www.cryocath.com
Toronto Stock Exchange Symbol: CYT
MONTREAL, Aug. 5 /PRNewswire-FirstCall/ - CryoCath(R) Technologies Inc., the global leader in cryotherapy products to treat cardiac arrhythmias, today announced financial results for the third quarter, ended June 30, 2008.
“We have established a clear strategy to focus on commercial progress in Europe and obtain PMA approval for Arctic Front in the U.S.,” said Jan Keltjens, President and CEO of CryoCath. “In Europe, our business continues to grow rapidly with both an increased presence and increased unit sales. We entered three new markets during the third quarter launching Arctic Front in Italy, Belgium and Spain and we activated new sites at a record pace of nearly one new user every week, with 12 new sites now using Arctic Front. We also recruited seasoned and senior leadership with the addition of Mr. Vandeputte to oversee and accelerate our growth in Europe. Sales of Arctic Front had a strong finish to the quarter despite a vendor supply constraint for our FlexCath(R) Steerable guiding catheter. This supply constraint has since been fully resolved, but impacted sales in the first two months of the quarter. In the U.S., now that the STOP AF IDE pivotal trial is fully enrolled and all patients have received treatment, we are in the countdown period towards final data. We expect the 12-month follow-up data to be available in the second quarter of calendar 2009, which would enable a product approval in the U.S. by the end of 2009. Access to the large U.S market will allow us to significantly accelerate growth.”
Financial Results
Total revenue for the third quarter of fiscal 2008 was $9.2 million compared with $11.6 million for the third quarter of fiscal 2007, which included sales from the divested surgical business of $3.4 million. For the nine-month period ended June 30, 2008, total revenue was $28.0 million compared with $32.9 million for the corresponding period last year, which included sales from the divested surgical business of $10.8 million.
EP disposable revenues for the third quarter of fiscal 2008 were $6.3 million, or a growth of 14.5%, as compared to $5.5 million for the third quarter of fiscal 2007. U.S. sales of these products were $3.0 million, a 2.8% decrease from the corresponding period last year completely driven by foreign exchange impact. Sales outside the U.S. (OUS) of these products were $3.3 million as compared to $2.4 million, or an increase of 36.4%.
Other EP revenues, which consist of console sales and rentals, as well as various accessories and services, for the third quarter of 2008 were $2.9 million as compared to $2.8 million for the third quarter of fiscal 2007. U.S. sales of these products were $2.0 million as compared to $1.6 million in the third quarter of fiscal 2007. OUS sales of these products were $0.9 million, as compared to $1.2 million in the third quarter of fiscal 2007.
Gross profits for the third quarter of fiscal 2008 were $5.1 million or 56.2% of sales compared to $6.8 million or 58.2% of sales in the third quarter of fiscal 2007. For the nine-month period ended June 30, 2008, gross profits were $15.1 million or 54.0% of sales, compared to $20.0 million or 60.8% of sales from the corresponding period last year. The difference is primarily due to volume loss on the surgical portfolio divestiture. Gross margins grew for the third consecutive quarter and the Company anticipates that gross profit will continue to fluctuate modestly as the sales mix of consoles and higher margin consumables fluctuate. However, the Company remains confident that gross margins will grow to at least 70% once Arctic Front is launched in the U.S.
Net research and development expenses for the third quarter of fiscal 2008 were $4.6 million compared to $3.2 million for the third quarter of fiscal 2007. For the nine-month period ended June 30, 2008, research and development expenses were $10.2 million compared to $8.2 million for the corresponding period in 2007. The difference is directly related to the STOP AF IDE pivotal trial in the United States and Canada and legal fees.
Sales and marketing expenses for the third quarter of fiscal 2008 were $5.4 million compared to $6.6 million for the third quarter of fiscal 2007. For the nine-month period ended June 30, 2008, sales and marketing expenses were $15.1 million compared to $18.6 million for the corresponding period in 2007. The change is a result of the surgical portfolio divestiture with the elimination of commissions and fees combined with increasing efficiencies in the sales and marketing process which was partially offset by an increase in certain investments made in Europe to increase the Company’s presence in the region to support Arctic Front.
Administrative expenses for the third quarter of fiscal 2008 were $2.7 million compared to $2.0 million for the third quarter of fiscal 2007. For the nine-month period ended June 30, 2008, administrative expenses were $8.0 million compared to $5.9 million for the corresponding period in 2007. The change is primarily related to investments in resources to build a robust infrastructure required to support rapid, sustainable growth while continuing the required programs on controls and compliance.
CryoCath’s net loss for the third quarter of fiscal 2008 was $7.9 million or ($0.20) per share compared to a gain of $2.4 million or $0.06 per share in the third quarter of fiscal 2007. Excluding the $10.1 million from the sale of the surgical portfolio, net loss for the third quarter of fiscal 2007 was $7.8 million or ($0.20) per share.
Operating burn for the third quarter of fiscal 2008 was $6.4 million compared to $4.7 million in the third quarter of fiscal 2007. For the nine-month period ended June 30, 2008, the operating burn was $16.1 million compared to $10.0 million for the corresponding period in 2007. Variations are mainly due to the divested surgical business combined with the impact of interests on long-term debt no longer capitalized and unrealized foreign exchange variations.
EBITDA for the third quarter of fiscal 2008 was at ($6.3) million, compared to $3.7 million for the third quarter of fiscal 2007. EBITDA for the corresponding period for 2007 was ($6.4) million, excluding the $10.1 million from the sale of the surgical business. For the nine-month period ended June 30, 2008, EBITDA was ($15.6) million as compared to ($3.4) million for the corresponding period last year. Excluding the sale of the surgical business, EBITDA was ($13.5) million for the nine-month period ended June 30, 2007.
As of June 30, 2008, the Company had access to approximately $28.6 million in cash and borrowing facilities as compared to $15.9 million at the end of March, 2008.
Notice of Conference Call
CryoCath will host a conference call to discuss the third quarter results and provide an update on its business today, on Tuesday, August 5, 2008, at 9:00 a.m. (ET) hosted by Mr. Jan Keltjens, President and Chief Executive Officer and Mrs. Ginette Gagne, Chief Financial Officer. To access the conference call by telephone, dial 416-644-3427 or 1-866-250-4892. The call will be audiocast live from CryoCath’s website and archived for 90 days.
Complete financials will be filed at www.sedar.com.
About CryoCath
CryoCath - www.cryocath.com - is a medical technology company that leads the world in cryotherapy products to treat cardiac arrhythmias. With annual sales in excess of $40 million, its products are routinely used in more than 500 centers around the world. The Company’s flagship product, Arctic Front, is a minimally invasive cryo-balloon catheter designed specifically to treat Atrial Fibrillation, an emerging $2 billion market opportunity. Marketed in Europe and the subject of a pivotal study in the United States, Arctic Front has been used to treat 3,100 patients.
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.
CONTACT: visit our website at www.cryocath.com, or contact: Ross Marshall,
Investor Relations, Phone: (416) 815-0700 ext. 238, Fax: (416) 815-0080,
E-mail: rmarshall@equicomgroup.com
