LAUSANNE, Switzerland and IRVINE, California, November 9 /PRNewswire-FirstCall/ -- IsoTis S.A. , the orthobiologics company, today reported its results for the third quarter and nine months ended September 30, 2006. Revenues were $10.2 million for the third quarter of 2006, representing a 25% increase over revenues of $8.1 million for the third quarter of 2005. For the first nine months of 2006, revenues were $30.8 million, representing a 31% increase over revenues of $23.5 million for the same period in 2005.
Revenue Analysis
IsoTis’ chief distribution channels are its U.S. network of independent agents and its network of international distributors, while the remaining portion of its revenues is derived from private label agreements. In the third quarter of 2006, revenues from the U.S. network grew 19% to $6.0 million compared to $5.0 million in the third quarter of 2005, while in the nine months of 2006, revenues from the U.S. network grew 18% to $18.0 million, compared to $15.2 million in the first nine months of 2005. In the third quarter of 2006, international revenues grew 44% to $2.4 million compared to $1.7 million in the third quarter of 2005, while in the nine months of 2006 international revenues grew 43% to $7.4 million, compared to $5.2 million in the nine months of 2005.
Results Comparison & Cash Position
The loss from operations for the third quarter of 2006 was $3.1 million, compared to $2.3 million for the third quarter of 2005. In the nine months of 2006, the loss from operations was $7.8 million, compared to $7.1 million in the nine months of 2005. Net loss for the third quarter of 2006 totaled $1.9 million or $0.03 per diluted share as compared with a net loss of $1.5 million or $0.02 per diluted share for the third quarter of 2005. The net loss for the nine months ended September 30, 2006 was $11.9 million or $0.17 per share due in part to the $4.6M negative impact of foreign currency movements on intercompany loans. For the nine months ended September 30, 2005 net income was $2.4 million or $0.03 per share which was primarily due to an $8.6 million favorable impact of foreign currency movements on intercompany loans.
At September 30, 2006, IsoTis had cash and cash equivalents and restricted cash of $20.0 million.
Highlights Third Quarter - Sale of dental assets to Keystone Dental Inc. for $7.4 million - Secured $5 million credit line with SVB Silicon Valley Bank - Appointed Gene Reu. as VP of Operations - Private label agreement with Alphatec Spine
Pieter Wolters, President and CEO of IsoTis said, “I am pleased with our performance in the third quarter. We are reporting our eighth consecutive quarter of revenue growth. With the sale of our dental assets and the credit line, we have considerably strengthened our cash position. We believe our continued growth and our improved financial position provide a solid foundation for our intention to become a U.S. company with a single listing on NASDAQ that we announced earlier this week. We believe that the NASDAQ listing, will allow us to continue to accelerate and sustain our growth. Meanwhile, we reiterate our 2006 guidance of achieving between 25% and 30% revenue growth.”
Business Outlook for 2006
- IsoTis anticipates total revenues for full year 2006 to grow by between 25% and 30%
- IsoTis continues its product and business development efforts aimed at introducing new products
- IsoTis intends to become a U.S. company with a single NASDAQ listing in Q1 of 2007
Conference Call
IsoTis will conduct a conference call today at 4.30 p.m. CET/10.30 a.m. ET/7.30 a.m. PT. 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 6.30 p.m. until November 10, 2006, 6.30 p.m. CET, dial: +41-91-612-4330 (Europe); +44-20-7108-6233 (UK); +1-866-416-2558 (US/Canada); playback ID: 711#. The call will also be webcast live on the IsoTis website at www.isotis.com. The webcast will remain available on IsoTis’ website through December 31, 2006.
IsoTis 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. IsoTis’ main commercial operations are based in Irvine, California, and its international sales headquarters are 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 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, failure to obtain sufficient shareholder support for the exchange offer, inability to list the IsoTis Inc, shares on NASDAQ in a timely manner, if at all, 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 (a.o. EMEA, CE), 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 IsoTis’ Annual Report on Form 20-F for the fiscal year ended December 31, 2005, filed with the SEC and to IsoTis’ 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).
IsoTis S.A. Consolidated Statements of Operations-Unaudited US Dollars Three Months Ended Nine Months Ended 30-Sep-06 30-Sep-05 30-Sep-06 30-Sep-05 - - - - Revenues Product sales $ 10,161,972 $ 8,146,900 $ 30,729,113 $ 23,450,049 Other revenue - - 35,816 38,825 - - - - Total revenues 10,161,972 8,146,900 30,764,929 23,488,874 - - - - Operating expenses Costs of sales 3,630,693 3,261,653 11,304,813 9,183,912 Research and development 1,983,751 1,735,114 5,591,768 4,171,131 Marketing and selling 4,667,770 3,315,938 13,200,975 9,310,025 General and administrative 2,978,011 2,152,586 8,445,734 7,938,321 - - - - Total operating expenses 13,260,225 10,465,291 38,543,290 30,603,389 - - - - Loss from operations (3,098,253) (2,318,391) (7,778,361) (7,114,515) Interest income 161,784 131,427 440,021 385,975 Interest expense (75,735) (31,807) (132,219) (156,555) Foreign exchange gain/(loss) 941,506 301,706 (4,568,038) 8,625,190 Other 146,019 431,548 142,100 663,351 - - - - Net (loss) income before taxes (1,924,679) (1,485,517) (11,896,497) 2,403,446 Provision for income taxes - - - - - - - - Net (loss) income $ (1,924,679) $ (1,485,517) $ (11,896,497) $ 2,403,446 - - - - Basic and diluted net (loss) income per share $ (0.03) $ (0.02) $ (0.17) $ 0.03 - - - - Weighted average common shares outstanding Basic 70,940,713 70,681,023 70,918,356 70,349,586 Diluted 70,940,713 70,681,023 70,918,356 72,407,899 IsoTis S.A. Consolidated Balance Sheets ------------------ ----------------- September 30, 2006 December 31, 2005 ------------------ ----------------- Assets (Unaudited) (Audited) Current assets: Cash and cash equivalents $ 16,909,442 $ 15,714,442 Restricted cash 1,634,357 2,184,063 Trade receivables, net 7,548,822 6,306,518 Inventories 12,921,460 10,020,906 Unbilled receivables 74,069 295,115 Value added tax receivable 120,944 95,505 Prepaid expenses and other current assets 979,227 761,355 ------------------ ----------------- Total current assets 40,188,321 35,377,904 Non-current assets: Restricted cash 1,500,000 2,250,000 Property, plant and equipment, net 3,420,410 1,359,280 Goodwill 16,383,069 16,383,069 Intangible assets, net 11,659,113 13,585,250 ------------------ ----------------- Total non-current assets 32,962,592 33,577,599 ------------------ ----------------- Total assets $ 73,150,913 $ 68,955,503 ------------------ ----------------- Liabilities and shareholders’ equity Current liabilities: Trade payables $ 5,234,565 $ 2,910,114 Accrued liabilities 7,727,924 6,680,989 Deferred revenue 1,342,797 344,719 Current portion of interest-bearing loans and borrowings 2,217,473 1,015,471 ------------------ ----------------- Total current liabilities 16,522,759 10,951,293 ------------------ ----------------- Non-current liabilities: Interest-bearing loans and borrowings 2,083,692 2,043,781 Deferred revenue 5,132,910 - Other long term liabilities 133,266 - ------------------ ----------------- Total non-current liabilities 7,349,868 2,043,781 ------------------ ----------------- 50,716,173 50,644,949 106,655,281 106,212,297 17,631,722 12,932,003 (125,724,890) (113,828,820) ------------------ ----------------- Total shareholders’ equity 49,278,286 55,960,429 ------------------ ----------------- Total liabilities and shareholders’ equity $ 73,150,913 $ 68,955,503 IsoTis S.A. Consolidated Statements of Cash Flows-Unaudited US Dollars Nine Months Ended 30-Sep-06 30-Sep-05 - - Cash flows from operating activities Net (loss) income from continuing operations $ (11,896,497) $ 2,403,446 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization 2,516,901 2,405,608 Bad debt expense 213,709 141,535 Gain (loss) on sale of assets 17 (659,898) Stock-based compensation expense 413,598 479,719 Foreign currency transaction (gain) loss 4,568,038 (8,625,190) Change in operating assets and liabilities: Inventories (2,863,302) (204,946) Trade receivables (1,399,926) (1,895,226) Other current assets 47,521 646,321 Deferred revenue (414,257) 136,910 Trade and other payables 2,854,413 (833,008) Other long term liabilities 133,266 - Restructuring provision - (673,197) -------------- ------------ Net cash flows used in operating activities (5,826,519) (6,677,926) Cash flows from investing activities Purchase of property, plant and equipment (2,633,905) (439,516) Proceeds from sale of dental assets 6,984,277 Proceeds from sale of property, plant and equipment and assets 22,411 2,590,700 Change in restricted cash 1,378,164 1,381,372 -------------- ------------ Net cash flows provided by investing activities 5,750,947 3,532,556 Cash flow from financing activities Proceeds from issuance of common shares 100,610 865,689 Proceeds from interest-bearing loans and borrowings 2,000,000 - Repayment of interest-bearing loans and borrowings (762,090) (6,190,650) -------------- ------------ Net cash flows provided by (used in) financing activities 1,338,520 (5,324,961) (Loss) on cash held in foreign currency (67,948) (30,701) -------------- ------------ Net increase/(decrease) in cash and cash equivalents 1,195,000 (8,501,032) Cash and cash equivalents at the beginning of the period 15,714,442 25,539,602 -------------- ------------ Cash and cash equivalents at the end of the period $ 16,909,442 $ 17,038,570
IsoTis OrthoBiologics
CONTACT: For information contact: Hans Herklots, Director, Tel:+41(0)21-620-6011, E-mail: hans.herklots@isotis.com. IR Rob Morocco, CFO,+1-949-855-7155, robert.morocco@isotis.com
