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Company Press Release
Cohesion Technologies Reports FISCAL Fourth Quarter Results
PALO ALTO, Calif.--(BW HealthWire)--Aug. 3, 1999--Cohesion Technologies (NASDAQ NM: CSON - news) today reported results for the fiscal 1999 fourth quarter and full year. Highlights for the three months ended June 30, 1999 and recent weeks include:
Filing a pre-market approval (''PMA'') application with the Food and Drug Administration (''FDA'') for CoStasis(TM) Surgical Hemostat (''CoStasis''), a sprayable bioresorbable device to stop surgical bleeding
Receiving notification from the FDA of Streamlined Review Status for CoStasis
Training new distributors and introducing CoStasis in Denmark, Belgium, the Netherlands, Switzerland and Italy
Engaging distributors in France, Greece, Spain, Portugal and Turkey
Completing patient enrollment in the clinical study in Europe to support a CE mark application with CoSeal(TM) Surgical Sealant (''CoSeal''), a sprayable, resorbable device used for sealing during vascular surgery
Completing new manufacturing facilities for CoStasis and CoSeal at the company's Palo Alto facilities, including a consolidation of corporate offices and laboratories to reduce facility expenses
Near-term anticipated milestones for Cohesion include:
- Finalizing the US distribution strategy for CoStasis
Continued introductions and roll-out of CoStasis in European surgical markets
- Further reducing the Company's cash burn rate
Completing the CoSeal expanded clinical study in Europe and filing for European regulatory approval
- Beginning a feasibility clinical trial with CoSeal in the U.S.
Validating and starting up commercial scale manufacturing facilities for CoStasis and CoSeal
''During the fiscal 1999 fourth quarter, we continued to make important progress toward commercializing our two lead products, which are based on two distinct, proprietary platform technologies,'' said David Foster, chief executive officer. ''The highlight of the quarter was the filing of our PMA for CoStasis Surgical Hemostat with the FDA, and just last week the FDA granted streamlined review status for CoStasis, which could significantly reduce the review time for CoStasis to as little as 180 days from our original filing date in early June 1999.''
''CoStasis is expected to offer physicians a better way to control surgical bleeding. By simply spraying CoStasis onto a bleeding site, bleeding can be stopped or controlled in a matter of minutes, without the surgeon having to spend time applying pressure, or tamponade, to the wound. CoStasis uses the patient's own platelets and fibrinogen, thereby eliminating potential contamination risks inherent with products derived from pooled plasma. In Europe, we continue to expand the distribution of CoStasis into additional countries.''
For the fiscal 1999 fourth quarter, Cohesion Technologies reported net income of $890,000, or $0.11 per basic and $0.10 per diluted share on 8.4 and 8.6 million average shares outstanding, respectively, compared with a net income of $1.4 million, or $0.16 per basic and diluted share in the prior-year fourth quarter. Revenues for the fiscal 1999 fourth quarter were up 65% to $943,000, primarily from product sales of Collagraft® bone graft matrix and strip, which are marketed by the Zimmer, Inc. subsidiary of the Bristol-Myers Squibb Company. Revenues for the fourth quarter of fiscal 1998 were $571,000.
Research and development expenses for the fiscal 1999 fourth quarter were approximately $4.1 million, down 17% compared with $4.9 million in the prior-year quarter. Selling, general and administrative expenses of $1.9 million increased 12% over the prior year fourth quarter, due primarily to sales and marketing expenses for CoStasis in Europe. Gross margins decreased markedly as expected during the quarter due primarily to manufacturing start-up costs for the CoStasis product line.
Net gain on sale of investments for the fiscal 1999 fourth quarter was $7.8 million, primarily from the sale of 235,000 shares (post-split) of Boston Scientific (NYSE: BSX - news) common stock. The Company now holds approximately 1.0 million shares of BSX, 97% of which are hedged with equity collars ranging from $31 - $49 per share. The Company expects to continue selling shares of BSX stock on a quarterly basis to fund its operations. However, the number of BSX shares sold is expected to fluctuate significantly from quarter to quarter due, in part, to the timing of the expiration dates of the equity collars and the price at which BSX stock is trading, among other factors.
For the fiscal year ended June 30, 1999, the Company reported net income of $6.2 million, or $0.73 per basic and $0.72 per diluted share on 8.6 million average shares outstanding, compared with a net loss of $9.6 million, or $1.07 loss per basic and diluted share, in fiscal 1998. Revenues for fiscal 1999 were $2.6 million, compared with revenues of $2.0 million last year. Fiscal 1999 research and development costs of $15.3 million were lower than the prior-year period, while selling, general and administrative costs were up 24% to $6.8 million, primarily due to marketing costs associated with the launch of CoStasis in Europe. The net gain on sale of investments for fiscal 1999 was $34.9 million, primarily from the sale of BSX common stock, compared with $19.1 million in the prior-year period. As of June 30, 1999, Cohesion Technologies had cash and marketable securities of approximately $60 million and approximately 485,000 shares authorized for repurchase.
During the 1999 fiscal year, the Company recorded compensation expense of $3.4 million in connection with a cash-out of stock options for Cohesion Corporation, a majority-owned subsidiary of Cohesion Technologies. The Company expects to record up to an additional $2.6 million in cash compensation expense over the next two fiscal years in connection with the cash-out of remaining options.
Cohesion Technologies is developing products for the estimated $1.3 billion worldwide surgical hemostasis 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. Such statements are indicated by words or phrases such as ''anticipates,'' ''estimates,'' ''projects,'' ''believes,'' ''intends,'' ''expects'' and similar words and phrases. 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 arrangements with other companies, receipt of regulatory approvals, 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 decisions by management and 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. Please see the Company's filings with the Securities and Exchange Commission including, without limitation, the Company's Form 10-K and Form 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 OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
June 30, June 30,
------------------- -------------------
1999 1998 1999 1998 (1)
-------- -------- -------- --------
Product sales $ 943 $ 571 $ 2,594 $ 2,043
Costs and expenses:
Cost of sales 991 346 1,984 1,162
Research and development 4,110 4,942 15,292 16,251
Selling, general and
administrative 1,910 1,706 6,841 5,526
Compensation expense
related to Cohesion
Corporation options 440 -- 3,385 --
Purchased in-process
research and development -- 57 -- 10,587
-------- -------- -------- --------
7,451 7,051 27,502 33,526
-------- -------- -------- --------
Loss from operations (6,508) (6,480) (24,908) (31,483)
Other income:
Net gain on investments,
principally Boston
Scientific Corporation 7,757 5,357 34,948 19,087
Interest income, net 18 70 79 332
-------- -------- -------- --------
Income (loss) before
income taxes 1,267 (1,053) 10,119 (12,064)
Provision for (benefit
from) income taxes 377 (2,497) 3,918 (2,497)
-------- -------- -------- --------
Net income (loss) $ 890 $ 1,444 $ 6,201 $ (9,567)
======== ======== ======== ========
Basic net income
(loss) per share $ 0.11 $ n/a $ 0.73 $ n/a
======== ======== ======== ========
Diluted net income
(loss) per share $ 0.10 $ n/a $ 0.72 $ n/a
======== ======== ======== ========
Shares used in
calculating basic per
share information 8,380 n/a 8,550 n/a
======== ======== ======== ========
Shares used in
calculating diluted per
share information 8,628 n/a 8,635 n/a
======== ======== ======== ========
Basic and diluted pro forma
net income (loss) per share $ 0.16 $ (1.07)
======== ========
Shares used in calculating
basic and diluted pro
forma per share information 8,913 8,913
======== ========
(1) 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,
1999 1998 (2)
-------- --------
ASSETS
Current assets:
Cash, cash equivalents
and short-term investments $ 4,239 $ 1,607
Accounts receivable, net 895 473
Inventories 976 81
Other current assets 2,142 1,254
-------- --------
Total current assets 8,252 3,415
Property and equipment, net 6,705 2,072
Investment in Boston Scientific Corporation 41,632 73,979
Other investments and assets, net 14,930 16,187
-------- --------
$ 71,519 $ 95,653
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
other accrued liabilities $ 6,340 $ 5,015
Income taxes payable 953 300
-------- --------
Total current liabilities 7,293 5,315
Deferred income taxes 18,985 31,923
Commitments and contingencies
Stockholders' equity 45,241 58,415
-------- --------
$ 71,519 $ 95,653
======== ========
(2) NOTE: Amounts derived from audited financial statements at the
date indicated.
--------------------------------------------------------------------------------
Contact:
Cohesion Technologies
Lisa Morgensai, 650/320-5633
www.cohesiontech.com
or
Investor Relations:
Lippert/Heilshorn & Associates
Bruce Voss, 310/575-4848
bruce@lhai.com
www.lhai.com
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