Exhibit 99.1
FOR IMMEDIATE RELEASE
NEWS RELEASE
Thursday, November 6, 2008
ANGIOTECH ANNOUNCES RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2008
Vancouver, BC, November 6, 2008– Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI, TSX: ANP), a global specialty pharmaceutical and medical device company, today announced its financial results for the third quarter ended September 30, 2008.
“Our Medical Products sales results continued their growth trend in the third quarter, with solid improvement as compared to the same period in 2007,” said Dr. William Hunter, President and CEO of Angiotech. “Sales of our Promoted Brand product portfolio, including Quill™ SRS and the newly launched HemoStream™ chronic dialysis catheter, continue to show differential growth, and the cost reduction initiatives we announced have started to take hold, with reduced reported expenses across all operating categories in the current quarter as compared to the second quarter of 2008. We are exceptionally proud of our dedicated people, who have worked hard to deliver these results in what has been a challenging operating environment for our company.”
Third Quarter Financial Highlights
- Total revenue was $68.4 million.
- Net product sales were $46.5 million.
- Royalty revenue was $21.4 million.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted to excludecertain non-cash and non-recurring items) was $11.5 million.
- Research and development expenses were $10.7 million, and as adjusted to exclude non-cash stock-basedcompensation expenses and non-recurring termination related costs were $8.8 million. These resultscompare to $18.6 million and $17.2 million (as adjusted), respectively, in the second quarter of 2008,reflecting a reduction in expenses of 49% on an adjusted basis in one quarterly period.
- Selling, general and administrative expenses were $23.4 million, and as adjusted to exclude non-cash stock-based compensation expenses, non-recurring termination related costs and intellectual property litigationcosts, were $20.5 million. These results compare to $25.8 million and $23.6 million (as adjusted),respectively, in the second quarter of 2008 and to $24.7 million and $21.5 million (as adjusted),respectively, in the third quarter of 2007. Importantly, we were able to achieve higher sales during thecurrent period on lower absolute levels of selling, general and administrative expenses as compared to thesame period of 2007.
- GAAP net loss and net loss per share from continuing operations for the quarter were $622.4 million and$7.31, respectively. These reported net losses reflect a substantial non-cash item; specifically a write downof goodwill and other items totalling $612.9 million. Primarily as a result of our acquisition of AmericanMedical Instruments Holdings, Inc. in March of 2006, we have recorded a significant amount of goodwill inour non-current assets, representing a substantial portion of the acquisition consideration amounts that wereabove the fair value of assets acquired. According to GAAP, circumstances that could trigger a “goodwillimpairment” include significant declines in a company’s share price, adverse changes or outcomes in legalor regulatory m atters, technological advances that may significantly impact a company’s competitiveposition, decreases in anticipated demand for a company’s or a partner’s products or services, orunanticipated competition. As a result of the significant and sustained decline in our public share price andour announcement on September 22, 2008 that we may not be able to meet the closing conditions of theproposed transaction with Ares Management (“Ares”) and New Leaf Venture Partners (“New Leaf”), weperformed an interim impairment test of goodwill and acquired intangible assets. Upon the conclusion ofsuch testing, we recorded an impairment charge to goodwill, which is a non-cash accounting item, of $599.4 million in the third quarter of 2008. In addition, as a result of th e uncertainty regarding ourproposed transaction with Ares and New Leaf, in the third quarter of 2008 we recognized costs andpotential costs totalling $13.5 million related to our exploration of proposed financing and strategicalternatives, as described further below under “Significant Recent Developments”, of which $3.1 millionhad been capitalized to other assets on our balance sheet at the end of the second quarter of 2008.
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- Adjusted net loss from continuing operations and adjusted net loss per share from continuing operations(GAAP net loss as adjusted to exclude certain non-cash and non-recurring items) were $4.3 million and$0.05, respectively.
- As of September 30, 2008, cash and short and long-term investments were $72.5 million and net debt was$509.1 million.
Significant Recent Developments
On July 7, 2008, we announced our Board of Directors had authorized a transaction to create a new subsidiary, Angiotech Pharmaceutical Interventions, Inc. (“API”), and that we would contribute certain business assets and intellectual property to API, which were to include primarily business assets of Angiotech other than the intellectual property and royalty revenue related to our partnership with Boston Scientific Corporation (“BSC”) and BSC’s sales of TAXUS® paclitaxel-eluting coronary stent systems. Concurrently, we entered into a Note Purchase Agreement with Ares and New Leaf, under which the investors would purchase between $200 and $300 million, at our option, of convertible notes issued by API that would be convertible into a significant minority equity interest in API. The net proceeds from the issuance of the convertible notes were to be used to refinance existing Angiotech debt through the consummation of a tender offer. The tra nsaction was subject to shareholder approval.
On September 22, 2008, we announced that we would postpone the planned shareholder vote regarding the proposed transaction with Ares and New Leaf. As of that date, we advised Ares and New Leaf that, given the time required to complete more extended discussions with certain of our shareholders and bondholders and to therefore complete the transaction, and given various other factors impacting our business and cash position (including lower expected royalty revenues derived from sales of TAXUS by our partner BSC), that we did not believe we would be able to satisfy the condition in the Note Purchase Agreement with respect to the minimum level of cash and cash equivalents required to be held at the time of the transaction’s close.
As a result of the uncertainty regarding our proposed transaction with Ares and New Leaf, we also announced on September 22, 2008 that management and the Board of Directors would continue to explore and pursue financial and strategic alternatives in order to address our balance sheet and current capital structure, including but not limited to whether we could consummate the previously announced transaction or other potential transaction alternatives with Ares and New Leaf. On September 23, 2008, we announced the termination of our previously announced cash tender offer for our outstanding Senior Floating Rate Notes due 2013 and our outstanding 7.75% Senior Subordinated Notes due 2014.
On September 22, 2008 we also announced that we would pursue various initiatives to reduce operating costs and further focus our business efforts. Our remaining resources subsequent to these reorganization and cost reduction initiatives will be focused primarily on our existing medical device products business, with particular emphasis on our portfolio of Promoted Brands and on selected new products that have recently launched or are expected to be launched in the near future, including Quill™ SRS, the HemoStream™ Chronic Dialysis Catheter, the Option™ Inferior Vena Cava Filter and the Bio-Seal™ Lung Biopsy System.
Due to numerous factors that may impact our future cash position, working capital and liquidity as discussed below, and the significant cash that will be necessary to continue to service our current level of debt obligations, there can be no assurance that we will have adequate liquidity and capital resources to satisfy our financial obligations in 2009 and beyond.
Our cash inflows and the amounts of expenditures that will be necessary to execute our business plan are subject to numerous uncertainties, including but not limited to: changes in drug-eluting coronary stent markets,including the impact of new competitive entrants into such markets, and the sales achieved in such markets by our partner BSC, the timing and success of product sales and marketing initiatives and new product launches, the timing and success of our research, product development and clinical trial activities, the timing of completing certain operational initiatives including facility closures, our ability to effect reductions in certain aspects of our budgets in an efficient and timely manner, and changes in interest rates. These and other uncertainties may adversely affect our liquidity and capital resources to a significant extent and may force us to further reduce our expenditures on research and development or on our var ious new product and sales and marketing initiatives in order for us to continue to service our debt obligations. Such further reductions in our budgeted expenditures may have an adverse effect on our new product development and sales growth initiatives and reduce our ability to achieve the revenue growth targets, product launch or new product development timelines in our current operating plan. There can also be no assurance that such reductions in expenditures will be adequate to provide enough cash flow to continue to service our current level of debt obligations.
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In particular, should our royalties received from BSC decline more significantly than we expect in future periods as a result of new competitive entrants into the U.S. drug-eluting stent market from Abbott Laboratories, Inc. and Medtronic, Inc., our liquidity may be adversely affected, and we may be forced to explore alternative funding sources through debt, equity or other public or private securities offerings, or to pursue certain reorganization, restructuring or other strategic alternatives. There can be no assurance that if we pursue such financing activities that alternative sources of funding would be available to us on attractive terms, if at all. In addition, we may not be able to complete any restructuring, reorganization or strategic activities on terms that would be favourable for the Company or our shareholders. Capital markets conditions have deteriorated significantly during the third quarter of 2008, including a significant and material decline in the level of corporate lending activity, combined with a significant increase in the cost of any such lending. Current market conditions may have a material impact on our ability to secure any alternative source of funding, our ability to secure interim financing or to complete any of the activities as described on favourable terms, if at all.Our management and Board of Directors continue to believe a transaction alternative of significant size and scope is necessary to meaningfully address the working capital needs for our business initiatives and provide the financial and operating flexibility necessary for us to achieve our operating and revenue growth goals.
Third Quarter Business Highlights
- Promoted Brand Strategy.Sales of our currently marketed Promoted Brand products continued todemonstrate higher revenue growth as compared to our overall product portfolio, consistent with the priorquarter. Revenue growth in our Promoted Brand products was approximately 50%, contributing to anaggregate growth rate of approximately 12% in total product revenue in the third quarter of 2008 ascompared to the comparable quarter of 2007. During the third quarter, we announced that we had receivedCE Mark approval to market and sell our HemoStream™ chronic dialysis catheter in Europe. We launchedHemoStream in the U.S. during the second quarter of 2008, taking our total number of promoted brandsavailable for sale to six. We al so observed continued commercial progress with our proprietary Quill SRSproduct line. At the end of the third quarter, we had 464 hospital customers, which is on track relative toour goal of 500 hospital customers by the end of 2008.
- Base Medical Products Sales. Sales of products outside of our Promoted Brand product group alsoexperienced growth during the quarter. Revenue growth in our base Surgical, Interventional and Specialtiesbusinesses (excluding Promoted Brands) was approximately 6% in the third quarter of 2008 as compared tothe third quarter of 2007, reflecting the continued benefits of the realignment of our sales force completed atthe end of 2007 and continued customer stability in our Specialities business, which primarily sells medicaldevices and medical device components to other third-party medical device makers.
- TAXUS Liberte® and TAXUS Express2 Atom™ Stents.On October 10, 2008, we announced that BSChad received approval from the U.S. Food and Drug Administration (“FDA”) to market and sell the second-generation TAXUS Liberte® Paclitaxel-Eluting Coronary Stent System in the U.S. On September 25,2008, we announced that BSC had received approval from the FDA to market and sell the TAXUSExpress2 Atom™ Paclitaxel-Eluting Coronary Stent System in the U.S. We are entitled to receive royalties based on the commercial sale of these products by BSC, which BSC has stated are currently expected tocommercially launch before the end of 2008.
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- TAXUS PERSEUS Clinical Trial.On October 8, 2008, we announced that BSC had completed enrollmentin the PERSEUS clinical trial, designed to evaluate the TAXUS Element paclitaxel-eluting coronary stent,which is the third-generation BSC stent platform to utilize our proprietary paclitaxel technology. ThePERSEUS clinical program has enrolled nearly 1,500 patients at 100 U.S. and international centers sinceJuly 2007, and will compare the safety and efficacy of the TAXUS Element Stent to the prior-generationTAXUS Express2 Stent.
- Zilver® PTX™ Paclitaxel-eluting Peripheral Stent.On September 10, 2008 we announced that our partnerCook Medical (“Cook”) had completed enrollment in the first international clinical trial of a drug-elutingstent designed to treat arterial blockages outside the coronary arteries. The 420 patients enrolled in Cook’srandomized trial of its Zilver PTX Drug-Eluting Peripheral Stent include peripheral artery disease patientstreated in Germany, the United States and Japan. Based on a release by Cook on September 10, 2008, Cookhad enrolled an additional 780 patients in the European Union, Canada and Korea in a clinical registrydesigned to evaluate the safety of the Zilver PTX device. Those data have been used for submission inEurope for CE Mark approval to market the device there, with additional regulatory submissions pending inadditional markets.
Financial Information
This press release contains the condensed financial statements derived from the unaudited consolidated interim financial statements for the three and nine-month periods ended September 30, 2008 and 2007. Full unaudited consolidated interim financial statements and Management’s Discussion and Analysis for the three and nine-month periods ended September 30, 2008, will be filed with the relevant regulatory agencies, as well as posted on our website at www.angiotech.com.
Amounts, unless specified otherwise, are expressed in U.S. dollars. Financial results are reported under U.S. GAAP unless otherwise noted. All per share amounts are stated on a diluted basis unless otherwise noted.
Use of Certain Non-GAAP Financial Measures
Certain financial results presented in this press release include non-GAAP measures that exclude certain items. Adjusted net loss from continuing operations, adjusted net loss per share from continuing operations and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) exclude certain non-cash and non-recurring items such as, goodwill and financing cost write downs, acquisition related amortization charges, acquired in-process research and development relating to license agreements and acquisitions, stock-based compensation expense, foreign exchange gains or losses relating to translation of foreign denominated items and other non-recurring items. Adjusted net loss from continuing operations, adjusted net loss per share from continuing operations and Adjusted EBITDA also exclude litigation expenses related to defending intellectual property claims. Revenue, as adjusted, excludes non-recurring, non-operating revenue deri ved from license agreements and other license revenue, net of license fees due to licensors and excludes amounts accrued for costs incurred. Adjusted net loss from continuing operations, adjusted net loss per share from continuing operations, revenue, as adjusted, and Adjusted EBITDA do not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers. Management uses these non-GAAP or adjusted operating measures to establish operational goals and believes that these measures may assist investors in evaluating the results of the business and analyzing the underlying trends in our business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for, or as superior to, financial reporting measures prepared in accordance with GAAP. We have provided a reconciliation of these measures to GAAP in the attached tables.
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Conference Call Information
A conference call to discuss these financial results will be held today, Thursday November 6, 2008 at 8:00 AM PT (11:00 AM ET).
Dial-in information:
North America (toll free): (866) 383-7998
International: (617) 597-5329
Enter passcode: 11247654
A replay archive of the conference call will be available until November 13, 2008 by calling (888) 286-8010 (in North America) or (617) 801-6888 (International) and entering passcode 75181409.
A live webcast will be available to all interested parties through the Investors section of Angiotech’s website: www.angiotech.com
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ANGIOTECH PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | | | Three months ended | | | Three months ended | |
| (in thousands of U.S.$, except share and per share data) | | | 30-Sep-08 | | | 30-Sep-07 | |
| | | | Reported | | | Adjustments | | | Adjusted | | | Reported | | | Adjustments | | | Adjusted | |
| REVENUE | | | | | | | | | | | | | | | | | | | | | |
| Royalty revenue | | $ | 21,405 | | $ | - | | | $ | 21,405 | | $ | 26,622 | | $ | - | | | $ | 26,622 | |
| Product sales, net | | | 46,502 | | | - | | | | 46,502 | | | 41,351 | | | - | | | | 41,351 | |
| License fees | | | 453 | | | (453 | ) | a | | - | | | 53 | | | (53 | ) | a | | - | |
| | | | 68,360 | | | (453 | ) | | | 67,907 | | | 68,026 | | | (53 | ) | | | 67,973 | |
| |
| EXPENSES | | | | | | | | | | | | | | | | | | | | | |
| License and royalty fees | | | 3,452 | | | - | | | | 3,452 | | | 4,527 | | | - | | | | 4,527 | |
| Cost of products sold | | | 24,772 | | | (94 | ) | b | | 24,678 | | | 23,384 | | | (253 | ) | b | | 23,131 | |
| Research and development | | | 10,658 | | | (1,826 | ) | c | | 8,832 | | | 13,188 | | | (542 | ) | c | | 12,646 | |
| Selling, general and administrative | | | 23,370 | | | (2,821 | ) | d | | 20,549 | | | 24,715 | | | (3,173 | ) | d | | 21,542 | |
| Depreciation and amortization | | | 8,560 | | | (7,581 | ) | e | | 979 | | | 8,119 | | | (7,244 | ) | e | | 875 | |
| | | | 70,812 | | | (12,322 | ) | | | 58,490 | | | 73,933 | | | (11,212 | ) | | | 62,721 | |
| Operating (loss) income | | $ | (2,452 | ) | $ | 11,869 | | | $ | 9,417 | | $ | (5,907 | ) | $ | 11,159 | | | $ | 5,252 | |
| Other income (expenses): | | | | | | | | | | | | | | | | | | | | | |
| Foreign exchange gain (loss) | | | 1,009 | | | (1,009 | ) | f | | - | | | (110 | ) | | 110 | | f | | - | |
| Investment and other income | | | 187 | | | 174 | | g | | 361 | | | 2,073 | | | | | | | 2,073 | |
| Write-down / loss on redemption of investments | | | (1,901 | ) | | 1,901 | | h | | - | | | - | | | - | | | | - | |
| Interest expense on long-term debt | | | (10,790 | ) | | 559 | | i | | (10,231 | ) | | (13,280 | ) | | 558 | i | i | | (12,722 | ) |
| Write-down and other deferred financing charges | | | (13,544 | ) | | 13,544 | | j | | - | | | - | | | - | | | | - | |
| Write-down of goodwill | | | (599,400 | ) | | 599,400 | | k | | - | | | - | | | - | | | | - | |
| | | | (624,439 | ) | | 614,569 | | | | (9,870 | ) | | (11,317 | ) | | 668 | | | | (10,649 | ) |
| |
| | | | | | | | | | | | | | | | | | | | | | |
| (Loss) income from continuing operations before income taxes | | $ | (626,891 | ) | $ | 626,438 | | | $ | (453 | ) | $ | (17,224 | ) | $ | 11,827 | | | $ | (5,397 | ) |
| Income tax (recovery) expense | | | (4,513 | ) | | 8,328 | | l | | 3,815 | | | (6,392 | ) | | 4,139 | | l | | (2,253 | ) |
| (Loss) income from continuing operations | | | (622,378 | ) | | 618,110 | | | | (4,268 | ) | | (10,832 | ) | | 7,688 | | | | (3,144 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
| Net loss from discontinued operations, net of income taxes | | | - | | | - | | | | - | | | (1,156 | ) | | 1,156 | | m | | - | |
| Net (loss) income for the period | | $ | (622,378 | ) | $ | 618,110 | | | $ | (4,268 | ) | $ | (11,988 | ) | $ | 8,844 | | | $ | (3,144 | ) |
| |
| | | | | | | | | | | | | | | | | | | | | | |
| Basic and diluted net loss per common share from continuing operations | | $ | (7.31 | ) | | | | | $ | (0.05 | ) | $ | (0.13 | ) | | | | | $ | (0.04 | ) |
| |
| Basic and diluted weighted average shares outstanding (000’s) | | | 85,122 | | | | | | | 85,122 | | | 85,014 | | | | | | | 85,014 | |
| | a. | Non-recurring, non-operating license revenue, net of license fees due to licensors. |
| | b. | Severance and reorganization costs. In 2007, change in estimate of accounting for excess and obsolete inventory resulting from the alignment during thesecond quarter of 2007 of inventory policies across our various manufacturing operations. |
| c. | Research and development adjustments: |
| | Three months | Three months | |
| | ended | ended | |
| | Sept 30, 2008 | Sept. 30, 2007 | |
| | Stock-based compensation | (169) | (542) | |
| Termination and reorganization costs | (1,657) | - | |
| | (1,826) | (542) | |
| | d. | Selling, general and administrative adjustments: |
| | Three months | Three months | |
| | ended | ended | |
| | | Sept 30, 2008 | Sept 30, 2007 | |
| | Stock-based compensation | (384) | (811) | |
| Termination and reorganization costs | (2,232) | (1,454) | |
| Litigation expenses relating to defending intellectual property claims | (205) | (908) | |
| | (2,821) | (3,173) | |
| | e. | Amortization of acquisition related intangible assets and medical technologies. |
| | f. | Foreign exchange fluctuations on foreign currency net monetary assets. |
| g. | Realized loss on disposition of investments and unrealized loss on write down of an intangible asset. |
| h. | Loss on write down of investments. |
| i. | Amortization of deferred financing costs. |
| j. | Write down of other deferred financing charges |
| k. | Loss on write down of goodwill |
| l. | Tax effects of adjustments a. through k. for the period, including the reversal of tax reserves previously booked. |
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| ANGIOTECH PHARMACEUTICALS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| (Unaudited) |
| | | Nine months ended | | | Nine months ended | |
| (in thousands of U.S.$, except share and per share data) | | 30-Sep-08 | | | 30-Sep-07 | |
| | | Reported | | | Adjustments | | | Adjusted | | | Reported | | | Adjustments | | | | Adjusted | |
| REVENUE | | | | | | | | | | | | | | | | | | | | |
| Royalty revenue | $ | 75,871 | | $ | - | | | $ | 75,871 | | $ | 89,500 | | $ | - | | | $ | 89,500 | |
| Product sales, net | | 144,761 | | | - | | | | 144,761 | | | 126,258 | | | 2,980 | | a | | 129,238 | |
| License fees | | 558 | | | (558 | ) | b | | - | | | 577 | | | (577 | ) | b | | - | |
| | | 221,190 | | | (558 | ) | | | 220,632 | | | 216,335 | | | 2,403 | | | | 218,738 | |
| |
| EXPENSES | | | | | | | | | | | | | | | | | | | | |
| License and royalty fees | | 11,484 | | | - | | | | 11,484 | | | 14,235 | | | - | | | | 14,235 | |
| Cost of products sold | | 77,430 | | | (122 | ) | c | | 77,308 | | | 71,261 | | | (1,980 | ) | c | | 69,281 | |
| Research and development | | 45,468 | | | (4,759 | ) | | | 40,709 | | | 40,407 | | | (4,432 | ) | d | | 35,975 | |
| Selling, general and administrative | | 77,100 | | | (9,540 | ) | e | | 67,560 | | | 72,532 | | | (13,194 | ) | e | | 59,338 | |
| Depreciation and amortization | | 25,577 | | | (22,759 | ) | f | | 2,818 | | | 24,603 | | | (21,978 | ) | f | | 2,625 | |
| In-process research and development | | 2,500 | | | (2,500 | ) | g | | - | | | 8,000 | | | (8,000 | ) | g | | - | |
| | | 239,559 | | | (39,680 | ) | | | 199,879 | | | 231,038 | | | (49,584 | ) | | | 181,454 | |
| Operating (loss) income | $ | (18,369 | ) | $ | 39,122 | | | $ | 20,753 | | $ | (14,703 | ) | $ | 51,987 | | | $ | 37,284 | |
| Other income (expenses): | | | | | | | | | | | | | | | | | | | | |
| Foreign exchange gain (loss) | | 1,569 | | | (1,569 | ) | h | | - | | | (514 | ) | | 514 | | h | | - | |
| Investment and other income | | 1,630 | | | 190 | | i | | 1,820 | | | 9,881 | | | (5,577 | ) | i | | 4,304 | |
| Write-down / loss on redemption of investments | | (12,561 | ) | | 12,561 | | j | | - | | | (8,157 | ) | | 8,157 | | k | | - | |
| Interest expense on long-term debt | | (33,851 | ) | | 1,678 | | l | | (32,173 | ) | | (38,975 | ) | | 1,684 | | l | | (37,291 | ) |
| Write-down and other deferred financing charges | | (13,544 | ) | | 13,544 | | m | | - | | | - | | | - | | | | - | |
| Write-down of goodwill | | (599,400 | ) | | 599,400 | | n | | - | | | - | | | - | | | | - | |
| | | (656,157 | ) | | 625,804 | | | | (30,353 | ) | | (37,765 | ) | | 4,778 | | | | (32,987 | ) |
| |
| | | | | | | | | | | | | | | | | | | | | |
| (Loss) income from continuing operations before income taxes | $ | (674,526 | ) | $ | 664,926 | | | $ | (9,600 | ) | $ | (52,468 | ) | $ | 56,765 | | | $ | 4,297 | |
| Income tax (recovery) expense | | (10,314 | ) | | 16,290 | | o | | 5,976 | | | (19,920 | ) | | 14,440 | | o | | (5,480 | ) |
| |
| (Loss) income from continuing operations | | (664,212 | ) | | 648,636 | | | | (15,576 | ) | | (32,548 | ) | | 42,325 | | | | 9,777 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss from discontinued operations, net of income taxes | | - | | | - | | | | - | | | (6,947 | ) | | 6,947 | | | | - | |
| Net (loss) income for the period | $ | (664,212 | ) | $ | 648,636 | | | $ | (15,576 | ) | $ | (39,495 | ) | $ | 49,272 | | | $ | 9,777 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
| Basic and diluted net (loss) income per common share from continuing operations | $ | (7.80 | ) | | | | | $ | (0.18 | ) | $ | (0.38 | ) | | | | | $ | 0.12 | |
| |
| Weighted average shares outstanding (000’s) – basic and diluted | | 85,117 | | | | | | | 85,117 | | | 85,010 | | | | | | | 85,010 | |
| a. | Amounts incurred for costs incurred, and potential future costs, related to our discontinuation of the Contour Threads brand product. |
| | b. | Non-recurring, non-operating revenue as derived from licence agreements with Histogenics Corporation and other license revenue, net of license feesdue to licensors. |
| c. | Severances and reorganization costs. In 2007, change in estimate of accounting for excess and obsolete inventory resulting from the alignment duringthe second quarter of 2007 of inventory policies across our various manufacturing operations. |
| d. | Research and development adjustments: |
| | Nine months | Nine months | |
| | ended | ended | |
| | Sept 30, 2008 | Sept. 30, 2007 | |
| Stock-based compensation | (670) | (1,515) | |
| | License fees due to licensors related to non-recurring license revenue | - | (419) | |
| | Termination and reorganization costs | (2,964) | (849) | |
| Non-recurring supply / distribution agreement termination costs | (500) | (899) | |
| Non-recurring in-process research and development expenses and intellectual property license | | | |
| agreement. | (625) | (750) | |
| | (4,759) | (4,432) | |
| | e. | Selling, general and administrative adjustments: |
| | Nine months | Nine months | |
| | ended | ended | |
| | | Sept 30, 2008 | Sept 30, 2007 | |
| | Stock-based compensation | (1,308) | (2,203) | |
| Termination and reorganization costs | (5,739) | (4,839) | |
| Litigation expenses relating to defending intellectual property claims | (2,493) | (5,902) | |
| Non-recurring supply / distribution agreement termination costs | - | (250) | |
| | (9,540) | (13,194) | |
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| f. | Amortization of acquisition-related intangible assets and medical technologies. |
| g. | Non-recurring in-process research and development expense relating to payments made to licensors and collaborators. |
| h. | Foreign exchange fluctuations on foreign currency net monetary assets. |
| | i. | Write off of uncollectible tax receivable and write off of certain capitalized costs. |
| j. | Loss on write down of investments. |
| k. | Net impact of loss and gain on redemption of investments of common share holdings in Orthovita Inc. and NuVasive Inc. respectively. |
| l. | Amortization of deferred financing costs. |
| m. | Write down of other deferred financing charges |
| n. | Loss on write down of goodwill carrying costs. |
| o. | Tax effects of adjustments a. through n. for the period, including the reversal of tax reserves previously booked. |
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| ANGIOTECH PHARMACEUTICALS, INC. |
| CALCULATION OF ADJUSTED EBITDA |
| (Unaudited) |
| | | Three months ended Sept 30 | | | Nine months ended Sept 30 | |
| (in thousands of U.S.$) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| |
| Net (loss) income on a GAAP basis | $ | (622,378 | ) | $ | (11,988 | ) | | (664,212 | ) | $ | (39,495 | ) |
| Interest expense on long-term debt | | 10,790 | | | 13,280 | | | 33,851 | | | 38,975 | |
| Income tax expense (recovery) | | (4,513 | ) | | (7,055 | ) | | (10,314 | ) | | (24,474 | ) |
| Depreciation and amortization | | 9,673 | | | 9,228 | | | 28,846 | | | 28,003 | |
| EBITDA | $ | (606,428 | ) | $ | 3,465 | | | (611,829 | ) | $ | 3,009 | |
| Adjustments: | | | | | | | | | | | | |
| |
| Net loss from discontinued operations, excluding depreciation, | | | | | | | | | | | | |
| amortization and income tax expense included above | $ | - | | $ | 1,743 | | $ | - | | $ | 11,122 | |
| In-process research and development | | - | | | - | | | 2,500 | | | 8,000 | |
| Non-recurring research and development | | - | | | - | | | 625 | | | 750 | |
| Non-recurring revenue, net of license fees | | (453 | ) | | (54 | ) | | (558 | ) | | (160 | ) |
| Stock-based compensation | | 556 | | | 1,353 | | | 1,981 | | | 3,717 | |
| Litigation expenses | | 204 | | | 908 | | | 2,493 | | | 5,902 | |
| Foreign exchange gain | | (1,009 | ) | | 110 | | | (1,569 | ) | | 514 | |
| Investment and other income | | (187 | ) | | (2,073 | ) | | (1,629 | ) | | (4,304 | ) |
| Severance | | 3,984 | | | 1,454 | | | 8,824 | | | 5,438 | |
| Supply/distribution agreement termination costs | | - | | | - | | | - | | | 2,199 | |
| E&O inventory adjustment | | - | | | 253 | | | - | | | 1,180 | |
| Contour Threads return costs accrual | | - | | | - | | | - | | | 2,980 | |
| Write off of capitalized costs | | - | | | - | | | 500 | | | 280 | |
| Write off uncollectible tax receivable | | - | | | - | | | - | | | 2,250 | |
| Gain realized on recovery of investment | | - | | | - | | | - | | | (7,510 | ) |
| Accrued interest income | | - | | | - | | | - | | | (597 | ) |
| Writedown / loss on redemption of investments | | 1,901 | | | - | | | 12,561 | | | 8,157 | |
| Writedown of other assets | | 13,544 | | | - | | | 13,544 | | | - | |
| Writedown of goodwill | | 599,400 | | | - | | | 599,400 | | | - | |
| |
| Adjusted EBITDA | $ | 11,512 | | $ | 7,159 | | | 26,843 | | $ | 42,927 | |
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| ANGIOTECH PHARMACEUTICALS, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
| As at | | September 30, | | | December 31, | |
| (in thousands of U.S.$) | | 2008 | | | 2007 | |
| ASSETS | | | | | | |
| Cash and short-term investments | $ | 65,915 | | $ | 109,225 | |
| Accounts receivable | | 25,980 | | | 22,678 | |
| Inventories | | 39,607 | | | 33,647 | |
| Deferred income taxes | | 5,394 | | | 5,964 | |
| Other current assets | | 6,078 | | | 7,070 | |
| Total current assets | $ | 142,974 | | $ | 178,584 | |
| Long-term investments | $ | 6,560 | | $ | 6,557 | |
| Property and equipment, net | | 59,944 | | | 59,187 | |
| | Intangible assets, net | | 203,087 | | | 225,889 | |
| | Goodwill | | 55,990 | | | 659,511 | |
| | Deferred income taxes | | 3,553 | | | - | |
| Deferred financing costs | | 11,922 | | | 13,600 | |
| Other assets | | 5,734 | | | 6,780 | |
| Total assets | $ | 489,764 | | $ | 1,150,108 | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
| Current liabilities | $ | 76,616 | | $ | 62,940 | |
| Long-term debt | | 575,000 | | | 575,000 | |
| Deferred income taxes | | 49,548 | | | 59,368 | |
| Other tax liabilities | | 5,792 | | | 4,693 | |
| Other long-term liabilities | | 5,579 | | | 6,035 | |
| Stockholders’ (deficit) equity | | (222,771 | ) | | 442,072 | |
| Total liabilities and stockholders’ (deficit) equity | $ | 489,764 | | $ | 1,150,108 | |
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Forward Looking Statements
Statements contained in this press release that are not based on historical fact, including without limitation statements containing the words “believes,” “may,” “plans,” “will,” “estimate,” “continue,” “anticipates,” “intends,” “expects” and similar expressions, constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and constitute “forward-looking information” within the meaning of applicable Canadian securities laws. All such statements are made pursuant to the “safe harbor” provisions of applicable securities legislation. Forward looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for the second half of 2008 and beyond, and our strategies or future actions, our targets, expectations for our financial condition and the results o f, or outlook for, our operations, research development and product and drug development. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward looking statements. Many such risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, the following: general economic and business conditions, both nationally and in the regions in which we operate; market demand; technological changes that could impact our existing products or our ability to develop and commercialize future products; competition; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; adverse results or unexpected delays in pre-clinical and clinical product development processes; adverse findings related to the safety and/or efficacy of our products or products sold by our partners; decisions, and the timing of decisions, made by health regulatory agencies regarding approval of our technology and products; the requirement for substantial funding to conduct research and development, to expand manufacturing and commercialization activities or consummate acquisitions; and any other factors that may affect performance. In addition, our business is subject to certain operating risks that may cause the actual results expressed or implied by the forward looking statements in this press release to differ materially from our actual results. These operating risks include: our ability to attract and retain qualified personnel; our ability to successfully complete preclinical and clinical development of our products; changes in business strategy or development plans; our failure to obtain patent protection for discoveries; loss of patent protection resulting from third party challenges to our patents; c ommercialization limitations imposed by patents owned or controlled by third parties; our ability to obtain rights to technology from licensors; liability for patent claims and other claims asserted against us; our ability to obtain and enforce timely patent and other intellectual property protection for our technology and products; the ability to enter into, and to maintain, corporate alliances relating to the development and commercialization of our technology and products; market acceptance of our technology and products; our ability to successfully manufacture, market and sell our products; the continued availability of capital to finance our activities; our ability to continue to service our debt obligations; and any other factors referenced in our annual information form and other filings with the applicable Canadian securities regulatory authorities or the Securities and Exchange Commission.Given these uncertainties, assumptions and risk factors, readers are cautione d not to place undue reliance on such forward-looking statements. Except as required by law, we disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained in this press release to reflect future results, events or developments.
Quill™ is a trademark of Quill Medical, Inc., a wholly-owned subsidiary of Angiotech Pharmaceuticals, Inc.
BioSeal™ is a trademark of Medical Device Technologies, Inc., a wholly-owned subsidiary of Angiotech Pharmaceuticals, Inc.
TAXUS Liberte, TAXUS Express2, Taxus Express2 Atom, TAXUS Element are trademarks of Boston Scientific Corporation.
Zilver®PTX™ is a trademark of Cook Medical, Inc.
HemoStream™ and Option™ are trademarks of Rex Medical, LP, used under license by Angiotech Pharmaceuticals (US), Inc.
©2008 Angiotech Pharmaceuticals, Inc. All Rights Reserved.
About Angiotech Pharmaceuticals
Angiotech Pharmaceuticals, Inc. is a global specialty pharmaceutical and medical device company with over 1,500 dedicated employees. Angiotech discovers, develops and markets innovative treatment solutions for diseases or complications associated with medical device implants, surgical interventions and acute injury. To find out more about Angiotech (NASDAQ: ANPI, TSX: ANP) please visit our website at www.angiotech.com.
FOR ADDITIONAL INFORMATION:
DeDe Sheel
Investor Relations and Corporate Communications
Angiotech Pharmaceuticals, Inc.
(415) 293-4412
dede.sheel@fdashtonpartners.com
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