Advanced Tissue Sciences Announces Year-End 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)--Feb. 19, 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 results for the fourth quarter and year ended December 31, 2001. The company reported a loss of 13 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. or $9.1 million for the fourth quarter of 2001, compared to a loss of 5 cents a share or $3.3 million for the same quarter in 2000. For the year ended December 31, 2001, the company lost 43 cents a share or $28.4 million, compared to a loss of 41 cents or $24.6 million in 2000. Fourth quarter 2001 revenues were $8.1 million, compared to $5.8 million in the fourth quarter of 2000. For the year 2001, revenues were $28.9 million, compared to $25.3 million in 2000. Revenues for 2001 include a $5.0 million milestone payment from Smith & Nephew NEPHEW, dom. rel. The son of a person's brother or sister. Amb. 514; 1 Jacob's Ch. R. 207. plc resulting from the approval by the U.S. Food and Drug Administration (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. ) in the third quarter of 2001 of 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. Application for Dermagraft(R) in the treatment of chronic foot 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. in patients with diabetes. By comparison, revenues for 2000 included the recognition of $3.6 million of a $5.0 million licensing payment received from Inamed Corporation in 1999. Grant income increased by $0.7 million in 2001 compared to 2000. In addition, revenues for research and development performed for the Dermagraft and NeoCyte joint ventures decreased by $3.4 million in 2001 compared to 2000, primarily reflecting the completion of the additional clinical trial of Dermagraft in the treatment of 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 and reduced spending in the NeoCyte joint venture. Wound Care Separately, the Dermagraft joint venture with Smith & Nephew reported combined sales of TransCyte(R) and Dermagraft to customers of $1.3 million for the fourth quarter 2001 compared to $1.2 million in the fourth quarter 2000. Combined sales for TransCyte and Dermagraft for the year ended December 31, 2001 decreased to $4.2 million, from sales of $4.3 million in 2000. TransCyte sales were $3.8 million of the total sales reported for the year ended December 31, 2001 as compared to $3.9 million for the year ended December 31, 2000. The decline in TransCyte sales is related to the reduced manufacturing yields reported previously in the second and third quarters. 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: Sales of human-based 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. to Inamed were approximately $4.1 million in the fourth quarter 2001 and $5.3 million for the year, compared to $0.1 million in 2000. As previously announced, a subsidiary of Inamed, McGhan Medical, filed a Premarket Approval supplement with the FDA seeking approval to add our human-based collagen to McGhan's injectable in·ject·a·ble adj. Capable of being injected. Used of a drug. n. A drug or medicine that can be injected. collagen products for wrinkle Wrinkle A feature of a new product or security intended to entice a buyer. treatments. Both companies had anticipated receiving FDA approval in the fourth quarter of 2001. However, Inamed announced in October 2001 that the FDA had requested additional pre-clinical data and asked Inamed to conduct skin-test studies. During the fourth quarter of 2001, Advanced Tissue Sciences continued to ship limited quantities of human-based collagen to Inamed for the purposes of evaluation and testing. However, pre-launch sales of collagen to Inamed have now stopped pending receipt of FDA approval and the subsequent launch of the product in the wrinkle treatment market. The delay in the FDA approval delayed receipt of a $2.0 million milestone payment from Inamed. In addition, the company agreed to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. receipt and recognition of $1.0 million of milestone revenue from one of its cosmeceutical cos·me·ceu·ti·cal n. A cosmetic that has or is purported to have medicinal properties. partners, Biozhem, from 2001 into the fourth quarter of 2002 to more closely reflect the anticipated sales growth of their NouriCel(TM)-based products. Cash Position As of December 31, 2001, the company had cash, cash equivalents and short-term investments of approximately $30 million. During the fourth quarter of 2001, the company received the $5 million milestone payment from Smith & Nephew mentioned above; announced a broad strategic collaboration with Medtronic, Inc. whereby an affiliate of Medtronic simultaneously purchased $20 million of Advanced Tissue Sciences' common stock; and announced the completion of a private placement to a group of institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. led by the State of Wisconsin Investment Board, raising net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $13.5 million. The management of the company believes that existing funds are sufficient to maintain planned operations into 2003. Background Information Advanced Tissue Sciences is redefining tissue repair and transplantation transplantation /trans·plan·ta·tion/ (trans?plan-ta´shun) the grafting of tissues taken from the patient's own body or from another. with human-based products developed and derived from its patented tissue-engineering technology. The company's efforts are concentrated in four therapeutic areas where the body cannot heal itself: wound care; aesthetic and reconstructive; 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 cosmetic markets. The company's tissue-engineered, human-based collagen is awaiting FDA approval for wrinkle 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. No assurances can be given, for example, that the company's current net loss forecast or loss estimate will be indicative of the company's actual burn rate or that the company will successfully obtain regulatory approvals and resulting milestones (or that any such approvals will be obtained on a timely basis). In addition, no assurances can be given that the company will successfully implement its business strategy, develop its current products, or any new products it may pursue, complete clinical trials, or be able to manufacture or successfully commercialize such products. 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 ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. deficits, the company's reliance on collaborative relationships, 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, 2000 and the company's quarterly reports on Form 10-Q Form 10-Q See 10-Q. for the quarters ended March 31, June 30 and September 30, 2001. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or arising after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . Financials Follow:
Advanced Tissue Sciences, Inc.
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
Three Months Years
Ended Ended
December 31, December 31,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
Revenues:
Joint venture
contracts (1)............. $ 3.6 $ 4.6 $ 16.8 $ 20.6
Product sales to
others (2)................ 4.1 0.1 5.3 0.1
Milestones, contracts
and fees (3).............. 0.4 1.1 6.8 4.6
-------- -------- -------- --------
Total revenues........... 8.1 5.8 28.9 25.3
-------- -------- -------- --------
Costs and expenses:
Joint venture
contracts (1)............. 4.3 5.1 16.6 20.4
Cost of goods
sold (2).................. 5.6 0.1 8.3 0.1
Research and
development .............. 1.5 1.6 7.8 7.4
Selling, general and
administrative (4)........ 2.6 0.1 12.5 9.8
-------- -------- -------- --------
Total costs and
expenses................ 14.0 6.9 45.2 37.7
-------- -------- -------- --------
Income (loss) from
operations before
equity in losses of
joint ventures.............. (5.9) (1.1) (16.3) (12.4)
Equity in losses of
joint ventures.............. (3.2) (2.9) (12.4) (13.3)
-------- -------- -------- --------
Loss from operations......... (9.1) (4.0) (28.7) (25.7)
Other income (expense),
net......................... -- 0.7 0.3 1.1
-------- -------- -------- --------
Net loss applicable to
common stock................ $ (9.1) $ (3.3) $(28.4) $(24.6)
======== ======== ======== ========
Basic and diluted loss
per common share............ $ (.13) $ (.05) $ (.43) $ (.41)
======== ======== ======== ========
Weighted average shares
(millions).................. 71.587 64.172 66.069 60.575
======== ======== ======== ========
The presentation of the above income statement has been reformatted to more clearly reflect revenue and cost transactions between us and our joint ventures with Smith & Nephew plc. These transactions are separately presented from transactions with other parties. We believe this provides a clearer segregation segregation: see apartheid; integration. of such transactions than has previously been provided. Prior periods have been reformatted to be consistent with this new presentation.
Condensed Consolidated Balance Sheets
(In millions)
December 31, December 31,
-------------- --------------
2001 2000
-------------- --------------
(Unaudited)
Assets:
Cash, cash equivalents and
short-term investments............ $ 30.0 $ 31.0
Other current assets............... 14.7 9.1
Property, net...................... 11.0 13.7
Other assets....................... 6.2 5.3
-------------- --------------
Total assets..................... $ 61.9 $ 59.1
============== ==============
Liabilities and stockholders' equity:
Current liabilities................ $ 14.1 $ 15.0
Long-term liabilities.............. 5.8 8.3
Stockholders' equity............... 42.0 35.8
-------------- --------------
Total liabilities and stockholders'
equity.............................. $ 61.9 $ 59.1
============== ==============
Footnotes (1) Joint venture contract revenues include sales of Dermagraft(R) and TransCyte(R) to the Dermagraft joint venture at cost and reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. 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) Product sales to others, and 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 , primarily reflect sales of collagen to Inamed Corporation. Cost of goods sold includes costs associated with collagen start-up manufacturing and product development. (3) Contracts and fees for the year ended December 31, 2001 include the recognition of a $5.0 million milestone payment from Smith & Nephew which became due on the approval by the U.S. Food and Drug Administration (FDA) of a Premarket Approval Application (PMA PMA (papillary-marginal-attached), n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation. PMA Progressive muscular atrophy ) for Dermagraft in the treatment of chronic foot ulcers in patients with diabetes. Contracts and fees for the year ended December 31, 2000 include $3.6 million in revenue related to licensing payments previously received from Inamed in 1999. No milestone or licensing payment revenues were recognized in the fourth quarter of 2001, compared to $0.9 million of Inamed licensing fee revenue recognized in the fourth quarter of 2000. (4) Selling, general and administrative includes expense of $0.4 million in the fourth quarter of 2001 and a gain of $2.6 million in the fourth quarter of 2000, related to a variable stock option, exercised through the issuance of a loan. For the years ended December 31, 2001 and December 31, 2000, expense related to this variable stock option was $0.7 million and zero, respectively. 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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