CryoCath announces 2007 fourth quarter and fiscal year end financial results



    
    www.cryocath.com               Toronto Stock Exchange Symbol: CYT
    

    MONTREAL, Dec. 17 /CNW/ - CryoCath(R) Technologies Inc., the global
leader in cryotherapy products to treat cardiovascular disease, today
announced financial results for the fourth quarter and year ended
September 30, 2007.

    
    Selected FY 2007 Financial and Operating Highlights:

    -   Following the sale of the surgical portfolio to ATS Medical, we
        successfully transitioned our organization in Q4 towards a high
        growth, pure play EP/AFib company, with relentless focus on the
        blockbuster potential of Arctic Front(R). As part of this transition
        we did incur a number of one-time charges in fiscal Q4 '07.
    -   Revenue of $39.7 million, a growth of 3.4% over prior year. This
        growth is composed of 14.2% growth of our electrophysiology (EP)
        business to $29M, offset by the impact of selling the surgical
        business at the end of Q3 2007.
    -   Q4 2007 sales were $6.6 million, a growth of 1.1% over our EP
        business revenue in Q4 2006. In what is traditionally our weakest
        quarter, sales growth was further slowed down by unfavorable exchange
        rate impact, a one-time revenue accrual and abandoning quarter-end
        volume discount sales practices.
    -   Global growth is fueled by the strong performance of our flagship
        Arctic Front product in European markets. The number of active Arctic
        Front users has grown in Q4 from 20 to 23 and is accelerating. At the
        end of Q4 a total of approximately 1,600 Arctic Front procedures have
        been performed in Europe. Our Atrial Fibrillation (AFib) business
        grew by 52.1% in FY2007 and 61.7% in Q4. Excluding a one time revenue
        accrual, our AFib revenue growth accelerated to 60.1% for the year
        and a strong 97.8% for Q4.
    -   Gross margins increased significantly to 59.2% from 53.6% in fiscal
        2006.
    -   Excluding the impact of the sale of the surgical portfolio, the net
        loss for 2007 was $29.2 million or a drop of 2.4% as compared to
        $30.0 for 2006. Including the gain from selling the surgical
        portfolio the net loss ended at $19.0 million.
    -   Overall operating burn increased marginally from $19.8 million in
        2006 to $20.3 million in 2007.
    -   A total of 162 patients have been enrolled to date in our STOP AF IDE
        pivotal trial. This study continues to be the fastest enrolling AFib
        trial in the US. At the current enrollment rate per center we will
        reach full enrollment by April 2008. This keeps this key program on
        track for late 2009 approval by the FDA.
    -   There is a growing body of strong clinical evidence around our Arctic
        Front system. In various studies in US and Europe, the system lives
        up to its expectations and provides solid 12-month outcomes and no
        permanent side effects in Paroxysmal AFib patients in a relatively
        simple procedure.
    

    "The past year has been packed with positive changes for CryoCath. More
than ever, we are now focused on commercialization and growth," said Jan
Keltjens, President & CEO of CryoCath. "Undoubtedly, the sale of the surgical
products division at the end of Q3 was the pivotal initiative in this respect,
enabling us to concentrate fully on the huge potential offered by the
electrophysiology market and atrial fibrillation, in particular. Our focus is
on obtaining US approval for our revolutionary Arctic Front system and rapid,
profitable growth in Europe. In both areas, we made solid progress in 2007. In
the last couple of months of 2007 we were able to resolve supply constraints
for Arctic Front and embarked on a solid commercial roll-out plan in Europe.
As a result, Arctic Front has started to show its explosive growth potential
and has become the largest driver of our growth.
    We are also confident with the progress in our pivotal trial in the US.
STOP AF continues to be the fastest enrolling trial in this space and is on
track to support a late 2009 US Arctic Front approval. Our confidence in the
blockbuster potential of Arctic Front is strengthened continuously based on
the solid clinical performance and enthusiastic feedback from both our
European customers as well as our US investigators. We feel that in 2007 we
created the foundation needed to allow us to bring our Arctic Front
breakthrough therapy to millions of Paroxysmal AFib patients and create a
significant and profitable business."

    FY 2007

    For the 12-month period ending September 30, 2007, sales increased 3.4%
to reach $39.7 million compared to $38.4 million in fiscal 2006. US disposable
EP product sales grew by 2.6% to $12.3 million, whereas outside US disposable
revenue, driven by the success of Arctic Front, grew by 17.6% to 8.0 million.
Total EP growth in the US was 11.1% to $18.3 million and outside US growth was
20.1% to $10.7 million.
    Gross margins in fiscal 2007 were $23.5 million or 59.2% of sales, versus
$20.6 million or 53.6% of sales in 2006. This increase in margins is a result
of improved focus on the product supply process and the corresponding increase
in output and yields, and the increase in sales of our higher margin new
generation of products. Excluding the impact of the revenue accrual for
returned goods included in the Q4 FY2007 results, but not in FY2006, gross
margin for the year would have increased by 0.3% to 59.5%.
    Total expenses in fiscal 2007 were $53.5 million, up 4.2% from $51.3
million in fiscal 2006.
    Sales and marketing expenses in fiscal 2007 totaled $24.7 million versus
$27.4 million for the same period a year ago. This decrease is based on a
reduced head count and reduced commissions and other variable expenses as a
result of the sale of the surgical portfolio to ATS Medical.
    On a 12-month basis, net research and development expenses were
$11.9 million versus $10.9 million in fiscal 2006. The increased expenses in
research and development are related to additional clinical expenses
associated with the enrollment in our STOP AF IDE pivotal trial.
    Total administrative expenses in fiscal 2007 were $7.6 million versus
$6.0 million for the same period a year ago as the company continued to invest
in the resources to build a robust infrastructure required for rapid and
sustainable growth.
    Other expenses were $1.1 million in fiscal 2007 and $1.8 million in the
prior year and are associated with realignment initiatives. The costs in
fiscal 2007 are the result of the sale of the surgical business and the
Company's strategy to transition itself into a lean, focused and fast growing
electrophysiology cryoablation company.
    Interest expense for the year increased as a result of higher debt levels
and totaled $2.8 million, an increase of $1.4 million over 2006.
    Most of the Company's sales revenues are denominated in either US dollars
or Euros as are a significant amount of our assets. Foreign denominated
expenses and liabilities only provide a partial natural hedge against currency
fluctuations, which were significant in 2007. As a result the Company incurred
a foreign exchange loss in 2007 of $2 million versus $0.2 million last year.
    Net loss in fiscal 2007 was $19.0 million or $0.50 per share versus
$30.0 million or $0.79 per share in the same period a year ago. This decrease
in net loss was aided by the one time gain from the sale of the surgical
portfolio to ATS Medical which netted $10.0 million.
    On a 12-month basis, the operating burn was $20.3 million versus
$19.8 million in 2006. Excluding one time costs related to the sale of the
surgical business and the FY07 restructurings, the operating burn in FY2007
would have been $15.3 million.

    Q4 2007

    The Company's revenues were $6.6 million in the fourth quarter, a
decrease of 30.8% from sales of $9.5 million in the fourth quarter of fiscal
2006. This decline reflects the absence of revenues from the surgical
portfolio (sold at the end of the third quarter) offset by a 1.1% increase in
EP revenues as compared to the same period last year. US disposable EP product
sales declined by 21.4% to $2.7 million, whereas outside US disposable revenue
driven by the success of Arctic Front, grew by 10.0% to $1.8 million. Total EP
sales in the US declined by 5.4% to $4.4 million while outside US revenue was
16.9% to $2.3 million.
    Gross margins in the fourth quarter of fiscal 2007 were $3.4 million, or
51.5% of sales, an increase from 41.1% or $3.9 million from Q4 of fiscal 2006.
As with the year, the decrease in gross margin dollars was directly
attributable to lower revenues in the quarter, but offset in part by the
higher gross margin percentages. Excluding the impact of the revenue accrual
for returned goods included in the Q4 FY 07 results, but not in FY06, gross
margin for Q4 would have increased by 2.2% to 53.7%.
    Total expenses in the fourth quarter of 2007 were $15.7 million, up 8.9%
from the fourth quarter of 2006.
    The Company's sales and marketing expenses for the fourth quarter of
fiscal 2007 were $5.6 million compared to $7.5 million for the fourth quarter
of fiscal 2006, and were associated with lower headcount, reduced commissions
and lower variable spending.
    Net research and development expenses for the fourth quarter were
$3.3 million, compared to $1.6 million for the fourth quarter of fiscal 2006,
and were related to higher clinical costs incurred in the STOP AF Trial.
    Administrative expenses for the fourth quarter of 2007 were $2.7 million
compared to $1.9 million for the fourth quarter ended September 30, 2006, and
were related to investment in internal infrastructure to support growth.
    The appreciation of the Canadian dollar against the US dollar led to a
foreign exchange loss in the fourth quarter of $1.3 million versus nil in the
same quarter last year.
    CryoCath's net loss for the fourth quarter ended September 30, 2007
totaled $11.8 million or $0.31 per share compared to a loss of $10.5 million
or $0.27 per share in the fourth quarter of fiscal 2006.
    Operating burn for the quarter was $10.2 million versus $6.5 million for
the fourth quarter of 2006. Excluding one time costs related to the sale of
the surgical business and the FY07 restructurings, the operating burn in Q4
2007 would have been $5.9 million.
    Working capital was $18 million at September 30, 2007, as compared to
$20.9 million on September 30, 2006. At quarter end, CryoCath could access
$28.5 million in cash and credit lines comprised of $24.0 million in cash,
cash equivalents and short-term investments in addition to $4.5 in unused
borrowing facilities.
    The Company will host a conference call to discuss the fourth quarter and
year-end results on December 17, 2007 at 4:30 p.m. EST. The call will be
audio-cast live and archived for 90 days at www.cryocath.com.

    About CryoCath

    CryoCath - www.cryocath.com - is a medical technology company that leads
the world in cryotherapy products to treat cardiovascular disease. With a
priority focus on providing physicians with a complete solution of catheter
products to treat cardiac arrhythmias, CryoCath has multiple products approved
in the U.S., across Europe and several ROW countries. The Company is
developing additional products to expand its pipeline of products to treat
cardiac arrhythmias.

    This press release includes "forward-looking statements" that are subject
to risks and uncertainties, including with respect to the timing of regulatory
trials and their outcome. For information identifying legislative or
regulatory, economic, climatic, currency, technological, competitive and other
important factors that could cause actual results to differ materially from
those anticipated in the forward looking statements, see CryoCath's annual
report available at www.sedar.com under the heading Risks and Uncertainties in
the Management's Discussion and Analysis section. The financial results
referred to in the press release and accompanying statements are unaudited and
may differ from the final audited numbers.


    
    Balance Sheets (unaudited)


    As at September 30                                    2007          2006
                                                             $             $
    ASSETS

    Current assets
    Cash and cash equivalents                        9,139,844     9,178,123
    Cash subject to restrictions                       612,500             -
    Short-term investments held-to-maturity         14,894,481     5,616,907
    Accounts receivable                              7,027,518     8,119,660
    Investment tax credits receivable                  296,840       502,033
    Inventories                                      7,701,067     7,105,974
    Prepaid expenses                                 1,143,381     1,044,039
    -------------------------------------------------------------------------
    Total current assets                            40,815,631    31,566,736
    Cash subject to restrictions                       700,000             -
    Balance of sale receivable                       1,563,195             -
    Net investments in leases                                -         5,967
    Deferred financing charges                               -     2,636,636
    Consoles at customers' premises                  1,475,631     1,858,465
    Property, plant, and equipment                   2,881,313     3,212,551
    Intellectual property                            2,876,325    15,194,606
    -------------------------------------------------------------------------
                                                    50,312,095    54,474,961
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
    Bank indebtedness                                6,476,288             -
    Accounts payable and accrued liabilities        14,410,438    10,201,378
    Fair value of derivative financial instruments      41,175             -
    Current portion of long-term debt                1,236,032             -
    Current portion of deferred revenue                615,546       491,683
    -------------------------------------------------------------------------
    Total current liabilities                       22,779,479    10,693,061
    Long-term debt                                  22,927,229    22,399,317
    Deferred revenue                                   294,169       228,774
    -------------------------------------------------------------------------
    Total liabilities                               46,000,877    33,321,152
    -------------------------------------------------------------------------
    Commitments and contingencies
    Shareholders' equity
    Capital stock                                  181,041,609   180,655,193
    Contributed surplus                              9,215,635     7,469,343
    Deficit                                       (185,946,026) (166,970,727)
    -------------------------------------------------------------------------
    Total shareholders' equity                       4,311,218    21,153,809
    -------------------------------------------------------------------------
                                                    50,312,095    54,474,961
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Statements of Operations and Comprehensive Loss and Deficit (unaudited)


    Years ended September 30                              2007          2006
                                                             $             $
    REVENUES

    Sales (including rental income of
     $839,460; 2006 - $320,862)                     39,692,191    38,375,896
    Cost of sales (including amortization and
     console write-downs of $2,789,709; 2006
     - $4,245,556)                                  16,202,821    17,824,668
    -------------------------------------------------------------------------

    Gross Profit                                    23,489,370    20,551,228
    Surgical distribution rights                             -       233,358
    Interest income                                 23,489,370    20,784,586
                                                       727,198       531,978
    -------------------------------------------------------------------------
                                                    24,216,568    21,316,564
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EXPENSES

    Research and development                        12,591,208    11,829,618
    Investment tax credits                            (717,195)     (944,172)
    -------------------------------------------------------------------------
    Net research and development                    11,874,013    10,885,446
    Administrative                                   7,574,336     5,963,916
    Sales and marketing                             24,694,626    27,430,009
    Amortization and write-off of
     intellectual property                             239,539       324,745
    Amortization and write-off of property,
     plant, and equipment                            1,578,966     1,444,155
    Amortization of deferred financing charges         382,877       261,830
    Interest on long-term debt                       2,532,679     1,291,654
    Foreign exchange loss                            1,998,222       159,700
    Loss on foreign exchange embedded derivatives       41,175             -
    Stock-based compensation expense                 1,411,608     1,746,169
    Other expenses                                   1,130,796     1,775,401
    -------------------------------------------------------------------------
                                                    53,458,837    51,283,026
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net loss and other comprehensive loss
     before undernoted items                       (29,242,269)  (29,966,462)
    Income from manufacturing agreement                258,557             -
    -------------------------------------------------------------------------
    Gain on sale of surgical portfolio              10,028,913             -
    -------------------------------------------------------------------------
    Net loss and other comprehensive loss
     before income taxes                           (18,954,799)  (29,966,462)
    Income taxes                                       (20,500)            -
    -------------------------------------------------------------------------
    Net loss and other comprehensive loss          (18,975,299)  (29,966,462)
    Deficit, beginning of year                    (166,970,727) (137,004,265)
    -------------------------------------------------------------------------
    Deficit, end of year                          (185,946,026) (166,970,727)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of common shares        38,017,065    37,787,825
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic loss per share                                 (0.50)        (0.79)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted loss per share                               (0.50)        (0.79)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Statements of Cash Flows (unaudited)


    Years Ended September 30                              2007          2006
                                                             $             $
    OPERATING ACTIVITIES

    Net loss and other comprehensive loss
     for the year                                  (18,975,299)  (29,966,462)
    Items not affecting cash
    Gain on sale of surgical portfolio             (10,028,913)            -
    Stock-based compensation expense                 1,411,608     2,303,723
    Interest capitalized on long-term debt           1,732,124     1,291,654
    Amortization and write-off of consoles
     at customers' premises                          1,004,442     2,281,775
    Amortization and write-off of property,
     plant, and equipment                            2,717,030     1,913,292
    Amortization and write-off of
     intellectual property                           1,586,742     1,819,389
    Amortization of deferred financing charges         382,877       261,830
    Forgiveness of employee share purchase loan              -       233,069
    Accretion in balance of sale                       (58,955)            -
    Unrealized loss on foreign exchange
     embedded derivatives                               41,175             -
    Unrealized foreign exchange loss                   617,868        36,321
    -------------------------------------------------------------------------
                                                   (20,269,301)  (19,825,409)
    Net change in non-cash working capital
     balances relating to operations (note 20)       5,368,087     1,603,942
    Decrease in net investments in leases                5,967        61,311
    Increase in deferred revenue                       193,697       309,049
    -------------------------------------------------------------------------
    Cash flows related to operating activities     (14,701,550)  (17,851,107)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES

    Net proceeds from sale of surgical portfolio    19,755,918             -
    Proceeds upon maturity of short-term
     investments                                     6,616,907    45,709,482
    Acquisition of short-term investments          (16,258,558)  (25,980,051)
    Increase in cash subject to restrictions        (1,312,500)            -
    Acquisition of intellectual property              (379,282)     (509,442)
    Acquisition of property, plant, and equipment   (1,248,394)   (1,674,827)
    Increase in consoles at customers' premises     (1,905,872)   (1,362,761)
    -------------------------------------------------------------------------
    Cash flows related to investing activities       5,268,219    16,182,401
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES

    Issuance of common shares                          369,544       473,608
    Decrease in employee share purchase loans           13,054        48,232
    Increase in deferred financing charges             (25,167)     (409,817)
    Increase in long-term debt                       3,534,000    10,100,000
    Repayment of long-term debt                       (884,752)            -
    Increase in bank indebtedness                    6,476,288             -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows related to financing activities       9,482,967    10,212,023
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Effect of exchange rate change on cash and
     cash equivalents                                  (87,915)      (17,355)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net change in cash and cash equivalents            (38,279)    8,525,962
    Cash and cash equivalents, beginning
     of the year                                     9,178,123       652,161
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of the year       9,139,844     9,178,123
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents consist of:
    Cash                                             1,652,794     4,739,592
    Cash equivalents                                 7,487,050     4,438,531
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                     9,139,844     9,178,123
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow information
    Cash paid during the year for:
    Interest                                         1,111,077       124,083
    Income taxes                                        20,500             -
    -------------------------------------------------------------------------
    

    %SEDAR: 00015053E




For further information:

For further information: visit our website at www.cryocath.com, or
contact: Michael Moore, Investor Relations, Phone: (416) 815-0700 ext. 241,
Fax: (416) 815-0080, E-mail: mmoore@equicomgroup.com

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CRYOCATH TECHNOLOGIES INC.

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