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Angiotech Pharmaceuticals, Inc. announces financial results for the third quarter ended September 30, 2009

^{Published on 2009-11-09 04:07:01 - Market Wire}
 

 - Total revenue was $63.2 million. - Net product sales were $48.7 million. Sales of our Proprietary Medical Products were $14.7 million, or 30% of total product sales. Sales of our Base Medical Products were $34.0 million, or 70% of total product sales. - Royalty revenue was $14.5 million. - Research and development expenses were $4.6 million. - Selling, general and administrative expenses were $17.9 million. - Net loss and net loss per share for the quarter were $7.8 million and $0.09, respectively. - As of September 30, 2009, cash and short-term investments were $53.8 million and net debt was $521.2 million. 

 - Certain financial measures in this press release are prepared according to United States Generally Accepted Accounting Principles ("GAAP"). In addition, certain financial measures presented below and in the appendix of this press release are non-GAAP, or adjusted, financial measures that exclude certain items. Management uses certain non-GAAP, or adjusted, financial measures to establish operational goals, and believes that these measures may assist investors in evaluating the results of our business and analyzing the underlying trends in our business over time. Investors should consider these non- GAAP adjusted financial measures in addition to, and not as a substitute for, or as superior to, financial measures prepared in accordance with GAAP. A reconciliation of the Company's non-GAAP adjusted financial measures to the corresponding GAAP financial measures, and an explanation of the Company's use of these non-GAAP adjusted financial measures and of the excluded items, is included in the Appendix of this press release. - Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted to exclude certain non-cash and non-recurring items) was $15.3 million; - Adjusted research and development expenses were $4.1 million; - Adjusted selling, general and administrative expenses were $17.1 million; and - Adjusted net income and adjusted net income per share for the quarter were $0.1 million and $0.00, respectively. 

 Financial Information --------------------- 

 Conference Call Information --------------------------- 

 Dial-in information: North America (toll-free): (800) 599-9829 International: (617) 847-8703 Enter Passcode: 64385781 An archived replay of the call will be available until November 16, 2009. North America (toll-free): (888) 286-8010 International: (617) 801-6888 Enter Passcode: 36157253 

 ANGIOTECH PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 ------------------------------------------------------------------------- 2009 2008 2009 2008 [restated] [restated] ------------------------------------------- REVENUE Royalty revenue $ 14,531 $ 21,405 $ 48,638 $ 75,871 Product sales, net 48,660 46,502 141,976 144,761 License fees 53 453 25,503 558 ------------------------------------------------------------------------- 63,244 68,360 216,117 221,190 ------------------------------------------------------------------------- EXPENSES License and royalty fees 2,463 3,452 7,937 11,484 Cost of products sold 25,958 24,772 75,606 77,430 Research and development 4,596 10,658 17,526 45,468 Selling, general and administration 17,924 23,370 59,102 77,100 Depreciation and amortization 8,285 8,560 24,845 25,577 In-process research and development - - - 2,500 Write-down of goodwill - 599,400 - 599,400 ------------------------------------------------------------------------- 59,226 670,212 185,016 838,959 ------------------------------------------------------------------------- Operating income (loss) 4,018 (601,852) 31,101 (617,769) ------------------------------------------------------------------------- Other income (expenses): Foreign exchange (loss) gain (518) 1,009 (1,227) 1,569 Investment and other income (expense) 46 187 74 1,630 Interest expense on long-term debt (9,286) (10,790) (28,971) (33,851) Write-down / loss on investments - (1,901) - (12,561) Write-down and other deferred financing charges - (13,544) (643) (13,544) ------------------------------------------------------------------------- Total other expenses (9,758) (25,039) (30,767) (56,757) ------------------------------------------------------------------------- (Loss) / income before income taxes (5,740) (626,891) 334 (674,526) Income tax expense (recovery) 2,062 (4,513) 7,569 (10,314) ------------------------------------------------------------------------- Net loss $ (7,802) $(622,378) $ (7,235) $(664,212) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss per common share $ (0.09) $ (7.31) $ (0.08) $ (7.80) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted weighted average number of common shares outstanding (in thousands) 85,136 85,122 85,125 85,117 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ANGIOTECH PHARMACEUTICALS INC. CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, 2009 2008 ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 51,458 $ 38,952 Short-term investments 2,298 848 Accounts receivable 28,874 25,524 Inventories 37,954 38,594 Deferred income taxes, current portion 3,090 3,820 Prepaid expenses and other current assets 4,072 5,234 ------------------------------------------------------------------------- Total current assets 127,746 112,972 ------------------------------------------------------------------------- Long-term investments 1,561 1,561 Assets held for sale 8,391 8,422 Property, plant and equipment 46,903 49,108 Intangible assets 176,447 195,477 Deferred financing costs 11,993 11,363 Deferred income taxes 1,835 - Other assets 2,257 6,294 ------------------------------------------------------------------------- Total assets $ 377,133 $ 385,197 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 38,932 $ 46,620 Income taxes payable 7,261 8,071 Interest payable on long-term debt 10,797 6,514 Deferred revenue, current portion 210 210 ------------------------------------------------------------------------- Total current liabilities 57,200 61,415 ------------------------------------------------------------------------- Deferred revenue 842 999 Deferred leasehold inducement 2,968 2,780 Deferred income taxes 40,587 40,577 Other tax liabilities 3,145 3,145 Long-term debt 575,000 575,000 Other liabilities 686 1,154 ------------------------------------------------------------------------- Total non-current liabilities 623,228 623,655 ------------------------------------------------------------------------- Stockholders' deficit Share capital Authorized: 200,000,000 Common shares, without par value 50,000,000 Class I Preference shares, without par value Common shares issued and outstanding: September 30, 2009 - 85,136,725 December 31, 2008 - 85,121,983 472,742 472,739 Additional paid-in capital 33,278 32,107 Accumulated deficit (850,908) (843,673) Accumulated other comprehensive income 41,593 38,954 ------------------------------------------------------------------------- Total stockholders' deficit (303,295) (299,873) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total liabilities and stockholders' deficit $ 377,133 $ 385,197 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Forward Looking Statements -------------------------- 

 Appendix: Presentation of Certain Non-GAAP Financial Information and Reconciliations to Corresponding GAAP Financial Measures 

 Economic Substance of Non-GAAP Financial Measures ------------------------------------------------- 

 Use of Non-GAAP Financial Measures ---------------------------------- 

 - presenting, comparing and assessing the financial results and forecasts reported to the Company's Board of Directors; - evaluating, managing and benchmarking the operating performance of the Company; - analyzing underlying trends in the Company's business; - evaluating market position and performance relative to our competitors, many of which use the same or similar performance measures; - establishing internal operating budgets; - determining compensation under bonus or other incentive programs; - enhancing comparability from period to period; - assessing compliance with credit facility covenants; - providing vital information in assessing cash flows to service our significant debt obligations; - comparing performance with internal forecasts and targeted business models; and - evaluating and valuing potential acquisition candidates. 

 ANGIOTECH PHARMACEUTICALS, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO CORRESPONDING NON-GAAP FINANCIAL MEASURES (Unaudited) (in thousands of U.S.$, except share Three Months Ended and per share data) September 30, 2009 ------------------------------------------------------------------------- Reported Adjustments Adjusted REVENUE Royalty revenue $ 14,531 $ - $ 14,531 Product sales, net 48,660 - 48,660 License fees 53 (53) a - ------------------------------------------------------------------------- 63,244 (53) 63,191 ------------------------------------------------------------------------- EXPENSES License and royalty fees 2,463 - 2,463 Cost of products sold 25,958 (765) b 25,193 Research and development 4,596 (103) d 4,066 (427) c Selling, general and administrative 17,924 (260) d 17,126 (167) b (371) g Depreciation and amortization 8,285 (7,510) e 775 Write-down of goodwill - - - ------------------------------------------------------------------------- 59,226 (9,603) 49,623 ------------------------------------------------------------------------- Operating income (loss) 4,018 9,550 13,568 ------------------------------------------------------------------------- Other income (expenses): Foreign exchange (loss) gain (518) 518 h - Investment and other income (loss) 46 39 i 85 Interest expense on long-term debt (9,286) 708 f (8,578) Write-down / loss on investments - - - Write-down and other deferred financing charges - - - ------------------------------------------------------------------------- ------------------------------------------------------------------------- (9,758) 1,265 (8,493) ------------------------------------------------------------------------- ------------------------------------------------------------------------- (Loss) income before income taxes (5,740) 10,815 5,075 Income tax expense (recovery) 2,062 2,941 j 5,003 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net (loss) income for the period $ (7,802) $ 7,874 $ 72 ------------------------------------------------------------------------- Basic and diluted net (loss) income per common share $ (0.09) $ 0.09 $ 0.00 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average shares outstanding (000's) - basic & diluted 85,136 85,136 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (in thousands of U.S.$, except share Three Months Ended and per share data) September 30, 2008 ------------------------------------------------------------------------- Reported Adjustments Adjusted [Restated] REVENUE Royalty revenue $ 21,405 $ - $ 21,405 Product sales, net 46,502 - 46,502 License fees 453 (453) a - ------------------------------------------------------------------------- 68,360 (453) 67,907 ------------------------------------------------------------------------- EXPENSES License and royalty fees 3,452 - 3,452 Cost of products sold 24,772 (94) b 24,678 Research and development 10,658 (169) d 8,832 (1,657) c Selling, general and administrative 23,370 (384) d 20,549 (2,232) b (205) g Depreciation and amortization 8,560 (7,581) e 979 Write-down of goodwill 599,400 (599,400) i - ------------------------------------------------------------------------- 670,212 (611,722) 58,490 ------------------------------------------------------------------------- Operating income (loss) (601,852) 611,269 9,417 ------------------------------------------------------------------------- Other income (expenses): Foreign exchange (loss) gain 1,009 (1,009) h - Investment and other income (loss) 187 174 i 361 Interest expense on long-term debt (10,790) 559 f (10,231) Write-down / loss on investments (1,901) 1,901 i - Write-down and other deferred financing charges (13,544) 13,544 f - ------------------------------------------------------------------------- ------------------------------------------------------------------------- (25,039) 15,169 (9,870) ------------------------------------------------------------------------- ------------------------------------------------------------------------- (Loss) income before income taxes (626,891) 626,438 (453) Income tax expense (recovery) (4,513) 8,328 j 3,815 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net (loss) income for the period $ (622,378) $ 618,110 $ (4,268) ------------------------------------------------------------------------- Basic and diluted net (loss) income per common share $ (7.31) $ 7.26 $ (0.05) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average shares outstanding (000's) - basic & diluted 85,122 85,122 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ANGIOTECH PHARMACEUTICALS, INC. RECONCILIATION OF GAAP FINANCIAL MEASURES TO CORRESPONDING NON-GAAP FINANCIAL MEASURES (Unaudited) (in thousands of U.S.$, except share Nine Months Ended and per share data) September 30, 2009 ------------------------------------------------------------------------- Reported Adjustments Adjusted REVENUE Royalty revenue $ 48,638 $ - $ 48,638 Product sales, net 141,976 - 141,976 License fees 25,503 (25,503) a - ------------------------------------------------------------------------- 216,117 (25,503) 190,614 ------------------------------------------------------------------------- EXPENSES License and royalty fees 7,937 - 7,937 Cost of products sold 75,606 (1,661) b 73,945 Research and development 17,526 (318) d 15,843 (1,365) c - - Selling, general and administrative 59,102 (852) d 53,173 (1,433) b (2,612) g (1,032) b Depreciation and amortization 24,845 (22,344) e 2,501 In-process research and development - - - Write-down of goodwill - - - ------------------------------------------------------------------------- 185,016 (31,617) 153,399 ------------------------------------------------------------------------- Operating income (loss) 31,101 6,114 37,215 ------------------------------------------------------------------------- Other income (expenses): Foreign exchange (loss) gain (1,227) 1,227 h - Investment and other income (loss) 74 715 i 146 Interest expense on long-term debt (28,971) 2,076 f (26,895) Write-down / loss on investments - - - Write-down and other deferred financing charges (643) 643 f - ------------------------------------------------------------------------- ------------------------------------------------------------------------- (30,767) 4,661 (26,749) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Income (loss) before income taxes 334 10,775 10,466 Income tax expense (recovery) 7,569 3,706 i 11,275 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss for the period $ (7,235) $ 7,069 $ (809) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss per common share $ (0.08) $ 0.07 $ (0.01) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average shares outstanding (000's) - basic and diluted 85,125 85,125 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (in thousands of U.S.$, except share Nine Months Ended and per share data) September 30, 2008 ------------------------------------------------------------------------- Reported Adjustments Adjusted [Restated] REVENUE Royalty revenue $ 75,871 $ - $ 75,871 Product sales, net 144,761 - 144,761 License fees 558 (558) a - ------------------------------------------------------------------------- 221,190 (558) 220,632 ------------------------------------------------------------------------- EXPENSES License and royalty fees 11,484 - 11,484 Cost of products sold 77,430 (122) b 77,308 Research and development 45,468 (670) d 40,709 (2,964) b (500) b (625) c Selling, general and administrative 77,100 (1,308) d 67,560 (5,739) b (2,493) g - Depreciation and amortization 25,577 (22,759) e 2,818 In-process research and development 2,500 (2,500) c - Write-down of goodwill 599,400 (599,400) g - ------------------------------------------------------------------------- 838,959 (639,080) 199,879 ------------------------------------------------------------------------- Operating income (loss) (617,769) 638,522 20,753 ------------------------------------------------------------------------- Other income (expenses): Foreign exchange (loss) gain 1,569 (1,569) h - Investment and other income (loss) 1,630 190 i 1,820 Interest expense on long-term debt (33,851) 1,678 f (32,173) Write-down / loss on investments (12,561) 12,561 i - Write-down and other deferred financing charges (13,544) 13,544 f - ------------------------------------------------------------------------- ------------------------------------------------------------------------- (56,757) 26,404 (30,353) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Income (loss) before income taxes (674,526) 664,926 (9,600) Income tax expense (recovery) (10,314) 16,290 j 5,976 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss for the period $ (664,212) $ 648,636 $ (15,576) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss per common share $ (7.80) $ 7.62 $ (0.18) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average shares outstanding (000's) - basic and diluted 85,117 85,117 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ANGIOTECH PHARMACEUTICALS, INC. WORLDWIDE SALES (Unaudited) Change ---------------------- Three Months Ended As Constant ---------------------- Reported Currency (in thousands of U.S.$) 30-Sep-09 30-Sep-08 Basis Basis ------------------------------------------------------------------------- Proprietary Medical Products 14,646 10,992 33% 36% Base Medical Products 34,025 35,470 -4% -3% -------------------------------------------- Total Medical Products 48,671 46,462 5% 6% -------------------------------------------- -------------------------------------------- Change --------------------- Three Months Ended As Constant ---------------------- Reported Currency (in thousands of U.S.$) 30-Sep-09 30-Jun-09 Basis Basis ------------------------------------------------------------------------- Proprietary Medical Products 14,646 13,406 9% 8% Base Medical Products 34,025 33,773 1% 0% -------------------------------------------- Total Medical Products 48,671 47,179 3% 2% -------------------------------------------- -------------------------------------------- ANGIOTECH PHARMACEUTICALS, INC. NON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATIONS (Unaudited) Q3 2009 Net Sales as compared to Q3 2008 ----------------------------------------- Change ---------------------------- Estimated As Reported Constant Impact of Currency Currency Foreign (in thousands of U.S.$) Basis Basis Currency ------------------------------------------------------------------------- Proprietary Medical Products 3,655 3,805 (150) Base Medical Products (1,445) (1,115) (330) ----------------------------------------- Total Medical Products 2,210 2,690 (480) ----------------------------------------- ----------------------------------------- Q3 2009 Net Sales as compared to Q2 2009 ----------------------------------------- Change ---------------------------- Estimated As Reported Constant Impact of Currency Currency Foreign (in thousands of U.S.$) Basis Basis Currency ------------------------------------------------------------------------- Proprietary Medical Products 1,240 1,064 176 Base Medical Products 252 69 183 ----------------------------------------- Total Medical Products 1,492 1,133 359 ----------------------------------------- ----------------------------------------- ANGIOTECH PHARMACEUTICALS, INC. CALCULATION OF ADJUSTED EBITDA AND RECONCILIATION TO GAAP NET LOSS (unaudited) Three months ended Nine months ended September 30, September 30, (in thousands of U.S.$) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net loss on a GAAP basis $ (7,802) (622,378) $ (7,235) $(664,212) Interest expense on long-term debt 9,286 10,790 28,971 33,851 Income tax expense (recovery) 2,062 (4,513) 7,569 (10,314) Depreciation and Amortization 9,198 9,673 27,566 28,846 ------------------------------------------------------------------------- EBITDA 12,744 (606,428) 56,871 (611,829) Adjustments: Non-recurring revenue, net of license fees (53) (453) (25,503) (558) Restructuring related charges 932 3,984 3,094 8,824 In-process and non-recurring research and development charges 427 - 1,365 3,625 Stock-based compensation 363 556 1,170 1,981 Litigation expenses 371 204 2,612 2,493 Foreign exchange loss (gain) 518 (1,009) 1,227 (1,569) Investment and other income (46) (187) (74) (1,630) Write-downs of investments and other long-lived assets - 1,901 - 12,561 Write-down of goodwill - 599,400 - 599,400 Non-recurring deferred financing costs - 13,544 1,675 13,544 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjusted EBITDA $ 15,256 11,512 $ 42,437 $ 26,842 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Description of Adjustments -------------------------- 

 Material Limitations -------------------- 

 - Exclusion of amortization and depreciation expense from our adjusted financial measures does not take into account the need for future capital spending, whether this is to support growth or to replace assets which are subject to wear and tear. - Exclusion of write-downs, amortization and depreciation from our adjusted financial measures does not take into consideration the potential tax impacts or obligations which can materialize into actual future cash flows. - As we use our own approach for calculating our adjusted financial measures, other companies may not make the same adjustments or disclose their financial data in a manner that would allow comparison of their results to our adjusted results, thus decreasing comparability of our adjusted financial measures as comparative analytical tools. - Non-GAAP based adjustments may not take into account the full economic cost of running our business. For example, financing costs are required to raise capital, which is used to fund operations. Adjusted financial measures do not necessarily reflect these considerations.