Advanced Tissue Sciences Announces Second Quarter Financial Results.Business Editors & Health/Medical Writers BIOWIRE2K LA JOLLA La Jolla (lə hoi`yə), on the Pacific Ocean, S Calif., an uninc. district within the confines of San Diego; founded 1869. The beautiful ocean beaches, in particular La Jolla shores and Black's Beach, and sea-washed caves attract visitors and , Calif.--(BW HealthWire)--Aug. 13, 2002 Advanced Tissue Sciences, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ATIS ATIS - A Tools Integration Standard ) today announced its financial results for the quarter ended June 30, 2002. Total revenues for the quarter were $6.2 million compared to $5.4 million for the same quarter last year. Total revenues for the six months ended June 30, 2002 were $11.0 million compared to $10.4 million for the six months ended June 30, 2001. The company reported a net loss to common stockholders for the three months ended June 30, 2002 of $8.6 million or $0.12 per share compared to $9.3 million or $0.15 per share for the three months ended June 30, 2001. The company also reported a net loss to common stockholders for the six months ended June 30, 2002 of $16.3 million or $0.22 per share compared to $17.6 million or $0.27 per share for the six months ended June 30, 2001. The Dermagraft joint venture reported sales of TransCyte(R) and Dermagraft(R) to customers of $1.9 million for the second quarter ended June 30, 2002, compared to $0.9 million in the second quarter of 2001. Dermagraft sales in the quarter were $0.7 million compared to $0.1 million in the same quarter last year. For the first six months of the fiscal year, the joint venture reported total sales to customers of $3.0 million, compared to $1.8 million for the first half of 2001. The company's joint venture partner, Smith & Nephew, has said they are on track to achieve between $3 million and $4 million in Dermagraft sales in 2002. The joint venture is continuing to forecast Dermagraft reaching annual sales of about $50 million by 2006. The pass-through payment code for use of Dermagraft for Medicare patients in an outpatient setting became effective at the beginning of the second quarter, on April 1, 2002. Coverage policies for the use of Dermagraft in treating diabetic foot diabetic foot A foot with a constellation of pathologic changes affecting the lower extremity in diabetics, often leading to amputation and/or death due to complications; the common initial lesion leading to amputation is a nonhealing skin ulcer, induced by ulcers Ulcers (Digestive) Definition In general, an ulcer is any eroded area of skin or a mucous membrane, marked by tissue disintegration. In common usage, however, ulcer usually is used to refer to disorders in the upper digestive tract. have now been established to cover about half of the potential Medicare beneficiaries. This is in line with Smith & Nephew's expectations at this stage and they report that they continue to be on plan for their reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. goals. During the quarter, the company received a purchase order and is manufacturing collagen collagen (kŏl`əjən), any of a group of proteins found in skin, ligaments, tendons, bone and cartilage, and other connective tissue. Cells called fibroblasts form the various fibers in connective tissue in the body. for shipment to Inamed Corporation, to enable Inamed to build inventory in anticipation of FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. approval of their collagen submission. "During the past several months, we have made continued progress toward the goals we set for this year," said Arthur J. Benvenuto, chairman, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Advanced Tissue Sciences. "We began the pivotal animal trial for Anginera(TM) -- our potential product for ischemic Ischemic An inadequate supply of blood to a part of the body, caused by partial or total blockage of an artery. Mentioned in: Antiangiogenic Therapy, Subarachnoid Hemorrhage, Ventricular Fibrillation ischemic hearts, received approval from the FDA to begin the pivotal human trial for our periodontal surgery periodontal surgery, (per´ēōdon´t  l),n product, and reported that Inamed had submitted a premarket approval premarket approval Medical devices A scientific and regulatory review by the FDA to ensure the safety and effectiveness of a Class III device, before its approval for marketing. See Advisory panel, Medical device. supplement for human-based collagen. If Inamed's collagen submission is approved by the FDA, it will be our fourth product on the market with more moving through the pipeline." As of June 30, 2002, the company had cash, cash equivalents and short-term investments of $12.8 million. The company believes that its existing working capital, in addition to other sources of funds, will be sufficient to maintain planned operations through 2002. The company may seek other sources of funds, for example, through the issuance of debt or equity securities in public offerings or private placements, through new strategic alliances or collaborative arrangements, or through the expansion or extension of existing strategic alliances. During the next six months, the company expects to receive milestone payments totaling approximately $6 million. These include $3 million from Smith & Nephew for progress on securing Dermagraft reimbursement, $2 million from Inamed upon FDA approval of their collagen submission, and $1 million from Biozhem Cosmeceuticals, Inc. for reaching certain sales goals for their products containing NouriCel(TM). The company also announced today that it is certifying its quarterly financial statements filed with the Securities and Exchange Commission. Chairman, president and CEO, Arthur J. Benvenuto, and chief financial and development officer, Mark Gergen, certified See certification. the company's quarterly report on Form 10-Q Form 10-Q See 10-Q. to be filed for the quarter ended June 30, 2002. "We are pleased to include this certification as part of our continuing commitment to ethical business practices and excellence in corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. ," Benvenuto said. The company will discuss results of the quarter and business outlook in a conference call and webcast today at 4:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (1:30 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ). Detailed information for the conference call and webcast follows: -- Domestic call-in number: 1-800-428-6051 -- International call-in number: 1-973-709-2089 -- Passcode ID: 253827 A replay will be available from 6:30 p.m. EDT on August 13 through 11:59 p.m. EDT on August 20 both by phone and on the Internet. Detailed information for the conference call replay follows: -- Domestic call-in number: 1-800-428-6051 -- International call-in number: 1-973-709-2089 -- Passcode ID: 253827 Internet access See how to access the Internet. will be via the company website at www.advancedtissue.com. Background Information Advanced Tissue Sciences is redefining tissue repair and transplantation with human-based products developed and derived from its patented tissue-engineering technology. The company's efforts are concentrated in four therapeutic areas: wound care; aesthetic and reconstructive re·con·struc·tive adj. 1. Relating to or characterized by reconstruction. 2. Serving to rebuild, restore, or correct the appearance and function of defective, damaged, or misshaped body structures or parts: ; cardiovascular; and orthopedic orthopedic /or·tho·pe·dic/ (-pe´dik) pertaining to the correction of deformities of the musculoskeletal system; pertaining to orthopedics. . Three products are currently on the market: TransCyte, a temporary covering for second- and third-degree burns third-degree burns npl → brûlures fpl au troisième degré third-degree burns third npl → Verbrennungen pl dritten Grades ; Dermagraft, for the treatment of diabetic foot ulcers; and NouriCel for skincare and other aesthetic applications. A strategic partner, Inamed Corporation, is pursuing approval of the company's tissue-engineered, human-based collagen for wrinkle Wrinkle A feature of a new product or security intended to entice a buyer. injections. Other products are in clinical or preclinical trials Noun 1. preclinical trial - a laboratory test of a new drug or a new invasive medical device on animal subjects; conducted to gather evidence justifying a clinical trial preclinical phase, preclinical test . The company has developed strategic alliances designed to unlock longer term product opportunities. These include two joint ventures with Smith & Nephew, a strategic alliance with Inamed and a collaboration with Medtronic. More information on Advanced Tissue Sciences is available at www.advancedtissue.com. Statements in this press release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties. In addition, results for interim periods are not necessarily indicative of results to be expected for the full year. The company may not successfully secure additional funding, its joint venture partner or collaborators may not obtain regulatory approvals or any such approvals may not be obtained on a timely basis, and the company may not receive resulting milestones. Risks and uncertainties exist in the company's operations, including, without limitation, uncertainties related to clinical trials, the ability to obtain the appropriate regulatory approvals, the ability to obtain additional milestones and financing to continue operations when needed, a history of operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and accumulated deficits, the company's reliance on collaborative relationships, the company's ability to manufacture or successfully commercialize products, market acceptance of products, the company's ability to obtain and retain patent protection, as well as other risks detailed from time to time in publicly available filings with the Securities and Exchange Commission including, without limitation, Advanced Tissue Sciences' Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001 and the company's quarterly reports on Form 10-Q for the quarters ended March 31, 2002 and June 30, 2002. The company undertakes no obligation to release publicly the results of any revision to these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. to reflect events or circumstances arising after the date hereof. This caution is made under the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995.
Advanced Tissue Sciences, Inc.
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
------------------ ------------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenues:
Joint venture contracts(1)... $ 5.4 $ 4.7 $ 9.4 $ 9.0
Product sales to
third parties............... -- 0.4 -- 0.4
Contracts and fees........... 0.8 0.3 1.6 1.0
-------- -------- -------- --------
Total revenues............. 6.2 5.4 11.0 10.4
-------- -------- -------- --------
Costs and expenses:
Joint venture contracts(1)... 5.2 4.4 9.2 8.7
Cost of goods sold(2)........ 0.8 1.0 1.2 1.4
Research and development..... 3.3 2.1 5.8 4.2
Selling, general and
administrative(3)........... 3.2 3.9 5.9 7.7
-------- -------- -------- --------
Total costs and expenses... 12.5 11.4 22.1 22.0
-------- -------- -------- --------
Income (loss) from operations
before equity in losses of
joint ventures................ (6.3) (6.0) (11.1) (11.6)
Equity in losses of joint
ventures...................... (2.2) (3.4) (5.0) (6.3)
-------- -------- -------- --------
Loss from operations........... (8.5) (9.4) (16.1) (17.9)
Other income (expense), net.... (0.1) 0.1 (0.2) 0.3
-------- -------- -------- --------
Net loss applicable to
common stock.................. $ (8.6) $ (9.3) $ (16.3) $ (17.6)
======== ======== ======== ========
Basic and diluted loss per
common share.................. $ (.12) $ (.15) $ (.22) $ (.27)
======== ======== ======== ========
Weighted average shares
(millions).................... 73.16 64.20 73.15 64.20
======== ======== ======== ========
Condensed Consolidated Balance Sheets
(In millions)
June 30, December 31,
2002 2001
------------ ------------
(Unaudited)
Assets:
Cash, cash equivalents and
short-term investments................ $ 12.8 $ 30.0
Inventory(2)........................... 7.8 6.6
Other current assets................... 5.2 8.1
Property, net.......................... 9.6 11.0
Other assets........................... 7.1 6.2
------------ ------------
Total assets......................... $ 42.5 $ 61.9
============ ============
Liabilities and stockholders' equity:
Current liabilities.................... $ 12.9 $ 14.1
Long-term liabilities.................. 4.6 5.8
Stockholders' equity................... 25.0 42.0
------------ ------------
Total liabilities and stockholders'
equity.................................. $ 42.5 $ 61.9
============ ============
Footnotes (1) Joint venture contract revenues include sales of Dermagraft(R) and TransCyte(R) to the Dermagraft Joint Venture at cost, and reimbursement for research and administrative expenses incurred by the company on behalf of the Dermagraft and NeoCyte Joint Ventures. Each of the joint ventures is between the company and Smith & Nephew plc. (2) Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold includes costs associated with collagen and NouriCel start-up manufacturing and related product development. At June 30, 2002, collagen work-in-process and finished goods inventory at cost exceeded net estimated realizable value, based upon the price at which we expect to sell the collagen to Inamed, by $0.5 million. Collagen inventory has therefore been written down by $0.5 million in the three- and six-month periods ended June 30, 2002. (3) Selling, general and administrative includes a non-cash gain of $0.7 million in the six months ended June 30, 2002, and a non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) of $1.0 million for the comparable period in 2001, related to a variable stock option. For the quarter ended June 30, 2001, non-cash expense related to the variable stock option was $0.6 million, while for the quarter ended June 30, 2002 there was an immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. non-cash gain. As a result of the variable option treatment, variability in the market price of the company's common stock can result in significant increases and decreases in compensation expense from period to period. |
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