Angiotech announces preliminary third quarter financial results and updates fiscal 2007 outlook



    VANCOUVER, Oct. 19 /CNW/ - Angiotech Pharmaceuticals, Inc. (NASDAQ:   ANPI,
TSX: ANP), a global specialty pharmaceutical and medical device company, today
announced preliminary financial results from the third quarter ended
September 30, 2007 and updated its financial outlook for the full year ending
December 31, 2007, in conjunction with the release of Boston Scientific
Corporation's (BSC) third quarter financial results earlier today. Angiotech
will release its complete third quarter financial results, including
Management's Discussion and Analysis of Financial Condition and Results of
Operations, and hold its third quarter results conference call for analysts
and investors, as scheduled on November 1, 2007.

    
    Selected preliminary unaudited financial results for the third quarter are
as follows:

    -   Total revenues were $68.0 million.

    -   Net product sales were $41.4 million and were derived primarily from
        sales of our various single-use specialty medical devices as well as
        from sales of medical device components to third parties.

    -   Royalty revenue was $26.6 million and included $24.9 million of
        royalty revenue derived from sales by BSC of paclitaxel-eluting
        coronary stent systems.

    -   Adjusted EBITDA (earnings before interest, taxes, depreciation and
        amortization, adjusted to exclude certain non-cash and non-recurring
        items) was $7.2 million. Excluding research and development expenses,
        the significant majority of which are discretionary and relate
        primarily to our Pharmaceutical Technologies segment, Adjusted EBITDA
        would be $19.8 million.

    -   Cash and long-term investments were $132.7 million.

    -   Angiotech expects to post a net loss on a GAAP and adjusted basis for
        the third quarter, pending finalization of certain tax items.

    With the third quarter results as reported, we are updating our full year
2007 outlook as follows:

    -   We are updating our full year 2007 expected royalty revenue range
        to $118 million to $120 million, based on third quarter paclitaxel-
        eluting stent sales of $448 million announced by BSC in its third
        quarter earnings release earlier today and from which we will derive
        and record royalty revenue in our fourth quarter of 2007. BSC
        announced on October 16 that it plans to present a broad range of
        clinical trial data reinforcing the safety and efficacy of TAXUS(R)
        coronary stent systems at the upcoming Transcatheter Cardiovascular
        Therapeutics (TCT 2007) scientific symposium, which runs from
        October 20 to 25 in Washington, DC.

    -   We are revising our 2007 medical product sales outlook to a range
        of $171 million to $173 million, from our previous range of
        $190 million to $210 million. Our previous range included expected
        revenue of $180 million to $190 million from medical products
        obtained in the acquisition of American Medical Instruments, Inc.
        (AMI) and $10 million to $30 million from new product lines. We
        expect fourth quarter net medical product sales to be between
        $42 million and $44 million.

    -   Our full year 2007 outlook for revenue derived from sales of medical
        products obtained from AMI is modestly lower as compared to our
        original expectations as a result of our decision to de-emphasize or
        discontinue certain product lines that were generating limited or
        negative contribution margins in the second half of 2007. In
        addition, our previously announced decision to consolidate certain
        operations and close our facility in Syracuse, NY has impacted the
        shipment and production timing of a limited number of orders for
        surgical needles.

    -   Our original full year 2007 outlook for sales revenue derived from
        certain new product lines was $10 million to $30 million. At the
        present time we expect to begin generating more substantial revenue
        from these sources starting in 2008, rather than in the second half
        of 2007 as originally expected, as a result of several factors,
        including:

        -  Longer regulatory review times than originally expected, primarily
           for our Vascular Wrap(TM) product candidate in the European Union
           (EU). While we completed our EU clinical trial and submitted all
           regulatory filings as planned, review and approval timelines are
           entirely at the discretion of the regulatory body in the EU, and
           are not specifically mandated. We had originally expected this
           product candidate would be approved for sale by the third quarter
           of 2007. We now expect this product candidate, should it receive
           EU regulatory approval, to be available for sale in first half of
           2008;

        -  An initial "time to first order" of 9 to 12 months, as opposed to
           the originally forecasted 3 to 6 months, for our Quill(TM) SRS
           product line in the majority of customer accounts. Importantly, we
           continue to remain on track to sign up approximately 275 customer
           accounts by year-end. As of October 2007, we had signed
           approximately 230 Quill(TM) SRS customer accounts, including
           67 hospitals, 89 clinics and 74 physician offices, as compared to
           only a small number of ordering accounts and fewer than 10
           hospitals as of June 2007. As a result of positive physician
           reception for the Quill(TM) SRS product launch, we have
           accelerated our investments in sales and marketing, completed our
           hiring plans ahead of our original schedule, and will continue to
           invest research and development resources to expand the Quill(TM)
           SRS product line, with the goal of offering approximately 40
           Quill(TM) SRS SKUs by year-end.

    -   Our full year 2007 outlook for certain expenses, including selling,
        general and administrative and research and development expenses,
        remains consistent with ranges as previously communicated, with
        increases in sales and marketing related expenses as compared to the
        upper end of the range a possibility. This outlook is inclusive of
        investments in the second half of 2007 relating to:

        -  Sales force expansion, product launch and market development
           initiatives for Quill(TM) SRS and our interventional business;

        -  Launch preparation activities related to our HemoStream(TM)
           dialysis catheter product line, which recently received regulatory
           approval one quarter in advance of our original expectations;

        -  The acceleration of clinical trial activities relating to our
           Vascular Wrap(TM) product candidate in the U.S.;

        -  EU product launch and U.S. clinical trial activities relating to
           our Bio-Seal(TM) lung biopsy product line.

    -   As a result of the revenue delays and the decision to maintain
        investment in critical programs, we are updating our full year 2007
        Adjusted EBITDA outlook range to $47 million to $50 million from the
        previously stated $85 million to $95 million. Excluding research and
        development expenses, the significant majority of which are
        discretionary and relate primarily to our Pharmaceutical Technologies
        segment, our expected Adjusted EBITDA range would be $99 million to
        $102 million.

    -   Our outlook regarding adjusted net income per share for 2007 will be
        updated on November 1, 2007, pending finalization of certain tax
        items.
    

    We caution that the information above concerning our revised outlook for
2007 is forward-looking and accordingly, actual results may differ materially.
    "We remain optimistic about our numerous new product opportunities and
the revenue potential they provide for Angiotech. Physician excitement for
Quill(TM) SRS and other new Angiotech products, our recent positive clinical
trial results for our 5-FU CVC product candidate, and the continued progress
of our various research and product development programs give us confidence
that we should see improved product revenue growth in 2008," said Dr. William
Hunter, President and CEO of Angiotech.
    "While we had hoped to achieve higher revenues and adjusted EBITDA in the
third and fourth quarters of 2007 - the largest impact coming from the delayed
timing of revenue from newly launched products - we anticipate that our
various businesses and investments in sales, marketing and medical research
will deliver growth in 2008," said Thomas Bailey, Chief Financial Officer of
Angiotech.

    Upcoming Third Quarter Conference Call Information

    A conference call to discuss these financial results will be held on
Thursday, November 1, 2007 at 8:00 AM PT (11:00 AM ET).

    Dial-in information:
    North America (toll free): (800) 901-5213
    International: (617) 786-2962
    Enter passcode: 75137732

    A replay archive of the conference call will be available until
November 8, 2007 by calling (888) 286-8010 (in North America) or (617)
801-6888 (International) and entering Passcode 15190735.

    A live webcast will be available to all interested parties through
Angiotech's website at www.angiotech.com in the Investor Relations section.

    Financial Information and Certain Non-GAAP Financial Measures

    Amounts, unless specified otherwise, are expressed in U.S. dollars.
Financial results are reported under GAAP unless otherwise noted. All per
share amounts are stated on a diluted basis unless otherwise noted.
    This press release contains preliminary unaudited financial results for
the three month period ended and as of September 30, 2007. Because the
selected financial results described in this release are preliminary, these
results remain subject to change to reflect necessary corrections or
adjustments or changes in accounting estimates that are identified prior to
the time that we release our complete third quarter results. Actual results
may vary from the results presented in this release. We will release our
complete third quarter financial results, including Management's Discussion
and Analysis of Financial Condition and Results of Operations, and hold our
third quarter results conference call for analysts and investors, as scheduled
on November 1, 2007.
    Certain financial results presented in this press release include
non-GAAP measures that exclude certain items. Adjusted net income from
continuing operations, adjusted net income per share from continuing
operations and adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") exclude 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 currency cash and
investment balances and other non-recurring items. Adjusted net income from
continuing operations, adjusted net income per share from continuing
operations and Adjusted EBITDA also exclude litigation expenses related to
defending intellectual property claims. Adjusted net income from continuing
operations, adjusted net income per share from continuing operations, 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 certain non-GAAP or adjusted operating measures to
establish operational goals and assess corporate performance, and believes
that these measures may assist investors in analyzing the underlying trends in
our business over time. Investors should consider this non-GAAP measure in
addition to, not as a substitute for, or as superior to, financial reporting
measures prepared in accordance with GAAP.
    The financial outlook in this press release presents certain
forward-looking, non-GAAP financial information for which at this time there
is no calculable comparable GAAP measure or which at this time cannot be
quantitatively reconciled to GAAP financial information. Specifically,
reconciliation of our EBITDA and Adjusted EBITDA outlook to GAAP-based
financial information is not feasible at this time, as it would require the
estimation of certain expenses that are inherently unpredictable or subject to
significant fluctuation for reasons unrelated to our underlying business
performance, including stock-based compensation expenses, litigation expenses
and foreign exchange gains or losses.

    Note on 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 strategies or future actions, our targets, expectations for our
financial condition and the results of, 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 drug discovery and clinical development processes; 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 and to expand commercialization activities or
consummate acquisitions; sales numbers and future guidance publicly provided
by Boston Scientific Corporation regarding sales of their paclitaxel-eluting
coronary stent products; 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 report 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; commercialization 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 ability of Boston Scientific
Corporation to successfully manufacture, market and sell their
paclitaxel-eluting coronary stent products; the continued availability of
capital to finance our activities; our ability to continue to integrate into
our business the operations of American Medical Instruments Holdings, Inc.
("AMI"); our ability to achieve the operational and other synergies and the
other commercial or financial benefits expected as a result of the acquisition
of AMI; and any other factors referenced in our annual information form and
other filings with the applicable Canadian securities regulatory authorities
or the SEC. Given these uncertainties, assumptions and risk factors, readers
are cautioned not to place undue reliance on such forward-looking statements.
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.

    TAXUS(R) is a registered trademark of Boston Scientific Corporation.
    Quill(TM) is a trademark of Quill Medical, Inc., a wholly-owned
    subsidiary of Angiotech Pharmaceuticals, Inc.
    Vascular Wrap(TM) is a trademark of Angiotech Pharmaceuticals, Inc.
    HemoStream(TM) is a trademark of Rex Medical, LP, used under license by
    Angiotech.

    About Angiotech

    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.


    
                       ANGIOTECH PHARMACEUTICALS, INC.
                       CALCULATION OF ADJUSTED EBITDA
                                 (Unaudited)
                                                          Three months ended
    (in thousands of U.S.$)                               September 30, 2007
    -------------------------------------------------------------------------

    Loss from continuing operations before
     income taxes on a GAAP basis                                   (17,072)
    Interest expense on long-term debt                               13,281
    Depreciation and amortization from
     continuing operations                                            9,153
    -------------------------------------------------------------------------
    EBITDA from continuing operations                                 5,362
    -------------------------------------------------------------------------
    Adjustments:
      Non-recurring revenue, net of license fees                        (54)
      Stock-based compensation                                        1,353
      Litigation expenses                                               908
      Foreign exchange gain                                             (41)
      Investment and other income                                    (2,072)
      Severance/restructuring costs                                   1,454
      E&O inventory adjustment                                          253
    -------------------------------------------------------------------------
    Adjusted EBITDA                                                   7,163
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Media: Jodi Regts, Senior Manager, Corporate
Communications, Angiotech Pharmaceuticals, Inc., (604) 221-7930,
jregts@angio.com; Analyst and Investors: Deirdre Neary, Manager, Investor
Relations, Angiotech Pharmaceuticals, Inc., (604) 222-7056, dneary@angio.com

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