Cohesion Technologies Reports Fourth Quarter Results.Business Editors & Medical/Health Writers PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif.--(BW HealthWire)--Aug. 8, 2000 Cohesion Technologies, 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 NM: CSON CSON Connell School of Nursing (Boston College) ) today reported financial results for the fiscal year 2000 fourth quarter. Highlights of the three months ended June 30, 2000 and recent weeks include: - Receiving 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. ") marketing approval for CoStasis(R) surgical hemostat hemostat /he·mo·stat/ (he´mo-stat) 1. a small surgical clamp for constricting blood vessels. 2. an antihemorrhagic agent. he·mo·stat n. 1. ("CoStasis"), also known as DynaStat(TM) surgical hemostat ("DynaStat"); - Completing training of the U.S. Surgical ("USSC USSC United States Sentencing Commission USSC United States Supreme Court USSC United States Sanitary Commission (Civil War era forerunner of the Red Cross) USSC United States Space Command ") and Surgical Dynamics, Inc. ("SDI (1) (Serial Digital Interface) A physical interface widely used for transmitting digital video in various formats. For electrical transmission, it uses a high grade of coaxial cable and a single BNC connector with Teflon insulation. ") U.S. sales organizations and supporting the launch of CoStasis/DynaStat in the U.S.; - Presenting compelling preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. data on the Company's surgical adhesive and adhesion prevention materials under development; and - Shipping CoStasis orders to U.S. Surgical and Surgical Dynamics, Inc. hospital accounts. Near-term anticipated milestones for Cohesion include: - Supporting the U.S. launch of CoStasis/DynaStat; - Adding distributors for CoSeal(TM) surgical sealant Sealant A thin plastic substance that is painted over teeth as an anti-cavity measure to seal out food particles and acids produced by bacteria. Mentioned in: Tooth Decay sealant see bone sealant. ("CoSeal") in Europe and launching CoSeal at the European Society for Vascular Surgery Vascular surgery is a subspecialty of general surgery in which diseases of the vascular system, or arteries and veins, are managed, largely via surgical intervention. The vascular surgeon is trained in the diagnosis and management of diseases affecting all parts of the vascular meeting in September 2000; and - Completing enrollment in the CoSeal U.S. clinical study; "Clearly, the highlights of our fiscal fourth quarter and subsequent weeks were the FDA marketing approval of CoStasis and our initial shipments of CoStasis/DynaStat into USSC's and SDI's hospital accounts. We are very pleased with the aggressive efforts initiated by USSC and SDI in the first weeks of launch. Their respective representatives began sales efforts of CoStasis/DynaStat all across the country," said David Foster  This article or section resembles a .Please help [ improve this article] by removing excessive trivia, irrelevant praise and criticism, lists and collections of links that are of . , chief executive officer. "The USSC and SDI sales forces are very enthusiastic about selling CoStasis/DynaStat and we are pleased to be supporting their efforts in bringing CoStasis/DynaStat to surgeons in need of a safe, easy to prepare, easy to use product to control difficult bleeding during surgery." "With regard to CoSeal, we are enrolling patients into our U.S. pivotal study examining the use of CoSeal in sealing vascular grafts. The study is progressing and we anticipate completing enrollment in late fall," added Mr. Foster. "We are also making good progress with the development of our surgical adhesive and adhesion prevention materials, which are expected to address a global market estimated at over $1 billion." Revenues for the fiscal 2000 fourth quarter were $702,000, compared with $943,000 in the comparable quarter of the prior fiscal year. Fourth quarter 2000 revenues include $202,000 of product sales as well as recognition of $500,000 of milestone payments from USSC. Fourth quarter 1999 revenues include $714,000 in sales of NeuColl Inc.'s Collagraft(TM) line of products. Cohesion is no longer consolidating the product sales and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of NeuColl in its financial results as its ownership interest dropped below 50% at the end of the fiscal 2000 third quarter. Current quarter gross margins continue to reflect manufacturing start-up costs for CoStasis. Research, development and regulatory expenses of $2.9 million declined $1.2 million, or 29%, compared with $4.1 million in the prior-year period, due to the timing of research and clinical programs and NeuColl's orthopedic programs being included in the prior-year period spending. Selling, general and administrative expenses of $1.4 million were down 26%, over the prior-year fourth quarter, due primarily to expenses in the prior year quarter for NeuColl and for direct marketing support for CoStasis. During the fiscal 2000 fourth quarter, the Company recorded compensation expense of $186,000 in connection with a cash-out of stock options for Cohesion Corporation, compared with $440,000 in the comparable period in the prior year. The Company expects to record up to an additional $500,000 in cash compensation expense over the next two fiscal years in connection with the cash-out of remaining options. Net gain on investments for the fiscal 2000 fourth quarter was $5.2 million which included proceeds of $808,000 received from equity collars Equity collar The simultaneous purchase of an equity floor and sale of an equity cap. on a portion of the Boston Scientific The Boston Scientific Corporation (NYSE: BSX) (abbreviated BSC), is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a range of interventional medical specialties, including interventional cardiology, peripheral interventions, stock that matured during the quarter and a $4.4 million gain realized upon the business combination of Innovasive Devices (NASDAQ: IDEA) with Johnson & Johnson (NYSE NYSE See: New York Stock Exchange : JNJ JNJ Johnson and Johnson (stock symbol) JNJ Journal of Nursing Jocularity ). For the fiscal 2000 fourth quarter, Cohesion Technologies reported a 35% improvement in operating loss 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. to $4.2 million, compared with an operating loss of $6.5 million in the fiscal 1999 fourth quarter. The fiscal 2000 fourth quarter net income was $2.8 million, or $0.31 per basic share and $0.28 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with net income of $890,000, or $0.11 per basic and $0.10 per diluted share, in the fiscal 1999 fourth quarter. The Company currently holds approximately 726,000 shares of Boston Scientific common stock, 48% of which are hedged with equity collars ranging from $22-$49 per share. The Company expects to continue selling shares of its equity investments on an as-needed basis to fund its operations. The number and timing of shares sold is expected to fluctuate significantly from quarter to quarter due, in part, to the timing of the expiration dates Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. of the equity collars and the prices at which the common stocks are trading, among other factors. As of June 30, 2000, Cohesion Technologies had cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has of approximately $51 million. The Company also had 485,000 shares remaining in its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program as of June 30, 2000. Cohesion Technologies is developing products for the estimated $1.3 billion worldwide surgical hemostasis hemostasis /he·mo·sta·sis/ (he?mo-sta´sis) (he-mos´tah-sis) 1. the arrest of bleeding by the physiological properties of vasoconstriction and coagulation or by surgical means. 2. and sealant markets. For more information on Cohesion Technologies, please visit the Company's web site at www.cohesiontech.com. Except for the historical information contained herein, the matters discussed in this press release are 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. . Such statements are indicated by words or phrases such as "anticipates," "estimates," "projects," "believes," "intends," "expects" and similar words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. . Actual results are subject to risks and uncertainties, including the timing of product introductions, the success of scaling up product production, the timing and terms of sales Terms of sale Conditions under which a firm proposes to sell its goods or services for cash or credit. arrangements with other companies, performance of third-party sales representatives, receipt of regulatory approvals, including approvals from the FDA, clinical efficacy of and market demand for products, results of clinical studies and potential unfavorable publicity regarding Cohesion Technologies or its products, among other matters discussed in this release. Such differences may be based upon factors within the Company's control, such as strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. decisions by management and reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation of internal resources, or on factors outside the Company's control, such as scientific advances by third parties, introduction of competitive products and delays by regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , including approvals from the FDA. Please see the Company's filings with the Securities and Exchange Commission including, without limitation, the Company's 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. and Form 10-Qs Form 10-Q See 10-Q. , which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. The Company disclaims any obligation to update any of the forward-looking statements contained herein to reflect future events or developments.
COHESION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Year Ended
June 30, June 30,
------------------- ----------------
2000 1999 2000 1999(a)
---- ---- ---- ----
Revenues:
Product sales $202 $943 $1,998 $2,594
Other revenue 500 -- 500 --
----- ------ ------ ------
702 943 2,498 2,594
Costs and expenses:
Cost of sales and
manufacturing start
up costs 499 991 3,341 1,984
Research & development 2,856 4,110 12,438 15,292
Selling, general &
administrative 1,381 1,910 6,475 6,841
Compensation expense
related to Cohesion
Corporation stock
options 186 440 1,431 3,385
----- ----- ------ -----
4,922 7,451 23,685 27,502
----- ----- ------ ------
Loss from operations (4,220) (6,508) (21,187) (24,908)
Other income (expense):
Net gain on investments 5,231 7,757 31,763 34,948
Equity in losses of
affiliates (20) -- (20) --
Interest, net 361 18 763 79
------ ----- ------ ------
Income before income taxes 1,352 1,267 11,319 10,119
Provision (benefit) for
income taxes (1,441) 377 2,546 3,918
------ ----- ------ -----
Income before minority
Interest 2,793 890 8,773 6,201
Minority interest in net
loss of consolidated
subsidiary -- -- (133) --
----- ----- ------ ------
Net income $2,793 $890 $8,906 $6,201
====== ===== ====== ======
Earnings per common share $.31 $.11 $1.02 $.73
====== ===== ====== ======
Earnings per common share
assuming dilution $.28 $.10 $.93 $.72
====== ===== ====== ======
Weighted average shares
outstanding 9,128 8,380 8,756 8,550
====== ===== ====== ======
Weighted average shares
outstanding assuming
dilution 9,941 8,628 9,557 8,635
====== ===== ====== ======
(a) NOTE: Amounts derived from audited financial statements at the
date indicated.
COHESION TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, June 30,
2000 1999(a)
--------- --------
ASSETS
Current assets:
Cash and cash equivalents $14,154 $4,239
Accounts receivable, net 78 895
Inventories 2,508 976
Other current assets 1,981 2,142
--------- --------
Total current assets 18,721 8,252
Property and equipment, net 5,881 6,705
Investments in equity securities 37,163 55,401
Other assets 4,055 1,161
--------- --------
$65,820 $71,519
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $920 $1,035
Accrued compensation 629 1,172
Other accrued liabilities 3,151 4,133
Income taxes payable 681 953
Obligation under capital lease 792 --
--------- --------
Total current liabilities 6,173 7,293
Deferred income taxes 10,237 18,985
Obligation under capital lease 2,639 --
Stockholders' equity 46,771 45,241
--------- ---------
$65,820 $71,519
========= ========
(a) NOTE: Amounts derived from audited financial statements at the
date indicated.
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