LAUSANNE, Switzerland and IRVINE, California, November 3 /PRNewswire-FirstCall/ -- IsoTis OrthoBiologics today reported its results for the third quarter and nine months ended September 30, 2005. Revenues were US$8.1 million for the third quarter of 2005, representing a 37% increase over revenue of US$6.0 million in the third quarter of 2004. For the first nine months of 2005, revenue was US$23.5 million, representing a 24% increase over revenue of US$19.0 million in the same period of 2004.
Revenue Analysis
In the third quarter of 2005, US revenue grew 38% to US$6.8 million compared to US$4.9 million in the third quarter of 2004. For the nine months ended September 30, 2005, US revenue increased 23% to US$19.1 million compared to US$15.5 million for the same period of 2004. In the third quarter of 2005, international revenue grew 27% to US$1.4 million, compared to US$1.1 million for the third quarter of 2004. For the nine months ended September 30, 2005, international revenue grew 30% to US$4.3 million compared to US$3.3 million for the same period of 2004.
Results Comparison
The loss from operations for the third quarter of 2005 was US$2.3 million, down from an operational loss of US$6.2 million for the third quarter of 2004. The company recorded a net loss for third quarter of 2005, of US$1.5 million, against a net loss of US$6.1 million for the third quarter of 2004. The loss from operations for the nine months ended September 30, 2005 was US$7.1 million, down from an operational loss of US$20.4 million for the same period of 2004. Due to foreign exchange gains, the company recorded net income for the nine months ended September 30, 2005, of US$2.4 million, against a net loss of US$18.2 million for the same period of 2004. At September 30, 2005 the company had cash and cash equivalents (including restricted cash) of US$23 million.
Operational Highlights
During the third quarter 2005, IsoTis obtained 510(k) clearance for DynaGraft II Dental; appointed Kathe Liljestrand VP of Marketing; and entered into a 3 year non-exclusive worldwide distribution agreement for DynaGraft(R) II and OrthoBlast(R) II with Lifetek LLC and Endoplant AG, two subsidiaries of PLUS Orthopedics Holding AG.
Outlook 2005
Pieter Wolters, President and CEO of IsoTis OrthoBiologics commented, “We are pleased with the growth of the Company’s sales, the continued uptake of our Accell(R) technology products, and the sustained performance of our first generation DBM products. We believe these achievements are a direct result of our continued investments in competitive marketing, sales, and training programs. We reiterate our guidance of 20% revenue growth over 2004.
We are in the process of formulating our mid to long-term growth strategy, which we expect will involve accelerating our in-house product development programs. In addition, we are exploring external opportunities to add orthobiologics programs and products to our offering. With anticipated increases of our R&D outlay and increased investments in our sales management organization to support our growth targets, we are prioritizing growing the top line to gain critical mass. We expect to be able to sustain our 20% growth rate into 2006.”
Conference Call
The Company will host a conference call at 4:30 p.m. CET (10:30 a.m. ET; 7:30 a.m. PT) today. Access the audiocast via the IsoTis website at www.isotis.com. To participate in the conference call, dial: +41 91-610-5609 (Europe); +44-20-7107-0613 (UK); +1-866-865-5144 (toll free dial in US/Canada); no password required. Digital playback is available for 24 hours after the conference starting at 6 p.m. CET until November 4, 6 p.m. CET, dial: +41-91-612-4330 (Europe); +44-20-7108-6233 (UK); +1-866-416-2558 (US/Canada); Conference ID: 535#. An audio stream of the conference call will also be available on IsoTis’ website through December 30, 2005.
IsoTis OrthoBiologics has a product portfolio with several innovative and proprietary natural and synthetic bone graft substitutes on the market and others in development, an established North American independent distribution network, and an expanding international presence. The company’s main commercial operations are based out of Irvine, CA; its international sales headquarters is based in Lausanne, Switzerland.
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 S.A. 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 competitive sales and marketing environment, the timely commencement and success of IsoTis’ clinical trials and research endeavors, delays in receiving U.S. FDA or other regulatory approvals (a.o. EMEA, CE), market acceptance of the Company’s products, 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 the 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 Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2004, filed with the SEC and to IsoTis’ reports filed from time to time with the Swiss Stock Exchange (SWX), Euronext Amsterdam N.V., and SEDAR at www.sedar.com, as well as the Toronto Stock Exchange (TSX).
IsoTis S.A. Consolidated Statements of Operations-Unaudited US Dollars Three Months Ended Nine Months Ended 30-Sep-05 30-Sep-04 30-Sep-05 30-Sep-04 Revenues Product sales $8,146,900 $5,966,179 $23,450,049 $ 18,971,031 Government grants - - - 37,141 Royalties - - 38,825 - Total revenues 8,146,900 5,966,179 23,488,874 19,008,172 Operating expenses Costs of sales 3,261,653 2,876,280 9,183,912 8,635,445 Research and development 1,735,114 2,448,817 4,171,131 7,910,857 Marketing and selling 3,315,938 3,371,951 9,310,025 9,386,430 General and administrative 2,152,586 2,819,343 7,938,321 11,037,174 Reorganization costs - 615,442 - 2,409,175 Total operating expenses 10,465,291 12,131,833 30,603,389 39,379,081 Loss from operations (2,318,391 (6,165,654) (7,114,515) (20,370,909) Interest income and other 563,197 37,188 1,047,261 267,017 Interest expense and other (32,029) 545,110 (154,490) 402,964 Foreign exchange gain/(loss) 301,706 (481,107) 8,625,190 1,453,157 Net income(loss) before taxes (1,485,517) (6,064,463) 2,403,446 (18,247,771) Provision for income taxes - - - - Net income(loss) $(1,485,517) $(6,064,463) $2,403,446 $(18,247,771) Basic and diluted net income(loss) per share $ (0.02) $ (0.09) $ 0.03 $ (0.26) Weighted average common shares outstanding 70,681,023 69,845,893 70,349,586 69,743,000 IsoTis S.A. Consolidated Statements of Cash Flows-Unaudited US Dollars Nine Months Ended 30-Sep-05 30-Sep-04 Cash flows from operating activities Net income (loss) from continuing operations $ 2,403,446 $ (18,247,771) Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: Depreciation and amortization 2,405,608 4,069,259 Gain of sale of assets (659,898) - Stock-based compensation expense 479,719 211,257 Change in operating assets and liabilities: Inventories (204,946) (3,519,901) Trade receivables (1,753,691) (564,249) Other current assets 646,321 2,272,758 Deferred revenue 136,910 (100,900) Trade and other payables (833,008) 691,955 Restructuring provision (673,197) - Net cash flows used in operating activities 1,947,264 (15,187,592) Cash flows from investing activities Purchase of property, plant and equipment (439,516) (658,900) Purchase of intangible assets - (430,412) Change in restricted cash 1,381,372 749,540 Proceeds from sale of property, plant and equipment and assets 2,590,700 - Net cash flows provided by investing activities 3,532,556 (339,772) Cash flow from financing activities Proceeds from issuance of common shares 865,689 538,133 Repayments of interest-bearing loans and borrowings (6,190,650) (1,227,366) Net cash flows used in financing activities (5,324,961) (689,233) Gain on cash held in foreign currency (8,655,891) (1,696,528) - - Net decrease in cash and cash equivalents (8,501,032) (17,913,125) Cash and cash equivalents at the beginning of the period 25,539,602 50,104,682 - - Cash and cash equivalents at the end of the period $ 17,038,570 $ 32,191,557 IsoTis S.A. Consolidated Balance Sheets-Unaudited September 30, 2005 December 31, 2004 Assets Current assets: Cash and cash equivalents $ 17,038,570 $ 25,539,603 Restricted cash 3,412,021 3,030,402 Trade receivables, net 6,079,543 4,414,341 Inventories 9,358,305 9,295,435 Unbilled receivables 314,104 435,116 Value added tax receivable 22,417 137,122 Prepaid expenses and other current assets 1,070,744 2,297,876 Total current assets 37,295,704 45,149,895 Non-current assets: Restricted cash 2,500,000 4,605,623 Property, plant and equipment, net 1,454,960 3,270,707 Goodwill 16,383,069 16,383,069 Intangible assets, net 14,452,242 16,236,065 Total non-current assets 34,790,271 40,495,464 Total assets $ 72,085,975 $ 85,645,359 Liabilities and shareholders’ equity Current liabilities: Trade payables $ 3,393,886 $ 3,571,784 Accrued liabilities 6,315,670 8,468,782 Deferred revenue 193,808 62,042 Current portion of capital lease 3,973 39,877 obligations Current portion of interest-bearing 1,015,483 6,796,899 loans and borrowings Total current liabilities 10,922,820 18,939,384 Non-current liabilities: Capital lease obligations - - Interest-bearing loans and borrowings 2,298,636 3,067,722 Total non-current liabilities 2,298,636 3,067,722 Total shareholders’ equity 58,864,519 63,638,253 Total liabilities and shareholders’ equity $ 72,085,975 $ 85,645,359
IsoTis OrthoBiologics
CONTACT: For information contact: Hans Herklots, Director IR Rob Morocco,CFO, Tel: +41(0)21-620-6011, +1-949-855-7158, E-mail:hans.herklots@isotis.comrobert.morocco@isotis.com
