 77% for the three-month period ended December 31, 2008, compared to $10,590 or 43% for the same quarter in 2007. During the year ended December 31, 2008, ART generated a gross margin of $2,203,185 or 62% from the sales of its products, compared to $1,147,880 or 56% for the year ended December 31, 2007. The gross margin generated on the sales of services and other revenues was $1,340,838 or 94% for the year ended December 31, 2008, compared to $10,590 or 43% for the year ended December 31, 2007. The increase of the product gross margin ratio for the three-month period ended December 31, 2008, compared to the same quarter of the previous year, is primarily due to a different sales product mix whereas the Company sold more of the Fenestra® product. The increase in the product gross margin during the year ended December 31, 2008, compared to the year ended December 31, 2007, mainly resulted from the implementation of a direct sales force, as well as the sale of a SoftScan unit in the first quarter of 2008, where the gross margin on this unit represented almost 100% of the sale, given that this unit was sold as a prototype and therefore expensed as incurred in previous years. The gross margin of 94% on the sales of services and other revenues includes the amounts invoiced to the previous distributor as the majority of the costs associated to these services were incurred in previous years.
Operating Expenses
The Company’s research and development (“R&D”) expenditures for the three-month period ended December 31, 2008, net of investment tax credits, amounted to $594,040, compared to $734,287 for the same period ended December 31, 2007. For the year ended December 31, 2008, R&D expenditures, net of investment tax credits, were $2,704,682, compared to $4,724,842 for the year ended December 31, 2007. The R&D expenditures during the three-month and the twelve-month periods ended December 31, 2008, decreased by $140,247 or 19% and $2,020,160 or 43% respectively, compared to the same periods in 2007. The decrease was related to the medical sector given that the SoftScan product reached important approval milestones in the first quarter of 2007 by obtaining the CE marking for Europe. As well, in the preclinical sector, a decrease in R&D expenses was due to the completion of the research project leading to the new Optix MX2 system. The costs associated with the achievement of these milestones, therefore, did not have to be incurred again in 2008. In 2008, the R&D team continued to support the Optix system and collaborated with clients for the development of applications using the new MX2 version of the system in order to demonstrate the utility of the system in applications such as oncology, cardiology and neurology.
Selling, general, and administrative (“SG&A”) expenses for the three-month period ended December 31, 2008, totaled $1,261,085, compared to $1,339,559 for the same period ended December 31, 2007. SG&A expenses for the year ended December 31, 2008, totalled $5,536,464, compared to $5,045,825 for the year ended December 31, 2007. The SG&A expenses decreased by $78,474 or 6% during the three-month period ended December 31, 2008, and increased by $490,639 or 10% in the year ended December 31, 2008, compared to the same periods of 2007. The decrease of SG&A expenses in the fourth quarter of 2008 compared to 2007 was mainly due to the higher commissions and other direct marketing expenses incurred in 2007. The increase of the SG&A expenses during the year ended December 31, 2008 was mainly due to the hiring of the new direct sales force during the first quarter of 2008, the direct marketing expenses incurred to support the commercialization initiatives, and the estimated costs expected in relation with the transition out of the Company’s exclusive distribution agreement.
The increase of the amortization in the year ended December 31, 2008, is primarily due to the amortization of patents and of deferred development.
The operating expenses for the 2008 fourth quarter decreased by $371,615?or 15% to $2,102,548, from $2,474,163 for the same quarter a year ago. For the 2008 year-end, the operating expenses decreased by $1,361,244 or 13% to $9,069,729 from $10,430,973 for the year ended December 31, 2007. As a result, the operating loss for the 2008 fourth quarter decreased by $331,346 or 19%, to $1,374,940 from $1,706,286 for the same period a year ago. For the 2008 year-end, the operating loss decreased by $3,746,797, or 40%, to $5,525,706 from $9,272,503 compared to the same period in 2007.
For the fourth quarter of 2008, the financial revenues totalled $482,326, compared to financial expenses of $22,693 for the same quarter in 2007. For the year ended December 31, 2008, the Company realized a net financial revenue of $706,476, compared to a financial expense of $162,249 in 2007. The increase in the financial revenues in 2008 compared to 2007 mainly resulted from a foreign exchange gain, as a result of the trend of the fluctuations in value of the U.S. dollar against the Canadian dollar.
There were no current income taxes for the quarters ended December 31, 2008 and 2007, as well as for the year ended December 31, 2008, while there were current income taxes of $811,305 recovered for the year ended December 31, 2007. Income tax recovery in 2007 resulted from the utilization of tax losses to recover income taxes on a gain realized on the disposal of an investment in 2006.
Net Loss
The net loss for the three-month period ended December 31, 2008, was $892,615 or $0.01 per share, compared to $1,683,593 or $0.02 per share for the quarter ended December 31, 2007. The net loss for the year ended December 31, 2008, was $ 4,819,230 or $ 0.05 per share, compared to $8,623,447 or $0.13 per share for the year ended December 31, 2007.
Financial Position
As at December 31, 2008, ART had $3,146,086 in cash and cash equivalents, and a working capital of $4,479,304, compared to a cash and cash equivalent of $3,587,654 and a working capital of $5,119,250 as of December 31, 2007.
The financial statements, accompanying notes to the financial statements, and Management’s Discussion and Analysis for the three-month period ended December 31, 2008, will be available online at www.sedar.com, or at www.art.ca, in the “Investors” section. Summary financial tables are provided below. A detailed list of the risks and uncertainties affecting the Company can be found in the Management’s Discussion and Analysis for the year ended December 31, 2008, and in the Company’s most recent Annual Information Form, available on SEDAR at www.sedar.com.
Conference Call
ART will host a conference call today at 5:00 PM (EDT). The telephone number to access the conference call is (514) 861-1531 when dialing within the Montreal area, or (877) 667-7766 for the rest of North America. Outside of North America, please dial (514) 861-1531. A replay of the call will be available until April 14, 2009. To listen to the replay from the Montreal area, please dial (514) 861-2272, or, (800) 408-3053 for the rest of North America. From outside of North America, please dial (514) 861-2272. The access code for the replay is 2571417#.
About ART
ART Advanced Research Technologies Inc. is a leader in molecular imaging products for the healthcare and pharmaceutical industries. ART has developed products in medical imaging, medical diagnostics, disease research, and drug discovery with the goal of bringing new and better treatments to patients faster. The Optix® optical molecular imaging system, designed for monitoring physiological changes in living systems at the preclinical study phases of new drugs, is used by industry and academic leaders worldwide. The SoftScan® optical medical imaging device is designed to improve the diagnosis and treatment of breast cancer. Finally, the Fenestra® line of molecular imaging contrast products provides image enhancement for a wide range of preclinical Micro CT applications allowing scientists to see greater detail in their imaging studies, with potential extension into other major imaging modalities. ART is commercializing some of these products in a global strategic alliance with GE Healthcare, a world leader in mammography and imaging. ART’s shares are listed on the TSX under the ticker symbol ARA. For more information on ART, visit our website at www.art.ca.
This press release may contain forward-looking statements subject to risks and uncertainties that would cause actual events to differ materially from expectations. These risks and uncertainties are described in the most recent Annual Information Form and the financial statements for the year ended December 31, 2008, available on SEDAR (www.sedar.com).
Financial Statements (in U.S. dollars).
ART Advanced Research Technologies Inc. Balance Sheets (In U.S. dollars) (unaudited) ------------------------------------------------------------------- ------------------------------------------------------------------- December 31, December 31, 2008 2007 ------------------------------------------------------------------- ASSETS Current assets Cash $1,446,086 $561,325 Term deposits, 0.67%, maturing in January 2009 (2007 - 4.05% maturing in January 2008) 1,700,000 3,026,329 Accounts receivable 1,700,365 1,768,146 Investment tax credits receivable 779,682 1,558,709 Inventories 1,168,702 1,510,499 Prepaid expenses 547,127 260,199 ------------------------------------------------------------------- 7,341,962 8,685,207 Property, equipment and assets under capital leases 415,932 551,210 Patents 1,462,918 2,135,855 Deferred development costs 2,383,180 1,268,438 ------------------------------------------------------------------- $11,603,992 $12,640,710 ------------------------------------------------------------------- ------------------------------------------------------------------- LIABILITIES Current liabilities Bank loan $489,956 $605,266 Accounts payable and accrued liabilities 2,224,509 2,652,219 Deferred revenues 112,926 156,167 Deferred grant - 152,305 Current portion of obligations under capital leases 35,267 - ------------------------------------------------------------------ 2,862,658 3,565,957 Obligations under capital leases 39,271 - ------------------------------------------------------------------ 2,901,929 3,565,957 SHAREHOLDERS’ EQUITY Share capital and share purchase warrants 39,142,553 32,217,942 Contributed surplus 4,845,266 4,537,336 Deficit (36,410,691)(31,007,264) Accumulated other comprehensive income 1,124,935 3,326,739 ------------------------------------------------------------------ (35,285,756)(27,680,525) ------------------------------------------------------------------ 8,702,063 9,074,753 ------------------------------------------------------------------ $11,603,992 $12,640,710 ------------------------------------------------------------------ ------------------------------------------------------------------ ART Advanced Research Technologies Inc. Operations (In U.S. dollars) (unaudited) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Three-month periods ended Twelve-month periods ended December 31 December 31 2008 2007 2008 2007 -------------------------------------------------------------------------- Sales Products $1,061,500 $1,359,321 $3,526,325 $2,063,227 Services and other revenues 84,182 24,693 1,428,503 24,693 -------------------------------------------------------------------------- 1,145,682 1,384,014 4,954,828 2,087,920 -------------------------------------------------------------------------- Cost of sales Products 398,560 602,034 1,323,140 915,347 Services and other revenues 19,514 14,103 87,665 14,103 -------------------------------------------------------------------------- 418,074 616,137 1,410,805 929,450 -------------------------------------------------------------------------- Gross margin 727,608 767,877 3,544,023 1,158,470 -------------------------------------------------------------------------- Operating expenses Research and development, net of investment tax credits 594,040 734,287 2,704,682 4,724,842 Selling, general and administrative 1,261,085 1,339,559 5,536,464 5,045,825 Amortization 247,423 400,317 828,583 660,306 -------------------------------------------------------------------------- 2,102,548 2,474,163 9,069,729 10,430,973 -------------------------------------------------------------------------- Operating loss 1,374,940 1,706,286 5,525,706 9,272,503 Financial expenses (revenues) (482,325) (22,693) (706,476) 162,249 -------------------------------------------------------------------------- Loss from operations before income taxes 892,615 1,683,593 4,819,230 9,434,752 Current income taxes (Recovery) - - - (811,305) -------------------------------------------------------------------------- Net loss $892,615 $1,683,593 $4,819,230 $8,623,447 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Basic and diluted net loss (income) per share $0.01 $0.02 $0.05 $0.13 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Basic and diluted weighted average number of common shares outstanding 94,540,592 75,179,179 94,540,592 63,967,183 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Number of common shares outstanding, end of period 94,540,592 94,540,592 94,540,592 94,540,592 -------------------------------------------------------------------------- -------------------------------------------------------------------------- ART Advanced Research Technologies Inc. Cash Flows (In U.S. dollars) (unaudited) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Three-month periods ended Twelve-month periods ended December 31 December 31 2008 2007 2008 2007 -------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss $(892,615) $(1,683,593) $(4,819,230) $(8,623,447) Items not affecting cash Amortization 247,423 400,317 828,583 660,306 Stock-based compensation (27,175) 42,834 84,065 172,242 Deferred share units 48,476 - 48,476 - Gain on disposal of fixed assets - (27,542) Net changes in working capital items Accounts receivable 296,347 (860,155) (372,831) (1,010,929) Investment tax credits receivable (127,108) (640,106) 621,530 (1,101,184) Inventories (60) 488,399 57,746 508,265 Prepaid expenses 160,252 56,094 (443,651) 126,797 Accounts payable and accrued liabilities (246,094) 240,002 119,831 (935,991) Deferred revenues 17,391 157,678 (17,457) 157,678 Deferred grant (129,340) - (123,519) - Income taxes payable - - - (811,304) -------------------------------------------------------------------------- Cash flows from operating activities (652,503) (1,798,530) (4,043,999) (10,857,567) -------------------------------------------------------------------------- INVESTING ACTIVITIES Short-term investments - 1,118,039 - - Proceed on disposal of property and equipement 72,486 Acquisition of property and equipment (8,330) (12,323) (33,300) (125,104) Patents (27,588) (192,320) (186,897) (192,320) Deferred development costs (508,825) (332,234) (1,743,972) (825,869) -------------------------------------------------------------------------- Cash flows from investing activities (544,743) 581,162 (1,891,683) (1,143,293) -------------------------------------------------------------------------- FINANCING ACTIVITIES Bank loan - - - 546,398 Repayment of obligations under capital leases (8,531) - (36,287) - Issue of convertible preferred shares - - 7,100,000 - Common shares and share purchase warrants - 4,982,561 - 8,870,545 Equity issue expenses - (940,771) (584,197) (1,136,174) -------------------------------------------------------------------------- Cash flows from financing activities (8,531) 4,041,790 6,479,516 8,280,769 Effect of foreign currency translation adjustments on cash and cash equivalents (667,084) 68,626 (985,402) 760,809 -------------------------------------------------------------------------- (675,615) 4,110,416 5,494,114 9,041,578 -------------------------------------------------------------------------- Net decrease in cash and cash equivalents (1,872,861) 2,893,048 (441,568) (2,959,282) Cash and cash equivalents, beginning of period 5,018,947 694,606 3,587,654 6,546,936 -------------------------------------------------------------------------- Cash and cash equivalents, end of period $3,146,086 $3,587,654 $3,146,086 $3,587,654 -------------------------------------------------------------------------- -------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS Cash $1,446,086 $561,325 $1,446,086 $561,325 Term deposit 1,700,000 3,026,329 1,700,000 3,026,329 -------------------------------------------------------------------------- $3,146,086 $3,587,654 $3,146,086 $3,587,654 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Supplemental disclosure of cash flow information Interest paid 10,902 13,320 57,031 57,512 Interest received $14,819 $36,160 $66,480 $129,504
Contacts:
ART Advanced Research Technologies Inc.
Jacques Bedard
Chief Financial Officer
514-832-0777
jbedard@art.ca
www.art.ca
