Advanced Tissue Sciences (ticker: ATIS, exchange: NASDAQ Global Market (.O))
News Release -
13-Aug-2001
Advanced Tissue Sciences Announces Second Quarter Financial Results LA JOLLA, Calif.--(BW HealthWire)--Aug. 13,
2001--Advanced Tissue Sciences, Inc. (Nasdaq: ATIS) today announced its
financial results for the quarter ended June 30, 2001. Total revenues for the
quarter were $5.4 million compared to $6.3 million for same quarter last year.
Total revenues for the six months ended June 30, 2001 were $10.4 million
compared to $13.7 million for the six months ended June 30, 2000.
The Company reported a net loss to common stockholders
for the three months ended June 30, 2001 of $9.3 million or $0.15 per share
compared to $7.4 million or $0.12 per share for the three months ended June 30,
2000. The Company also reported a net loss to common stockholders for the six
months ended June 30, 2001 of $17.6 million or $0.27 per share compared to $15.8
million or $0.27 per share for the six months ended June 30, 2000.
"The results reflect an increase in manufacturing
staffing to gear up for collagen production and other investments in management
and infrastructure to support anticipated product launches and implementation of
the company's strategy," said Nikhil A. Mehta, Chief Financial Officer of
Advanced Tissue Sciences. "Looking ahead at the rest of this year, we
expect increased revenue from collagen sales as well as milestone payments from
our partners to have a positive impact on our earnings and cash flow."
Total revenues for the quarter included $0.4 million in
sales of collagen to Inamed Corporation. In May, Inamed and Advanced Tissue
Sciences announced a filing with the U.S. Food and Drug Administration (FDA) of
a Pre-Market Approval amendment by McGhan Medical Corporation, a subsidiary of
Inamed, seeking the FDA's approval to change McGhan Medical's injectable
collagen from bovine collagen to human-based collagen developed by Advanced
Tissue Sciences. Clearance of the PMA amendment filing by the FDA would permit
Inamed to market an injectable form of tissue-engineered, human-based collagen
for wrinkle treatment.
Advanced Tissue Sciences chairman and CEO, Arthur J.
Benvenuto, said that the commercialization of collagen and these early sales
reflect an important component of the company's business strategy. "While
the collagen sales figures only relate to the last part of the second quarter,
they are worth noting because they are the first revenues coming from products
other than TransCyte and Dermagraft. In addition, the marketing of collagen
represents an expansion of our product portfolio outside the third-party payment
arena."
The Dermagraft joint venture reported sales of
TransCyte(R) and Dermagraft(R) to customers of $0.9 million for the second
quarter ended June 30, 2001, compared to $1 million in the second quarter of
2000. TransCyte sales in the quarter decreased over the same quarter of 2000 by
7%, to $0.8 million. While product demand for TransCyte was strong, the decrease
in TransCyte sales was a result of a reduction in manufacturing yields, limiting
the company's ability to fill orders in the first part of the quarter. The joint
venture management has implemented corrective steps to increase yields and
production. For the first six months of the fiscal year, the joint venture
reported that TransCyte sales increased 4.1% to $1.6 million.
As of June 30, 2001, the Company had cash, cash
equivalents and short-term investments of approximately $11.5 million. Assuming
required regulatory approval of Dermagraft and human-based collagen by the FDA
and the launch of NouriCel, which would trigger milestone payments from
partners, management believes the company has sufficient funds to support
planned operations into the fiscal year 2002. The company will seek additional
funding as necessary from the most appropriate sources. These funds could come
from additional collaborative arrangements or the extension of existing
arrangements as well as public or private offerings of debt or equity securities
or other means.
Background Information
Advanced Tissue Sciences is a tissue engineering company
utilizing its proprietary core technology to develop and manufacture human-based
tissue products for tissue repair and transplantation. The company has two joint
ventures with Smith & Nephew. The first covers the application of Advanced
Tissue Sciences' tissue engineering technology for skin wounds and includes
Dermagraft for the treatment of diabetic foot ulcers, TransCyte for the
temporary covering of second and third-degree burns, and future developments for
venous ulcers, pressure ulcers, burns and other non-aesthetic wound care
treatments. The second joint venture is developing tissue-engineered orthopedic
cartilage, initially focusing on the repair of cartilage in knee joints. The
company also has a strategic alliance with Inamed Corporation for the
development and marketing of several of Advanced Tissue Sciences' human-based,
tissue-engineered products, such as collagen for aesthetic and certain
reconstructive applications. In addition, the company is developing products
such as NouriCel(TM) for skincare and cosmetic markets and other products for
cardiovascular applications. For more information on Advanced Tissue Sciences,
visit our web site 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. No assurances can be
given, for example, that the company will successfully secure additional funding
or obtain regulatory approvals and resulting milestones (or that any such
approvals will be obtained on a timely basis). Such funding would be required to
support its planned operations into fiscal year 2002. 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. Actual results may differ materially from those described in this
press release due to risks and uncertainties that 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 and accumulated deficits, market
acceptance of products, the company's reliance on collaborative relationships,
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 for the year ended December 31, 2000
and the company's quarterly report on Form 10-Q for the period ended June 30,
2001. The company undertakes no obligation to release publicly the results of
any revision to these forward-looking statements to reflect events or
circumstances arising after the date hereof.
Financials Follow:
Advanced Tissue Sciences, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------
2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Product sales to
related parties
(1)............... $ 3,526 $ 2,996 $ 6,828 $ 6,618
Product sales to
others
(2) .............. 438 -- 438 --
Contracts and fees
(3)................ 1,420 3,267 3,099 7,055
------ ------ ------ -------
Total revenues... 5,384 6,263 10,365 13,673
------ ------ ------ -------
Costs and expenses:
Research and
development....... 2,338 3,699 5,412 7,600
Cost of goods sold
(1 and 2)......... 4,727 2,996 8,032 6,618
Selling, general
and administrative
(4)............... 4,239 3,564 8,275 8,179
------ ------ ------ -------
Total costs and
expenses........ 11,304 10,259 21,719 22,397
------ ------ ------ -------
Income (loss) from
operations before
equity in losses of
joint ventures..... (5,920) (3,996) (11,354) (8,724)
Equity in losses of
joint ventures..... (3,370) (3,542) (6,329) (7,255)
------ ------ ------ -------
Loss from
operations......... (9,290) (7,538) (17,683) (15,979)
Other income
(expense), net..... (59) 110 73 252
------ ------- ------ -------
Net loss ........... (9,349) (7,428) (17,610) (15,727)
Dividends on
preferred stock.... -- -- -- (48)
------ ------- ------ -------
Net loss applicable
to common stock.... $(9,349) $(7,428) $(17,610) $(15,775)
------ ------- ------ -------
------ ------- ------ -------
Basic and diluted
loss per common
share.............. $ (.15) $ (.12) $ (.27) $ (.27)
------ ------- ------ -------
------ ------- ------ -------
Weighted average
shares (Millions).. 64,203 59,845 64,203 59,014
------ ------- ------ -------
------ ------- ------ -------
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2001 2000
-------- ------------
(Unaudited)
Assets:
Cash, cash equivalents
and short-term
investments.................. $ 11,546 $ 31,051
Other current assets......... 11,904 9,061
Property, net................ 12,487 13,681
Other assets................. 4,967 5,313
--------------- --------------
Total assets............. $ 40,904 $ 59,106
=============== ==============
Liabilities and stockholders' equity:
Current liabilities.......... $ 14,457 $ 15,030
Long-term liabilities........ 7,033 8,274
Stockholders' equity......... 19,414 35,802
--------------- --------------
Total liabilities and
stockholders' equity $ 40,904 $ 59,106
=============== ==============
(1) Product sales to related parties include sales of
Dermagraft(R) and TransCyte(TM) to a joint venture
between the
Company and Smith & Nephew plc (the "Dermagraft
Joint
Venture") at cost.
(2) Product sales to others include sales of collagen to
Inamed
Corporation.
(3) Contracts and fees include the recognition of $0.9
million for
the three month period and $1.8 million for the six
month
period ended June 30, 2000, of a $5 million licensing
payment
previously received from Inamed Corporation in 1999. No
Inamed
licensing payments have been recognized in revenue
during
2001.
(4) Includes non-cash compensation of $0.6 million in
the three
month period and $1.0 million in the six month period
ended
June 30, 2001, related to a variable stock option,
exercised
through the issuance of a loan and accounted for as a
variable
option. This compares to $0.7 million in the three month
period and $2.7 million in the six month period ended
June 30,
2000, related to the same variable option. 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.
CONTACT: Advanced Tissue Sciences, Inc.
Senior Director of Investor Relations
Abe Wischnia, 858/713-7992
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Advanced Tissue Sciences
