CryoCath Technologies Inc. Announces Fiscal 2007 First Quarter Financial Results

MONTREAL, Feb. 13 /PRNewswire-FirstCall/ - CryoCath Technologies , the global leader in cryotherapy products to treat cardiovascular disease, today announced financial results for the first quarter ending December 31, 2006.

Selected First Quarter Financial and Operating Highlights: - 13.5% increase in revenue over Q1 2006 to $10.1 million - Increase in gross margins to 61.1% of sales vs. 53.6% for fiscal 2006 and 41% for the fourth quarter 2006 - 27% reduction in operating burn rate to $2.1 million - 11% increase in disposable units sold over Q1 2006 to more than 4400 - First patients treated successfully with SurgiFrost(R) XL, subsequent to FDA 510(k) clearance and CE mark approval - Enrolled 41 patients in pivotal STOP AF IDE trial and received FDA approval to expand trial - Appointed Derek Lindsay to CFO Subsequent events - Appointed Jan Keltjens to President & CEO

"Not only did we see improvement in financial metrics like revenue, margin and burn during the first quarter, we were also able to substantially strengthen our management team with the appointment of Derek Lindsay as CFO and subsequent to the quarters end, Jan Keltjens as President & CEO," said Henri Vienneau, Interim CEO and Chairman of the Board of Directors. "Most importantly, we continued to advance Arctic Front with the enrollment of 41 patients in the pivotal STOP AF IDE trial. Now, with FDA approval to expand this trial, we anticipate that patient recruitment will be complete by early fall."

The Company's total sales reached $10.1 million, a 13.5% increase over the $8.9 million for the same quarter last year. Total disposable units sold for the quarter reached $8.5 million, an 11% increase from the same period last year.

Gross margins for the first quarter of fiscal 2007 were $6.2 million, or 61.1% of sales, an increase from the 53.6% level seen in fiscal 2006 and 41% in fourth quarter 2006. Driving the improved margins during the quarter were increased sales of the higher margin disposable units, manufacturing efficiencies and the absence of one-time, non-recurring charges taken in the last three quarters of fiscal 2006.

Net research and development expenses for the quarter ended December 31, 2006 were $2.3 million, a decrease from $2.6 million in the first quarter of last year. Clinical expenditures included in these research and development expenses almost doubled from the clinical expenditures in the first quarter of 2006, reflecting the commencement of our STOP AF IDE pivotal trial. This significant investment was offset by the elimination of the research and development costs for our interventional cardiology projects.

The Company's sales and marketing expenses for the first quarter of 2007 increased to $5.8 million from $5.7 million for the same period last year. As a percentage of sales, sales and marketing expenses declined to 57.2% this year from 63.7% last year.

Administrative expenses for the first quarter of 2007 increased to $1.1 million from $0.9 million in the same period last year as a result of higher professional fees partially offset by the impact of reduced staffing levels implemented in October 2006.

CryoCath's net loss for the first quarter ended December 31, 2006 decreased to $3.5 million or ($0.09) per share from a loss of $4.4 million or ($0.12) per share in the first quarter of fiscal 2006.

Operating burn for the quarter decreased $0.7 million to $2.1 million in first quarter 2007 from $2.8 million in first quarter 2006 and was significantly down from $6.4 million in fourth quarter of fiscal 2006. This reduced burn rate is driven by the cost-cutting initiatives implemented in October 2006 as well as timing issues where some programs expected to commence during the quarter were deferred to the latter part of the year.

Working capital decreased to $20.0 million as of December 31, 2006, a $1.0 million decrease from the $21.0 million as of September 30, 2006. At December 31, 2006, the Company had access to approximately $24.0 million in cash or borrowing facilities. The Company believes that it will continue to be able to access sufficient working capital to meet its current and future requirements.

The Company will host a conference call, and webcast in real time, to discuss the first quarter results on Tuesday, February 13, 2007 at 4:30 pm EST. The webcast will be archived for 12 months at www.cryocath.com

About CryoCath

CryoCath - www.cryocath.com - is a medical technology company that leads the world in cryotherapy products to treat cardiovascular disease. With a priority focus on providing physicians with a complete solution of catheter and surgical products to treat cardiac arrhythmias, CryoCath has multiple products approved in the U.S., across Europe and several ROW countries. The Company is developing additional products to expand its pipeline of products to treat cardiac arrhythmias.

This press release includes "forward-looking statements" that are subject to risks and uncertainties, including with respect to the timing of regulatory trials and their outcome. For information identifying legislative or regulatory, economic, climatic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, see CryoCath's annual report available at www.sedar.com under the heading Risks and Uncertainties in the Management's Discussion and Analysis section.

Balance Sheets (unaudited) As at December 31 September 30 2006 2006 $ $ ASSETS Current Assets Cash and cash equivalents 10,951,466 9,178,123 Cash subject to restrictions 481,250 - Short-term investments held to maturity 1,992,697 5,616,907 Accounts receivables 9,344,125 8,119,660 Investment tax credits receivable 602,968 502,033 Fair value of derivative financial instruments 57,701 - Inventories 6,921,764 7,105,974 Prepaid expenses 956,343 1,044,039 ------------------------------------------------------------------------- Total current assets 31,308,314 31,566,736 Cash subject to restrictions 1,159,375 - Net investments in leases - 5,967 Deferred financing charges - 2,636,636 Consoles at customers' premises 2,029,199 1,858,465 Property, plant, and equipment 3,286,040 3,212,551 Intellectual property 14,844,846 15,194,606 ------------------------------------------------------------------------- 52,627,774 54,474,961 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities 9,981,483 10,201,378 Current portion of long-term debt 970,102 - Current portion of deferred revenue 592,525 491,683 ------------------------------------------------------------------------- Total current liabilities 11,544,110 10,693,061 Long-term debt 22,814,847 22,399,317 Deferred revenue 277,200 228,774 ------------------------------------------------------------------------- Total Liabilities 34,636,157 33,321,152 ------------------------------------------------------------------------- Shareholders' equity Capital stock 180,657,743 180,655,193 Contributed Surplus 7,843,165 7,469,343 Deficit (170,509,291) (166,970,727) ------------------------------------------------------------------------- Total shareholders' equity 17,991,617 21,153,809 ------------------------------------------------------------------------- 52,627,774 54,474,961 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Statement of Operations and Deficit (unaudited) Three months Three months ended ended December December 31, 2006 31, 2005 $ $ Revenues Sales 10,076,565 8,922,380 Cost of sales (including amortization and console write-downs of $667,360; 2005 - $669,962) 3,918,941 3,348,265 ------------------------------------------------------------------------- Gross Profit 6,157,624 5,574,115 Interest income 113,400 166,887 ------------------------------------------------------------------------- 6,271,024 5,741,002 EXPENSES Research and development 2,449,854 2,807,338 Investment tax credits (100,935) (164,048) ------------------------------------------------------------------------- Net research and development 2,348,919 2,643,290 Administrative 1,105,451 947,062 Sales and marketing 5,768,909 5,684,440 Amortization of intellectual property 41,747 53,360 Amortization of property, plant, and equipment 167,891 233,633 Amortization of deferred financing charges 139,993 52,146 Interest on long-term debt 586,374 243,719 Gain on foreign exchange embedded derivative (57,701) - Foreign exchange gain (965,091) (27,044) Non-cash compensation expense 373,822 350,894 Other expenses 299,274 - ------------------------------------------------------------------------- 9,809,588 10,181,500 Net loss and other comprehensive loss (3,538,564) (4,440,498) Deficit, beginning of period (166,970,727) (137,004,265) ------------------------------------------------------------------------- Deficit, end of period (170,509,291) (141,444,763) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per share ($0.09) ($0.12) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares 37,969,619 37,671,040 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Statement of Cash Flows (unaudited) Three Months Three Months Ended Ended December December 31, 2006 31, 2005 $ $ Operating Activities Net loss and other comprehensive income for the period (3,538,564) (4,440,498) Items not affecting cash Non-cash compensation expense 373,822 350,894 Interest on long-term debt 569,342 243,719 Amortization of intellectual property 460,152 320,675 Amortization and write-down of consoles at customers' premises 208,838 327,674 Amortization of property, plant, and equipment 208,008 308,606 Amortization of deferred financing charges 139,993 52,146 Unrealized gain on foreign exchange embedded derivative (57,701) - Unrealized foreign exchange loss (gain) (421,659) 20,519 ------------------------------------------------------------------------- (2,057,769) (2,816,265) Net change in non-cash working capital balances relating to operations (940,332) (1,853,066) Decrease (increase) in net investments in leases 5,967 17,185 Increase in deferred revenue 48,426 889 ------------------------------------------------------------------------- Cash flows used in operating activities (2,943,708) (4,651,257) ------------------------------------------------------------------------- Investing Activities Proceeds from maturities of short-term investments 3,702,613 10,069,350 Acquisition of short-term investments - (2,151,087) Increase in cash subject to restrictions (1,640,625) - Acquisition of intellectual property (110,392) (15,710) Acquisition of property, plant, and equipment (281,497) (243,570) Placement of consoles at customers' premises (426,579) (573,425) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows used in investing activities 1,243,520 7,085,558 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Financing Activities Repayment of employee share purchase loans 2,550 - Increase in deferred financing charges (167) - Increase in long-term debt 3,534,000 - Repayment of long-term debt (220,900) - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows from financing activities 3,315,483 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Effect of exchange rate change on cash and cash equivalents 158,048 (4,778) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net change in cash and cash equivalents 1,773,343 2,429,523 Cash and cash equivalents, beginning of period 9,178,123 652,161 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents, end of period 10,951,466 3,081,684 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents consist of: Cash 7,455,341 945,709 Cash equivalents - commercial paper and other investments with maturities less than 90 days 3,496,125 2,135,975 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 10,951,466 3,081,684 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information Cash paid during the period Interest 18,350 404 ------------------------------------------------------------------------- -------------------------------------------------------------------------

CryoCath Technologies Inc.

CONTACT: visit our website at www.cryocath.com, or contact: Michael Moore,Investor Relations, Phone: (416) 815-0700 ext. 241, Fax: (416) 815-0080,E-mail: mmoore@equicomgroup.com

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