MONTREAL, Dec. 17 /PRNewswire-FirstCall/ - CryoCath(R) Technologies Inc., the global leader in cryotherapy products to treat cardiovascular disease, today announced financial results for the fourth quarter and year ended September 30, 2007.
“The past year has been packed with positive changes for CryoCath. More than ever, we are now focused on commercialization and growth,” said Jan Keltjens, President & CEO of CryoCath. “Undoubtedly, the sale of the surgical products division at the end of Q3 was the pivotal initiative in this respect, enabling us to concentrate fully on the huge potential offered by the electrophysiology market and atrial fibrillation, in particular. Our focus is on obtaining US approval for our revolutionary Arctic Front system and rapid, profitable growth in Europe. In both areas, we made solid progress in 2007. In the last couple of months of 2007 we were able to resolve supply constraints for Arctic Front and embarked on a solid commercial roll-out plan in Europe. As a result, Arctic Front has started to show its explosive growth potential and has become the largest driver of our growth.
We are also confident with the progress in our pivotal trial in the US. STOP AF continues to be the fastest enrolling trial in this space and is on track to support a late 2009 US Arctic Front approval. Our confidence in the blockbuster potential of Arctic Front is strengthened continuously based on the solid clinical performance and enthusiastic feedback from both our European customers as well as our US investigators. We feel that in 2007 we created the foundation needed to allow us to bring our Arctic Front breakthrough therapy to millions of Paroxysmal AFib patients and create a significant and profitable business.”
FY 2007
For the 12-month period ending September 30, 2007, sales increased 3.4% to reach $39.7 million compared to $38.4 million in fiscal 2006. US disposable EP product sales grew by 2.6% to $12.3 million, whereas outside US disposable revenue, driven by the success of Arctic Front, grew by 17.6% to 8.0 million. Total EP growth in the US was 11.1% to $18.3 million and outside US growth was 20.1% to $10.7 million.
Gross margins in fiscal 2007 were $23.5 million or 59.2% of sales, versus $20.6 million or 53.6% of sales in 2006. This increase in margins is a result of improved focus on the product supply process and the corresponding increase in output and yields, and the increase in sales of our higher margin new generation of products. Excluding the impact of the revenue accrual for returned goods included in the Q4 FY2007 results, but not in FY2006, gross margin for the year would have increased by 0.3% to 59.5%.
Total expenses in fiscal 2007 were $53.5 million, up 4.2% from $51.3 million in fiscal 2006.
Sales and marketing expenses in fiscal 2007 totaled $24.7 million versus $27.4 million for the same period a year ago. This decrease is based on a reduced head count and reduced commissions and other variable expenses as a result of the sale of the surgical portfolio to ATS Medical.
On a 12-month basis, net research and development expenses were $11.9 million versus $10.9 million in fiscal 2006. The increased expenses in research and development are related to additional clinical expenses associated with the enrollment in our STOP AF IDE pivotal trial.
Total administrative expenses in fiscal 2007 were $7.6 million versus $6.0 million for the same period a year ago as the company continued to invest in the resources to build a robust infrastructure required for rapid and sustainable growth.
Other expenses were $1.1 million in fiscal 2007 and $1.8 million in the prior year and are associated with realignment initiatives. The costs in fiscal 2007 are the result of the sale of the surgical business and the Company’s strategy to transition itself into a lean, focused and fast growing electrophysiology cryoablation company.
Interest expense for the year increased as a result of higher debt levels and totaled $2.8 million, an increase of $1.4 million over 2006.
Most of the Company’s sales revenues are denominated in either US dollars or Euros as are a significant amount of our assets. Foreign denominated expenses and liabilities only provide a partial natural hedge against currency fluctuations, which were significant in 2007. As a result the Company incurred a foreign exchange loss in 2007 of $2 million versus $0.2 million last year.
Net loss in fiscal 2007 was $19.0 million or $0.50 per share versus $30.0 million or $0.79 per share in the same period a year ago. This decrease in net loss was aided by the one time gain from the sale of the surgical portfolio to ATS Medical which netted $10.0 million.
On a 12-month basis, the operating burn was $20.3 million versus $19.8 million in 2006. Excluding one time costs related to the sale of the surgical business and the FY07 restructurings, the operating burn in FY2007 would have been $15.3 million.
Q4 2007
The Company’s revenues were $6.6 million in the fourth quarter, a decrease of 30.8% from sales of $9.5 million in the fourth quarter of fiscal 2006. This decline reflects the absence of revenues from the surgical portfolio (sold at the end of the third quarter) offset by a 1.1% increase in EP revenues as compared to the same period last year. US disposable EP product sales declined by 21.4% to $2.7 million, whereas outside US disposable revenue driven by the success of Arctic Front, grew by 10.0% to $1.8 million. Total EP sales in the US declined by 5.4% to $4.4 million while outside US revenue was 16.9% to $2.3 million.
Gross margins in the fourth quarter of fiscal 2007 were $3.4 million, or 51.5% of sales, an increase from 41.1% or $3.9 million from Q4 of fiscal 2006. As with the year, the decrease in gross margin dollars was directly attributable to lower revenues in the quarter, but offset in part by the higher gross margin percentages. Excluding the impact of the revenue accrual for returned goods included in the Q4 FY 07 results, but not in FY06, gross margin for Q4 would have increased by 2.2% to 53.7%.
Total expenses in the fourth quarter of 2007 were $15.7 million, up 8.9% from the fourth quarter of 2006.
The Company’s sales and marketing expenses for the fourth quarter of fiscal 2007 were $5.6 million compared to $7.5 million for the fourth quarter of fiscal 2006, and were associated with lower headcount, reduced commissions and lower variable spending.
Net research and development expenses for the fourth quarter were $3.3 million, compared to $1.6 million for the fourth quarter of fiscal 2006, and were related to higher clinical costs incurred in the STOP AF Trial.
Administrative expenses for the fourth quarter of 2007 were $2.7 million compared to $1.9 million for the fourth quarter ended September 30, 2006, and were related to investment in internal infrastructure to support growth.
The appreciation of the Canadian dollar against the US dollar led to a foreign exchange loss in the fourth quarter of $1.3 million versus nil in the same quarter last year.
CryoCath’s net loss for the fourth quarter ended September 30, 2007 totaled $11.8 million or $0.31 per share compared to a loss of $10.5 million or $0.27 per share in the fourth quarter of fiscal 2006.
Operating burn for the quarter was $10.2 million versus $6.5 million for the fourth quarter of 2006. Excluding one time costs related to the sale of the surgical business and the FY07 restructurings, the operating burn in Q4 2007 would have been $5.9 million.
Working capital was $18 million at September 30, 2007, as compared to $20.9 million on September 30, 2006. At quarter end, CryoCath could access $28.5 million in cash and credit lines comprised of $24.0 million in cash, cash equivalents and short-term investments in addition to $4.5 in unused borrowing facilities.
The Company will host a conference call to discuss the fourth quarter and year-end results on December 17, 2007 at 4:30 p.m. EST. The call will be audio-cast live and archived for 90 days 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 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. The financial results referred to in the press release and accompanying statements are unaudited and may differ from the final audited numbers.
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
