WILMINGTON, Mass., Feb. 14 /PRNewswire-FirstCall/ -- CardioTech International, Inc. , a developer and manufacturer of advanced medical device products treating cardiovascular disease, today announced financial results for its third quarter and nine months ended December 31, 2005.
For the fiscal quarter ended December 31, 2005, revenues were approximately $5.5 million as compared to approximately $5.3 million for the comparable prior year period, a 3.9% increase. Net loss for the three months ended December 31, 2005 was $958,000, or $0.05 per basic and diluted share, as compared to a net loss of $652,000, or $0.04 per basic and diluted share, for the comparable prior year period.
For the nine months ended December 31, 2005, revenues were approximately $17.1 million, as compared to approximately $16.1 million for the comparable prior year period, a 6.6% increase. Net loss for the nine months ended December 31, 2005 was $1,810,000, or $0.09 per basic and diluted share, compared to a net loss of $968,000, or $0.05 per basic and diluted share, for the comparable prior year period.
There were several important strategic developments involving the Company’s technology and operations during the past quarter.
Technology
In September 2005, the Company received FDA approval for its heparin coated products for the cardiopulmonary bypass surgery market. The Company is currently applying for CE Mark (marketing approval) in Europe for its heparin coated products and anticipates approval in calendar year 2006.
In January 2006, CardioTech was advised by the Notified Body that it is currently in the final stages of an independent clinical review of the CardioPass(TM) synthetic Coronary Artery Bypass Graft (“CABG”) dossier for “no-option” patients. A Notified Body is a European equivalent to the FDA that has the authority to grant a company the CE Mark for a medical device.
CardioTech has made the strategic decision to apply for an Investigational Device Exemption (“IDE”) with the FDA, while simultaneously pursuing the CE Mark. The Company has initiated discussions with thought-leaders in the cardiac surgical field for them to become Principal Investigators in a clinical trial. The trial will target “no-option” patients with insufficient autologous blood vessels who face imminent death from end-stage coronary artery disease. CardioTech’s clinical end points are patient survivability, quality of life, freedom from angina, and graft patency.
Dr. Michael Szycher, CEO and Chairman, CardioTech, said, “The Company is embarking upon an aggressive strategy for the CardioPass in Europe and the U.S. The attainment of a positive recommendation by the ‘independent clinical review’ would represent a meaningful step towards the receipt of a CE Mark for CardioPass. The start of an IDE represents a major milestone for any company developing a synthetic coronary bypass graft. We estimate that annually there are more than 100,000 ‘no-option’ patients each in Europe and the United States that can benefit from this technology. We are committed to working with regulatory agencies domestically and abroad in order to making our synthetic coronary bypass graft a viable alternative for ‘no-option’ patients suffering from cardiovascular disease.”
Operations
Sales of medical devices increased by 4.6% to $4,958,000 and by 8.1% to $15,550,000 for the three and nine months ended December 31, 2005, respectively. The Company did experience erosion of its gross margin resulting from: (i) provision for a voluntary recall of certain cardiopulmonary products resulting in decreases in gross margins of 3.9% and 1.2% for the three and nine months ended December 31, 2005, respectively, (ii) pilot production during the period for new products in our private-label manufacturing line for a major customer, (iii) a change in product mix to a higher percentage of lower margin, private-label products, and (iv) increased raw material costs for the cardiopulmonary products resulting from inflationary pressures on petrochemical-based supplies.
Dr. Szycher further commented, “We were faced with several operational challenges in our cardiopulmonary and private-label products businesses this recent quarter. The voluntary recall of certain cardiopulmonary bypass products allowed us to resolve an isolated quality issue, and we are pleased with our proactive steps to meet our customers’ needs. Our private-label products business has made significant strides in establishing its production line for a major customer and is working towards improving production efficiencies while ramping up production capacity to meet demands for increased product quantity.”
Company Conference Call and Replay
Management will host a conference call on Tuesday, February 14, 2006 at 4:10 PM Eastern Time to review the financial results and other corporate events, followed by a Q&A session. The call can be accessed by dialing: 866- 814-1913 and entering the pass code: 856812. Participants are asked to call the assigned number approximately 5 minutes before the conference call begins. A replay of the conference call will be available approximately three hours after the call through March 17, 2006 by dialing: 888-266-2081 and entering pass code: 856812.
About CardioTech
CardioTech International, Inc. is a medical device company that develops, manufactures and sells advanced products to surgically treat cardiovascular disease. The company is currently developing new products that address annual worldwide markets exceeding $1 billion. CardioPass is the Company’s proprietary, synthetic coronary artery bypass graft and CardioTech has partnered to develop a drug-eluting stent.
The company’s corporate headquarters are located in Wilmington, Massachusetts, with operations in California and Minnesota. The company generates revenues from sales of advanced medical devices and disposables used during cardiopulmonary bypass procedures, as well as from contracted product design and development services. More information can be found about CardioTech at its website: http://www.cardiotech-inc.com.
CardioTech believes that this press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties. Such statements are based on management’s current expectations and are subject to facts that could cause results to differ materially from the forward-looking statements. For further information you are encouraged to review CardioTech’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the period ended March 31, 2005, and Quarterly Reports on Form 10-Q for the periods ended June 30, 2005, September 30, 2005, and December 31, 2005. The Company assumes no obligation to update the information contained in this press release
For more information, please contact: CardioTech International Inc. Michael Szycher Ph.D. CEO and Chairman Eric G. Walters Vice President and CFO 978-657-0075 Catalyst Financial Resources, LLC Tom O’Brien 716-830-6611 CardioTech International, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share amounts) December 31, March 31, 2005 2005 ASSETS Current assets: Cash and cash equivalents $6,275 $7,469 Accounts receivable-trade, net 3,157 3,399 Accounts receivable-other 269 231 Inventories 5,420 4,802 Prepaid expenses and other current assets 230 195 Total current assets 15,351 16,096 Property, plant and equipment, net 4,283 4,549 Amortizable intangible assets, net 632 776 Goodwill 1,638 1,638 Other assets 183 198 Investment in CorNova, Inc. 372 505 Total assets $22,459 $23,762 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $1,576 $1,664 Accrued expenses 668 652 Deferred revenue 185 263 Total current liabilities 2,429 2,579 Deferred rent 134 173 Stockholders’ equity: Preferred stock; $.01 par value; 5,000,000 shares authorized; 500,000 shares issued and none outstanding as of September 30, 2005 and March 31, 2005, respectively -- -- Common stock; $.01 par value; 50,000,000 shares authorized; 19,533,693 and 19,258,989 shares issued and outstanding as of December 31, 2005 and March 31, 2005, respectively 195 192 Additional paid-in capital 35,872 35,263 Accumulated deficit (16,080) (14,270) Accumulated other comprehensive loss (91) (175) Total stockholders’ equity 19,896 21,010 Total liabilities and stockholders’ equity $22,459 $23,762 CardioTech International, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Nine Months Ended Ended December 31, December 31, 2005 2004 2005 2004 Revenues: Product sales $5,240 $5,085 $16,452 $15,543 Royalties 229 178 692 540 5,469 5,263 17,144 16,083 Operating expenses: Cost of product sales 4,463 3,982 13,346 11,554 Research and development 358 436 1,061 976 Selling, general and administrative 1,482 1,492 4,430 4,485 6,303 5,910 18,837 17,015 Loss from operations (834) (647) (1,693) (932) Other income, net 9 10 99 1 Equity in net loss of CorNova, Inc. (133) (15) (216) (37) Net loss $(958) $(652) $(1,810) $(968) Net loss per common share, basic and diluted $(0.05) $(0.04) $(0.09) $(0.05) Shares used in computing net loss per common share, basic and diluted 19,499 17,795 19,369 17,713
CardioTech International, Inc.
CONTACT: Michael Szycher Ph.D., CEO and Chairman, or Eric G. Walters, VicePresident and CFO, +1-978-657-0075, both of CardioTech International Inc.;or Tom O’Brien of Catalyst Financial Resources, LLC, +1-716-830-6611
Web site: http://www.cardiotech-inc.com//
