IRVINE, California, May 15 /PRNewswire-FirstCall/ -- IsoTis, Inc , an orthobiologics company, today reported results for the first quarter ended March 31, 2007.
Revenue Analysis
Revenue was $10.0 million for the first quarter of 2007, representing a 2% increase over revenue of $9.8 million for the first quarter of 2006.
IsoTis’ chief distribution channels are its U.S. network of independent distributor agents and its network of international stocking distributors, while the remaining portion of its revenues is derived from private label partners in the United States and internationally.
In the first quarter of 2007, revenue from the U.S. independent distributor agents grew 7% to $6.4 million compared to $6.0 million in the first quarter of 2006; revenue from international stocking distributors decreased 14% to $2.1 million compared to $2.5 million in the first quarter of 2006; and revenue from private label partners grew 22% to $1.1 million compared to $0.9 million in the first quarter of 2006.
Results Comparison & Cash Position
The net loss from operations before minority interest for the first quarter of 2007 was $5.5 million, compared to $3.8 million for the first quarter of 2006. Net loss for the first quarter of 2007 totaled $5.0 million or $0.79 per basic and diluted share as compared with a net loss of $3.8 million or $0.54 per basic and diluted share for the first quarter of 2006. The first quarter results were negatively impacted by several non-recurring items, including approximately $1.6 million of costs for outside advisors and exchange agents in four jurisdictions associated with the Company’s successful transformation to a US-based NASDAQ listed company, and a restructuring charge of $0.6 million for the Dutch facility which is no longer in use by the Company.
At March 31, 2007, IsoTis had cash and cash equivalents and restricted cash of $10.5 million. The net decrease in cash and cash equivalents in the first quarter of 2007 amounted to $ 5.5 million compared to $ 2.3 million in the first quarter of 2006. The first quarter cash flow was negatively impacted by several non-recurring items, including payments of approximately $1.0 million to outside advisors and exchange agents related to the transformation to a US-based NASDAQ listed company, as well as a build-up in inventory of $ 0.9 million. The Company needs and intends to raise additional funds for operations and is actively considering various financing alternatives.
Regulatory update
Further to the Company’s disclosure on February 14, 2007, the Company continues to communicate with the U.S. Food and Drug Administration (FDA) on the regulatory status of our Accell products. Based on these constructive communications, the Company continues to believe the Accell family of products are Class II medical devices that are subject to the 510(k) clearance process, although the Company can make no assurances in this regard. This belief is consistent with the treatment of other competing products, the Company’s prior discussions with the FDA and the 510(k) clearance previously received for Accell Connexus.
Highlights Q1 2007 & Year to Date - Patent for Reverse Phase Medium platform technology (May) - Sale of PolyActive IP Estate for $1.7 million up-front (April) - Appointment of James P. Abraham as SVP Sales (April)
- NASDAQ listing on January 26 after successful completion of exchange offer
Pieter Wolters, President and CEO of IsoTis said, “We are happy to report that the sales of our Accell products showed growth of 13% compared with the same quarter of last year. During the first quarter we faced the uncertainty about the regulatory status of our Accell products, which limited our ability to raise capital from the public market. Given these circumstances, I commend the IsoTis team and our distributors who remained focused on executing our plan.”
Conference Call
IsoTis has scheduled a conference call to discuss these results today May 15, 2007 at 5 p.m. EST (2 p.m. PST, 11 p.m. CET). US Dial In: toll free 1-800-798-2864; toll 1-617-614-6206; UK Dial In 44-20-7365- 8426; Continental Europe Dial In: 41-1-800-9569; password: IsoTis. Digital playback is available from May 15 at 8:00 p.m. for 24 hours. US Dial In: 1-617801-6888; European Dial In 44-20-7365-8427; playback ID: 94317272. To listen to the conference call live via the internet, visit the Investors section of the IsoTis website at www.isotis.com. Please go to the website 15 minutes prior to the call to register, download and install the necessary audio software.
About IsoTis
IsoTis is an orthobiologics company that develops, manufactures and markets proprietary products for the treatment of musculoskeletal diseases and disorders. IsoTis’ current orthobiologics products are bone graft substitutes that promote the regeneration of bone and are used to repair natural, trauma-related and surgically-created defects common in orthopedic procedures, including spinal fusions. IsoTis’ current commercial business is highlighted by its Accell line of products, which the company believes represents the next generation in bone graft substitution.
Certain statements in this press release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including those that refer to management’s plans and expectations for future operations, prospects and financial condition. Words such as “strategy,” “expects,” “plans,” “anticipates,” “believes,” “will,” “continues,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify such forward-looking statements. One can also identify them by the fact that they do not relate strictly to historical or current facts. Such statements are based on the current expectations of the management of IsoTis only. Undue reliance should not be placed on these statements because, by their nature, they are subject to known and unknown risks and can be affected by factors that are beyond the control of IsoTis. Actual results could differ materially from current expectations due to a number of factors and uncertainties affecting IsoTis’ business, including, but not limited to, the Company’s need to raise additional capital to continue operations, a competitive sales and marketing environment, the timely commencement and success of IsoTis’ clinical trials and research endeavors, delays in receiving U.S. Food and Drug Administration or other regulatory approvals (i.e.,. EMEA, CE), including the risk that the FDA determines that our Accell Putty and Accell TBM products are not human tissue or class II medical devices, that the Company is unable to obtain 510(k) clearance for its Accell products, that the FDA requires the Company to obtain premarket approval of its Accell products prior to continuing their marketing, that the FDA requires the Company to produce additional clinical data to support approval or clearance of its products, that the FDA imposes compliance measures against the Company for the marketing of its Accell products, including imposing fines and injunctions or causing the Company to recall its Accell products, market acceptance of IsoTis’ products, effectiveness of IsoTis’ distribution channels, development of competing therapies and/or technologies, the terms of any future strategic alliances, the need for additional capital, the inability to obtain, or meet, conditions imposed for required governmental and regulatory approvals and consents. IsoTis expressly disclaims any intent or obligation to update these forward-looking statements except as required by law. For a more detailed description of the risk factors and uncertainties affecting IsoTis, refer to the Annual Report on Form 20-F for the fiscal year ended December 31, 2006 of IsoTis S.A. (the predecessor to IsoTis, Inc.), and its other reports filed with the SEC, IsoTis S.A.'s reports filed from time to time with the Swiss Stock Exchange (SWX), Euronext Amsterdam N.V., SEDAR at www.sedar.com and the Toronto Stock Exchange (TSX) and the quarterly report on Form 10-Q for the quarter ended March 31, 2007 and other reports filed with the SEC from time to time by IsoTis, Inc.
IsoTis Inc. Consolidated Statements of Operations US Dollars Three Months Ended March 31, 2007 March 31, 2006 (Unaudited) (Unaudited) Revenue Product sales $ 9,974,489 $ 9,778,365 Other revenue - 35,816 Total revenue 9,974,489 9,814,181 Operating expenses Costs of sales 4,004,696 3,693,828 Sales and marketing 4,604,682 4,313,790 General and administrative 5,371,081 2,607,195 Research and development 1,561,021 1,713,821 Impairment of intangible assets Total operating expenses 15,541,480 12,328,634 Loss from operations (5,566,991) (2,514,453) Interest income 106,213 140,835 Interest expense (128,057) (27,860) Foreign exchange gain (loss) 7,034 (1,402,787) Other income 38,405 - Net loss before taxes and minority interest (5,543,396) (3,804,265) Minority interest 498,520 - Provision for income taxes (5,000) - Net loss $ (5,049,876) $ (3,804,265) Basic and diluted net loss per share $ (0.79) $ (0.54) Weighted average common shares outstanding Basic 6,373,735 7,087,316 Diluted 6,373,735 7,087,316 March 31, 2007 December 31, 2006 (Unaudited) Assets Current assets: Cash and cash equivalents $ 7,872,232 $ 13,362,915 Restricted cash 1,599,123 1,659,787 Trade receivables, net 7,686,038 7,463,194 Other receivables 213,234 374,061 Inventories 15,111,769 14,211,189 Prepaid expenses and other current assets 957,641 923,746 Total current assets 33,440,037 37,994,892 Non-current assets: Restricted cash 1,000,000 1,250,000 Property, plant and equipment, net 4,217,118 3,907,175 Goodwill 16,383,069 16,383,069 Intangible assets, net 10,381,626 11,026,656 Total non-current assets 31,981,813 32,566,900 Total assets $ 65,421,850 $ 70,561,792 Liabilities and shareholders’ equity Current liabilities: Trade payables $ 5,581,137 $ 6,707,212 Accrued liabilities 7,529,353 6,560,894 Deferred revenue 1,396,702 1,342,797 Current portion of interest-bearing loans 4,462,235 3,751,201 and borrowings Total current liabilities 18,969,427 18,362,104 Non-current liabilities: Interest-bearing loans and borrowings 1,375,808 1,696,963 Deferred revenue 4,456,939 4,792,638 Other long term liabilities 258,315 279,025 Total non-current liabilities 6,091,062 6,768,626 Minority interest 3,862,907 - 581 709 142,966,585 157,595,924 18,318,985 20,141,408 (124,787,697) (132,306,984) Total shareholders’ equity 36,498,454 45,431,062 Total liabilities and shareholders’ equity $ 65,421,850 $ 70,561,792 Three Months Ended March 31, 2007 March 31, 2006 (Unaudited) (Unaudited) Cash flows from operating activities Net loss from continuing operations $ (5,049,876) $ (3,804,265) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 844,727 831,187 Bad debt expense 8,210 (15,557) Loss on sale of assets - (642) Stock-based compensation expense 378,131 89,669 Foreign currency transaction (gain) loss (7,034) 1,402,787 Minority interest (498,520) - Change in operating assets and liabilities: Inventories (889,775) 21,965 Trade receivables (201,174) (216,208) Other current assets 137,454 (462,626) Deferred revenue (281,794) (207,830) Trade and other payables (143,396) 300,971 Other long term liabilities (20,710) - Net cash flows used in operating (5,723,757) (2,029,435) activities Cash flows from investing activities Purchase of propert, plant and equipment (503,428) (421,138) Change in restricted cash 318,143 250,000 Net cash flows used in investing (185,285) (171,138) activities Cash flow from financing activities Proceeds from issuance of common shares - 97,561 Proceeds from interest-bearing loans and 389,313 - borrowings Repayment of interest-bearing loans and - (253,827) borrowings Net cash flows provided by (used in) 389,313 (156,266) financing activities Gain on cash held in foreign currency 29,046 12,134 Net decrease in cash and cash (5,490,683) (2,344,705) equivalents Cash and cash equivalents at the 13,362,915 15,714,442 beginning of the period Cash and cash equivalents at the end of $ 7,872,232 $ 13,369,737 the period
IsoTis Inc
CONTACT: For information contact: Rob Morocco, CFO, +1-949-855-7155,robert.morocco@isotis.com Hans Herklots, Director IR, +1-949-855-7195 or+41-21-620-6011, hans.herklots@isotis.com
