MONTREAL, May 10 /PRNewswire-FirstCall/ - CryoCath Technologies Inc., the global leader in cryotherapy products to treat cardiovascular disease, today announced financial results for the second quarter, ended March 31, 2006.
Selected Second Quarter Financial and Operating Highlights - Increased revenues by 27% over second quarter of fiscal 2005, from $8.1 million to $10.3 million; - Increased gross margins from 60% in second quarter of 2005 to 63% in second quarter of 2006; - Increased disposable units sold by 31% over second quarter of fiscal 2005, from 3,291 to 4,299; - Installed 55 new surgical and EP console systems; - Reported acute data on 84 patients at European Cardiac Conference; 100% of the cases were considered successful with complete isolation of all pulmonary veins with no adverse events reported; and - Reported data at the Boston Atrial Fibrillation Symposium; 87% of 15 patients treated in the feasibility stage of the STOP AF trial were AF free at 3-month follow up.
“CryoCath experienced another period of solid growth during the second quarter of 2006, as evidenced by a 27% year-over-year increase in revenue and a 3% increase in gross margins,” said Steve Arless, President and CEO. “The European data, plus data from the feasibility stage of the STOP AF trial, continues to reinforce our belief that cryotherapy delivered by Arctic Front has the potential to become a gold-standard solution to treat Atrial Fibrillation.”
The Company’s total sales reached $10.3 million for the second quarter, an increase of 27% over the $8.1 million for the same quarter last year. For the six-month period ending March 31, 2006, sales increased 36% to $19.2 million compared to $14.1 million in the same period a year ago.
Gross margins for the second quarter of fiscal 2006 were $6.5 million or 63% of sales, an increase from $4.8 million or 60% seen in the second quarter of fiscal 2005. On a six-month year-to-date basis, gross margins were $12.2 million or 63% of sales, versus $8.5 million or 60% from the same period a year ago. The increase in margins was partially the result of lower production costs generated by greater production efficiencies with larger volumes and higher U.S. margins.
Net research and development expenses for the quarter ended March 31, 2006 were $3.4 million compared to $2.7 million in the same quarter last year. On a six-month year-to-date basis, R&D expenses were $6.0 million versus $4.8 million in the same period in 2005. The increase can be attributed in large part to expenditures incurred in the feasibility phase of the STOP AF IDE study and in preparation for the follow-on pivotal stage. The Company expects research and development costs to increase as it embarks on the pivotal stage of this study.
Administrative expenses for the second quarter of 2006 increased to $1.4 million from $1.0 million for the same period last year. On a six-month year-to-date basis, administrative expenses were $2.4 million versus, $1.9 million for the same period a year ago. Increases were a result of the Company building for the future as it continues to invest in information technology systems and infrastructure, training, automation and additional human and capital resources.
The Company’s sales and marketing expenses for the second quarter of 2006 increased to $7.2 million compared to $5.9 million in the same period last year. On a six-month year-to-date basis, sales and marketing expenses were $12.8 million versus $11.2 million for the same period a year ago, but decreased as a percentage of sales to 67% from 79%.
CryoCath’s net loss for the second quarter ended March 31, 2006 increased to $6.4 million or ($0.17) per share from a loss of $5.5 million, or ($0.15) per share in the second quarter of fiscal 2005.
While operating burn for the quarter increased to $4.7 million versus $4.1 million in the second quarter of 2005, on a six-month year-to-date basis, the operating burn was reduced to $7.5 million versus $7.8 million in 2005.
Working capital was $24.9 million as of March 31, 2006, a $5.6 million decrease from $30.5 million as of December 31, 2005. The Company as of March 31, 2006 had access to approximately $30.6 million in cash or borrowing facilities. The Company believes it will continue to be able to access sufficient working capital to meet its current and future requirements.
“The Arctic Front data out of Europe is providing us with a first glimpse into the potential of this product in a practical, real world setting. The compelling 100% acute success rates, coupled with encouraging chronic results, are translating into growing enthusiasm on the part of physicians,” said Steve Arless. “However, we continue to control the number of sites participating in the beta-launch until such time as our current manufacturing scale-up issues with Arctic Front are resolved.”
The Company will host a conference call to discuss the second quarter and provide an update on its business on Wednesday, May 10 at 10:00 a.m. (EST) The call will be audio-cast live and archived for 90 days at www.cryocath.com.
About CryoCath
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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 other ROW countries. The Company is developing additional products to expand its pipeline of products to treat cardiac arrhythmias and has development projects for the treatment of cardiac ischemia (angina) and peripheral arterial disease (PAD).
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 March 31 September 30 2006 2005 $ $ ASSETS Current Assets Cash and cash equivalents 13,141,131 652,161 Short-term investments 7,356,176 25,353,537 Accounts receivables 9,730,812 8,019,186 Investment tax credits receivable 852,076 264,104 Inventories 8,308,578 6,767,472 Prepaid expenses 338,689 728,969 ------------------------------------------------------------------------- Total current assets 39,727,462 41,785,429 Net investments in leases 34,097 67,278 Deferred financing charges 1,902,246 1,674,376 Consoles at customers’ premises 3,051,002 2,777,479 Property, plant, and equipment 3,668,852 3,451,016 Intellectual property 16,159,200 16,504,553 ------------------------------------------------------------------------- 64,542,859 66,260,131 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Bank Indebtedness 5,000,000 - Accounts payable and accrued liabilities 9,502,960 7,593,694 Current portion of deferred revenue 329,968 334,962 ------------------------------------------------------------------------- Total current liabilities 14,832,928 7,928,656 Long-term debt 11,509,021 11,007,663 Deferred revenue 112,362 76,446 ------------------------------------------------------------------------- Total Liabilities 26,454,311 19,012,765 ------------------------------------------------------------------------- Shareholders’ equity Capital stock 180,315,216 179,900,284 Other paid-in capital 5,477,941 4,351,347 Deficit (147,704,609) (137,004,265) ------------------------------------------------------------------------- Total shareholders’ equity 38,088,548 47,247,366 ------------------------------------------------------------------------- 64,542,859 66,260,131 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Statement of Operations and Deficit (unaudited) Three months Three months Six months Six months ended ended ended ended March 31, March 31, March 31, March 31, 2006 2005 2006 2005 $ $ $ $ REVENUES Sales 10,279,315 8,059,525 19,201,695 14,105,666 Cost of sales (including amortization of $632,328 and $1,189,830; 2005 - $602,174 and $1,247,641) 3,805,216 3,259,026 7,012,817 5,561,568 ------------------------------------------------------------------------- Gross Profit 6,474,099 4,800,499 12,188,878 8,544,098 Interest income 143,914 261,018 310,801 401,351 ------------------------------------------------------------------------- 6,618,013 5,061,517 12,499,679 8,945,449 EXPENSES Research and development 3,571,725 2,932,299 6,379,063 5,220,033 Investment tax credits (190,270) (242,188) (354,318) (465,811) ------------------------------------------------------------------------- Net research and development 3,381,455 2,690,111 6,024,745 4,754,222 Administrative 1,419,272 994,655 2,366,334 1,872,888 Sales and marketing 7,157,763 5,891,895 12,842,203 11,160,698 Amortization of intellectual property 55,719 47,539 109,079 95,660 Amortization of property, plant, and equipment 311,056 242,229 544,689 440,588 Amortization of deferred financing charges 45,684 48,268 97,830 97,676 Interest on long- term debt 257,639 211,970 501,358 421,535 Foreign exchange loss (gain) (60,065) 153,687 (87,109) 379,754 Non-cash compensation expense 450,000 262,855 800,894 411,258 ------------------------------------------------------------------------- 13,018,523 10,543,209 23,200,023 19,634,279 Net loss (6,400,510) (5,481,692) (10,700,344) (10,688,830) Deficit, beginning of period (141,304,099) (123,619,301) (137,004,265) (118,412,163) ------------------------------------------------------------------------- Deficit, end of period (147,704,609) (129,100,993) (147,704,609) (129,100,993) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per share (0.17) ($0.15) (0.28) ($0.30) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of common shares outstanding 37,706,985 37,574,779 37,688,839 35,735,721 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Statement of Cash Flows (unaudited) Three months Three months Six months Six months ended ended ended ended March 31, March 31, March 31, March 31, 2006 2005 2006 2005 $ $ $ $ OPERATING ACTIVITIES Net loss for the period (6,400,510) (5,481,692) (10,700,344) (10,688,830) Items not affecting cash Non-cash compensation expense 450,000 262,855 800,894 411,258 Interest on long-term debt 257,639 211,970 501,358 421,535 Amortization of intellectual property 317,600 305,774 638,275 580,142 Amortization of consoles at customers’ premises 266,057 225,125 481,271 543,434 Amortization of property, plant, and equipment 415,447 361,043 724,053 660,313 Amortization of deferred financing charges 45,684 48,269 97,830 97,677 Unrealized foreign exchange (gain) loss (94,551) 9,761 (74,032) 212,346 ------------------------------------------------------------------------- (4,742,634) (4,056,895) (7,530,695) (7,762,125) Net change in non- cash working capital balances relating to operations 725,450 (24,961) (1,155,820) (799,196) Decrease (increase) in net investments in leases 15,996 71,549 33,181 7,003 (Decrease) increase in deferred revenue 30,033 (22,469) 30,922 (19,847) ------------------------------------------------------------------------- Cash flows used in operating activities (3,971,155) (4,032,776) (8,622,412) (8,574,165) ------------------------------------------------------------------------- INVESTING ACTIVITIES Proceeds from maturities of short- term investments 17,450,591 3,842,865 27,519,941 8,682,730 Acquisition of short- term investments (7,356,176) (10,263,269) (9,507,263) (23,442,516) Acquisition of intellectual property (277,212) (27,290) (292,922) (40,372) Acquisition of property, plant, and equipment (698,319) (1,588,975) (941,889) (1,872,181) Increase in consoles at customers’ premises (522,790) (325,133) (1,096,215) (713,724) Repayment of employee share purchase loans 16,320 - 16,320 - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows used in investing activities 8,612,414 (8,361,802) 15,697,972 (17,386,063) ------------------------------------------------------------------------- ------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of common shares 398,612 3,799,923 398,612 28,800,222 Share issuance costs - (359,151) - (1,831,502) Increase in deferred financing charges - - - (2,150) Increase (repayment) of bank indebtedness 5,000,000 20,000 5,000,000 (4,490,000) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows from financing activities 5,398,612 3,460,772 5,398,612 22,476,570 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Effect of exchange rate change on cash and cash equivalents 19,576 (2,582) 14,798 (61,833) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net change in cash and cash equivalents 10,059,447 (8,936,387) 12,488,970 (3,545,491) Cash and cash equivalents, beginning of period 3,081,684 16,337,596 652,161 10,946,700 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents, end of period 13,141,131 7,401,209 13,141,131 7,401,209 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash and cash equivalents consist of: Cash 7,679,676 2,418,229 7,679,676 2,418,229 Cash equivalents - commercial paper and other investments with maturities less than 90 days 5,461,455 4,982,980 5,461,455 4,982,980 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 13,141,131 7,401,209 13,141,131 7,401,209 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental cash flow information Cash paid during the period Interest 36,056 5,870 36,460 8,525 ------------------------------------------------------------------------- -------------------------------------------------------------------------
CryoCath Technologies Inc.
CONTACT: For further information visit our website at www.cryocath.com, orcontact: Steve G. Arless, President & CEO, Phone: (514) 694-1212 ext. 224,E-mail: sarless@cryocath.com; Mike Polonsky, Investor Relations, Phone:(416) 815-0700 ext. 231, Fax: (416) 815-0080, E-mail:mpolonsky@equicompgroup.com
