Organogenesis Inc. Reports 1998 Third Quarter Financial Results.CANTON, Mass.--(BW HealthWire)--Nov. 16, 1998-- Period Marked by Increased Educational Activities on Apligraf(R) as well as Progress on Additional Apligraf Indications and VITRIX Growth Seen in Number of Centers Ordering and Re-Ordering Apligraf Organogenesis organogenesis /or·ga·no·gen·e·sis/ (or?gah-no-jen´e-sis) the origin and development of organs.organogenet´ic or·gan·o·gen·e·sis n. The formation and development of the organs of living things. Inc. (AMEX AMEX See: American Stock Exchange :ORG) today reported a $0.19 net loss for the third quarter ending September 30, 1998, compared with a net loss of $0.16 per share for the same period in 1997, as progress continued in laying a strong foundation for the growth of Apligraf(R) sales on the first approved indication approved indication, n 1. reliable signs that a certain remedy should be used. Not synonymous with “authorized.” 2. FDA-approved condition for a drug or other treatment that allows labeling. , and in the advancement of additional indications for Apligraf and other programs in the Company's pipeline. Total revenues for the third quarter 1998 were $0.7 million compared with $0.3 million for the same period in 1997, while total expenses for the third quarter 1998 were $6.4 million compared with $4.7 million for the same period in 1997. Total revenues were $8.4 million for the nine months ending September 30, 1998, up from $3.3 million for the same period in 1997, resulting in a net loss of $0.28 per share for the nine months ending September 30, 1998, down from a net loss of $0.54 per share for the same period in 1997. The 1998 revenue includes $6.75 million in milestone payments received from Novartis Pharma AG, up from $2.5 million in research support from Novartis for the same period in 1997. 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. were $16.7 million for the nine months ended September 30, 1998, down from $18.5 million for the same period last year which included a one-time non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $5.5 million. The increase in R&D and G&A expenses for 1998 is primarily due to expanded clinical and R&D activities aimed at broadening the indications for Apligraf and advancing the research pipeline, increased manufacturing activities to support the US launch of Apligraf and expanded support staff and investor/public relations activities. The Company's lead product, Apligraf, was launched in the US in June 1998 by Novartis Pharmaceuticals Corporation. Apligraf is the first manufactured product with living human cells to demonstrate efficacy in a controlled study and gain 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. Apligraf was approved for marketing on May 22, 1998 for the treatment of venous venous /ve·nous/ (ve´nus) pertaining to the veins. ve·nous adj. Of, relating to, or contained in the veins. venous pertaining to the veins. leg ulcers. Herbert M. Stein, Chairman and Chief Executive Officer, stated, "The third quarter was a period of continued progress for our Company. A growing number of medical centers are ordering and re-ordering Apligraf, creating the introductory ramp-up in product sales. The plan continues to be to establish the business base in 1998 to drive sales growth in 1999. We are pleased that Novartis is expanding its physician education program." Added Mr. Stein, "We are excited about our progress on additional indications for Apligraf that will extend the franchise and reinforce Organogenesis as the leader in tissue engineering. We continue to balance maintaining tight control of expenses with ensuring preparedness for growth in Apligraf sales." Leading Indicators Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of Apligraf Acceptance Underscoring the expanding sales foundation for Apligraf, the number of medical centers that had ordered Apligraf reached 135 by the end of September, up from 8 at the end of June. The number of centers that have re-ordered Apligraf reached 56 by the end of September, up from 2 at the end of June. By the end of October, the number of centers that had ordered Apligraf reached 192, and the number of sites that had re-ordered reached 94. Re-ordering is an important measure of product performance. Physicians report Apligraf usage is being reimbursed, and both physicians and patients have reported to Organogenesis dramatic healing success stories with Apligraf. Medical Education The Company noted that Novartis has increased its educational activities for Apligraf, a critical element of the marketing process given that the product represents a major technological advance. Like human skin, Apligraf is living, all natural and bi-layered. Its lower dermal dermal /der·mal/ (der´mal) pertaining to the dermis or to the skin. der·mal or der·mic adj. Of or relating to the skin or dermis. layer consists of living human fibroblasts Fibroblasts A type of cell found in connective tissue; produces collagen. Mentioned in: Skin Grafting (dermal cells) in a connective connective - An operator used in logic to combine two logical formulas. See first order logic. tissue matrix. Its upper epidermal Epidermal Referring to the thin outermost layer of the skin, itself made up of several layers, that covers and protects the underlying dermis (skin). Mentioned in: Antiangiogenic Therapy, Histiocytosis X epidermal layer consists of living human keratinocytes Keratinocytes Cells found in the epidermis. The keratinocytes at the outer surface of the epidermis are dead and form a tough protective layer. The cells underneath divide to replenish the supply. (epidermal cells Noun 1. epidermal cell - any of the cells making up the epidermis epidermis, cuticle - the outer layer of the skin covering the exterior body surface of vertebrates skin cell - any of the cells making up the skin ). These cells form the differentiated strata of the human epidermis, including the protective stratum corneum stratum cor·ne·um n. The horny outer layer of the epidermis, consisting of several layers of flat, keratinized, nonnucleated, dead or peeling cells. Also called corneal layer, horny layer. . The initial focus of Novartis has been on leaders in the treatment of venous leg ulcers. Novartis is expanding its education of physicians. In late September, Curative curative /cur·a·tive/ (kur´ah-tiv) tending to overcome disease and promote recovery. cu·ra·tive adj. 1. Serving or tending to cure. 2. Health Services health services Managed care The benefits covered under a health contract announced a clinical education program with Novartis to "help educate thousands of Curative Network Wound Care Center medical and clinical associates throughout the country" about Apligraf. Curative manages a network of more than 150 Wound Care Centers(R) nationwide. In addition to one-on-one discussion of Apligraf between sales representatives and clinicians, Novartis is also implementing educational events at medical meetings. Over one hundred physicians attended the Novartis-sponsored symposium, "Wound Care: The Future Is Here" at the American College of Surgeons This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. national meeting the last week of October. A large number of physicians also visited the Apligraf exhibit at this meeting. During the next three weeks, Novartis will be sponsoring major events at two more national meetings - an exhibit at the Art & Science of Wound Management meeting and an exhibit plus an educational symposium at the 25th Annual Symposium on Current Critical Problems. In August, Novartis also began advertising Apligraf in relevant medical journals. Apligraf for Multiple Uses Apligraf is being investigated for multiple uses. The Company has a large pivotal trial underway on Apligraf 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, which is expected to be the next large market for the product. Studies have been completed in burns and in two skin surgery uses. Organogenesis recently initiated a multi-center study to assess the cosmetic outcome of wounds treated with Apligraf compared with standard care. This study is being conducted in wounds due to skin cancer removal, and is believed to be the first large, controlled study of its type. The Company expects to initiate a trial in pressure sores pressure sore n. See bedsore. within the next few months. VITRIX Clinical Trials Expected in 1999 The focus of the Company is on products that can offer a significant advance over alternative approaches for widespread medical needs and can be mass-produced without harvesting tissue from the patient. The Company's pipeline leverages expertise proven with Apligraf, including that in cell biology Cell biology The study of the activities, functions, properties, and structures of cells. Cells were discovered in the middle of the seventeenth century after the microscope was invented. , cell culture and matrix chemistry, as well as in product development, manufacturing, and clinical/regulatory. In addition to broadening the indications for Apligraf, the Company is also rapidly advancing VITRIX. The VITRIX soft tissue replacement product builds on scientific advances and processes the Company developed over many years for Apligraf. Potential markets for VITRIX include dermal tissue replacement. Dermal tissue is the layer of skin below the surface epidermis. It can be lost through surgery, deep wounds and other injury. When lost, dermal tissue is not regenerated by the body, despite its importance to the appearance of the skin and its role in wound healing wound healing Physiology The repair of a wound Steps Inflammation, repair and closure, remodeling, final healing; repair of incisions may be either simple–'clean' wounds with little loss of tissue heal by 'primary intention', or 'dirty' wounds heal by . VITRIX is comprised of healthy human fibroblasts in natural 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. . VITRIX leverages information and processes already established with Apligraf, facilitating its development while reducing the risk typical in new products. Additional potential applications include use in mucosal repair procedures (e.g., periodontal surgery periodontal surgery, (per´ēōdon´t  l),n ) and plastic/reconstructive surgery. Additional products and programs in the pipeline include a bioartificial liver, a small diameter vascular graft, the GraftPatch tissue repair product and the engineered collagen fibrils for female urinary incontinence Urinary Incontinence Definition Urinary incontinence is unintentional loss of urine that is sufficient enough in frequency and amount to cause physical and/or emotional distress in the person experiencing it. and other tissue bulking applications. Organogenesis Inc. designs, develops and manufactures medical therapeutics containing living cells and/or natural connective tissue. The Company's product development focus includes living tissue replacements, cell-based organ assist devices and other tissue-engineered products. Statements in this press release which express, "planned", "expectation" and "anticipation", as well as other statements which are not historical fact, and statements as to product compatibility, design, features, functionality and performance insofar in·so·far adv. To such an extent. Adv. 1. insofar - to the degree or extent that; "insofar as it can be ascertained, the horse lung is comparable to that of man"; "so far as it is reasonably practical he should practice as they may apply prospectively, 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. within the meaning 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 and involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in this press release or in other forward-looking statements presented by management. Factors that might cause such a difference include, but are not limited, to development by the Company's competitors of new technologies or products that are more effective than the Company's, risks of failure of clinical trials, dependence on and retention of key personnel, protection of proprietary technology, compliance with the US Food and Drug Administration regulations, continued availability of raw material for the Company's products, availability of product liability insurance upon commercialization of the Company's products, ability to transition from small-scale manufacturing to full-scale commercial production of products, uncertainty as to the availability of additional capital on acceptable terms, if at all, and the demand for the Company's products, if and when approved. Apligraf(R) is a registered trademark of Novartis. -0-
ORGANOGENESIS INC.
Condensed Consolidated Statements of Operations(a)
(Unaudited, in thousands, except share data)
For the For the
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
---- ---- ---- ----
Revenues:
Research and development
support from related
party $ - $ - $ 6,750 $ 2,500
Product sales to related
party, royalties and
other income 352 144 854 444
Interest income 392 125 785 394
-------- ------- -------- --------
Total revenues 744 269 8,389 3,338
-------- ------- -------- --------
Costs and expenses:
Research and development 4,913 3,827 12,698 10,096
General and administrative 1,521 895 3,933 2,800
Noncash charge for stock
option extension - - - 5,555
-------- ------- -------- --------
Total costs and expenses 6,434 4,722 16,631 18,451
-------- ------- -------- --------
Net loss $ (5,690) $(4,453) $ (8,242) $(15,113)
======== ======= ======== ========
Net loss per common share $ (.19) $ (.16) $ (.28) $ (.54)
======== ======= ======== ========
-0-
SELECTED BALANCE SHEET DATA
(Unaudited, in thousands)
September 30, 1998 December 31, 1997
------------------- -----------------
Cash and investments $ 23,784 $ 6,145
Current assets 25,233 7,072
Current liabilities 2,724 2,229
Working capital 22,509 4,843
Total assets 31,856 13,780
Stockholders' equity 29,132 11,523
(a) The 25% stock dividend paid April 29, 1998 resulted in the
issuance of approximately 5,826,000 additional shares of Common
Stock. All related data in the consolidated financial statements
and notes reflect the stock dividend for all periods presented.
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