Micro Therapeutics Reports 1999 Third Quarter Financial Results; Neuro Vascular Product Sales Commence During The Quarter.

IRVINE, Calif.--(BUSINESS WIRE)--Oct. 27, 1999--

Micro Therapeutics Inc. (MTI) (Nasdaq:MTIX) today announced financial results for its third quarter ended September 30, 1999.

Net sales for the three-month period were $917,892, compared with $1,452,998 for the 1998 third quarter. Since a substantial portion of the 1999 third quarter sales were made to Abbott Laboratories, MTI's exclusive distribution partner in the U.S. and Canada for peripheral blood clot therapy products, the company realized lower average selling prices per unit, compared with the corresponding period in 1998, when most sales were made directly to end-user customers. In addition, sales in the 1998 third quarter included an initial stocking order from Abbott of approximately $320,000. Sales also were impacted in the current quarter and nine-month period by manufacturing issues, being addressed by Abbott, related to its thrombolytic drug, Abbokinase(R) (urokinase for injection). The issues surrounding Abbott's ability to supply Abbokinase to the blood clot therapy market correspondingly affected sales of MTI's blood clot therapy products to Abbott.

"Although we continue to support Abbott in addressing the current challenges in the peripheral blood clot therapy product market, we are pleased to report the commencement of sales in the third quarter of MTI's neuro vascular product line," stated George Wallace, MTI's president and chief executive officer. "In the third quarter, MTI received additional marketing clearances for our Equinox(tm) Occlusion Balloon System, and has seen positive reception from physicians in Europe and the U.S. Sales in the third quarter of Equinox and other neuro vascular products amounted to approximately $390,000, and a backlog for neuro vascular products existed at September 30, 1999 that will translate into shipments to customers in the fourth quarter."

Net loss for the quarter was $2,754,326, equal to $.35 per diluted share, compared with $2,243,348, or $.33 per diluted share, in the comparable period of the prior year.

For the nine months ended September 30, 1999, net sales were $2,811,151, compared with $3,397,374 for the similar nine-month period in 1998. Sales for the most recent nine-month period also were affected by the shift in product distribution to Abbott in the U.S. and Canada. Sales of MTI's peripheral blood clot therapy product by Abbott to hospitals were approximately $3.6 million for the nine months ended September 30, 1999, which represented a 16 percent increase from MTI's direct sales to hospitals during the corresponding period of 1998.

Net loss for the current nine-month period amounted to $10,808,141, or $1.49 per diluted share, compared with $6,469,765, or $.97 per diluted share, for the first nine months of 1998. Included in the 1999 results is a non-cash, non-recurring charge of $1,651,585, or $.23 per diluted share, related to the early debt conversion by Abbott of two five-year subordinated notes in advance of their maturity. The conversion resulted in the issuance of 962,628 shares of MTI common stock to Abbott.

Wallace continued: "On the clinical front, MTI made outstanding strides during the third quarter and is continuing this progress into the fourth quarter. In September, we successfully treated our first brain aneurysm patient with our ONYX system, and since then, another three aneurysms have been successfully treated. To date, 225 ONYX procedures have been performed in the treatment of brain aneurysms, head and neck tumors, arterio venous malformations and certain peripheral embolization applications."

"In Japan, three MTI neuro vascular products entered the market in mid-September, including our EASY(R) RIDER Micro Catheter, FLOW RIDER(tm) Flow Directed Catheter and the SilverSpeed(tm) Hydrophilic Guidewire. Japan is a significant market for our products, and we anticipate far-reaching penetration, spearheaded by Century Medical, our exclusive distribution partner in Japan."

Gross profit as a percentage of sales for the current third quarter increased to 50 percent, compared with 48 percent in the prior-year period, which reflects the net effect of two factors. Lower average selling prices per unit received under the distribution agreement with Abbott resulted in a reduced gross profit percentage. This percentage was positively impacted, however, with the commencement of shipments during the third quarter of MTI's neuro vascular products, which bear a higher percentage gross margin, and by a greater proportion of revenues in the 1999 quarter coming from MTI's contractual percentage share of Abbott's hospital sales. For the nine-month period, gross profit as a percentage of sales was 30 percent, compared with 51 percent for the similar period in the prior year. The decrease was due primarily to the lower average selling prices per unit received under the distribution agreement.

Research and development expenses for the current quarter and nine-month period, which include regulatory and clinical expenses, increased 61 percent and 52 percent, respectively, over the prior-year period, due primarily to the costs associated with the continued development of ONYX.

Selling, general and administrative expenses for the 1999 third quarter and nine-month period decreased 37 percent and 15 percent, respectively, from the corresponding periods in 1998. The decrease is attributable to two $500,000 non-refundable payments from Abbott for the continued resource commitment of MTI's sales representatives during the transition of distribution to Abbott in the second and third quarters of 1999, and the company's strategic cost control initiatives implemented during the 1999 third quarter.

Interest expense increased for the current quarter and nine months compared with the prior-year periods due to the higher levels of debt from both the Century Medical distribution agreement signed in September 1998 and a non-cash, non-recurring charge related to the early debt conversion by Abbott.

Cash, cash equivalents and short term investments at September 30, 1999 aggregated $8,937,424, which reflects the operational use during the 1999 third quarter of approximately $2.7 million and the receipt of $2 million from Century Medical in exchange for a convertible subordinated note, as disclosed by the company last week.

Wallace added: "The cash burn rate for the third quarter is substantially below that of preceding quarters, due in part to the receipt of the first of two $500,000 payments from Abbott and to the effects of strategic cost control initiatives implemented during the quarter. Management will continue to apply a strategic focus on the use of cash for the balance of 1999 and throughout the year 2000.

"In addition to our cash balance at September 30, 1999, our cash balance in the 1999 fourth quarter will be strengthened because MTI has exercised a Put Option with Abbott, announced in a separate press release this morning, under which Abbott will purchase newly issued shares of MTI common stock at a price of $12 per share, a substantial premium to the current market price of MTI common stock."

Micro Therapeutics, founded in 1993 and based in Irvine, California, develops, manufactures and markets minimally invasive medical devices for the diagnosis and treatment of vascular disease.

Certain statements in this release are forward-looking and may involve risk and uncertainties, including, but not limited to, current product development, demand and market acceptance risks, the impact of competitive products and pricing, regulatory approval and future product development. More information on factors which could affect Micro Therapeutic Inc.'s financial results is included in the company's prospectus dated February 18, 1997, as well as in its Forms 10-QSB and 10-KSB, filed with the Securities and Exchange Commission. -0-

                       MICRO THERAPEUTICS INC.

                     Statement of Operations Data
                              (Unaudited)


                       Three Months Ended         Nine Months Ended
                      9/30/99     9/30/98       9/30/99      9/30/98

Net sales         $   917,892  $ 1,452,998   $ 2,811,151  $ 3,397,374
Cost of sales         457,934      756,782     1,965,524    1,664,911
Gross profit          459,958      696,216       845,627    1,732,463

Operating expenses:
 Research &
 development        2,089,410    1,300,445     5,699,470    3,751,314
 Selling, general
  & administrative    993,561    1,569,940     3,729,769    4,399,248
Total operating
 expenses           3,082,971    2,870,385     9,429,239    8,150,562

Loss from
 operations        (2,623,013)  (2,174,169)   (8,583,612)  (6,418,099)

Interest & other
 income (expense),
 net                 (131,313)     (69,179)   (2,223,729)     (50,866)

Loss before taxes  (2,754,326)  (2,243,348)  (10,807,341)  (6,468,965)
Income tax expense         --           --           800          800

Net loss          $(2,754,326) $(2,243,348) $(10,808,141) $(6,469,765)

Per share data:
 Net loss         $(2,754,326) $(2,243,348) $(10,808,141) $(6,469,765)
 Net loss per
 share (basic
 and diluted)     $     (0.35) $     (0.33) $      (1.49) $     (0.97)
 Weighted average
 shares outstanding
 (in thousands)         7,808        6,700         7,236        6,686



                      SELECTED BALANCE SHEET DATA
                              (Unaudited)

                                     Sept. 30, 1999    Sept. 30, 1998

Cash, cash equivalents
 and short term investments          $  8,937,424       $ 15,334,881
Working capital                      $  9,998,825       $ 15,506,077
Total assets                         $ 15,590,511       $ 19,254,532
Long term portion of
 debt and capital lease
 obligations                         $ 10,492,031       $ 12,724,680
Accumulated deficit                  $(26,987,074)      $(23,550,419)
Total stockholders' equity           $  2,456,434       $  4,973,759