CryoCath Announces Fiscal 2008 First Quarter Results



    
    www.cryocath.com                      Toronto Stock Exchange Symbol: CYT
    

    MONTREAL, Feb. 14 /CNW/ - CryoCath(R) Technologies Inc., the global
leader in cryotherapy products to treat cardiac arrhythmias, today announced
financial results for the first quarter, ended December 31, 2007.

    
    Selected First Quarter Financial and Operational Highlights:
    -  EP Revenue for Q1 2008 was $8.7 million or a strong 32.2% increase
       over Q1 2007. All regions around the world showed healthy revenue
       growth.
    -  Rapid expansion in the number of active Arctic Front(R) sites in
       Europe - from 23 at the end of Q4'07 to 34 sites at the end of Q1. As
       well, we see rapid ongoing expansion in the number of installed
       consoles worldwide by 33 in Q1 to a total of over 507 consoles world-
       wide.
    -  Explosive sales growth of our flagship product Arctic Front with a 97%
       revenue increase over Q1 2007.
    -  Strong progress in enrollment of patients in our Pivotal STOP AF IDE
       Trial, with 210 patients consented as of February 13, 2008. The
       program remains firmly on track for April completion of enrollment and
       late 2009 FDA approval.
    -  Gross profit of 51.8% keeps us on track towards achieving our long-
       term goal of at least 70% gross margins post launch in the US. Margin
       improvements will be driven by the impact of volume increases, mix
       improvements, as well as by ongoing improvements in process design.
    -  Net loss of $6.1 million, an increase of $2.6 million over Q1 2007.
       This increase reflects the impact of reduced revenues and volume
       following the sale of our surgical portfolio in June 2007. Excluding a
       large non-recurring foreign exchange gain in Q1 2007, departmental
       spending increased by only 1% versus the prior year, this despite the
       accelerated enrollment pace in STOP AF, increased investments in
       Europe and significant incremental investments in administrative
       process and controls.
    

    "In the first quarter of 2008 we have been able to make significant
progress in developing our business," said Jan Keltjens, President and CEO of
CryoCath. "All regions are showing solid sales growth, and Arctic Front is
starting to show its true potential with a rapid uptake in Europe. With 34
active sites and a total of more than 2,060 procedures performed, Arctic Front
is rapidly building broad acceptance as a safe, easy to use and effective
therapy for Paroxysmal AFib. Based on the consistently strong clinical
feedback, and the rapid progression of enrollment of patients in our pivotal
trial in the US, we remain confident that we can complete enrollment by April
and obtain US approval towards the end of 2009, thus positioning ourselves for
even more explosive growth in 2010 and beyond."

    Financial Results

    The Company's total revenue reached $8.7 million in the first quarter, a
decrease of 14% from the $10.1 million for the same quarter last year.
Breaking out the $8.7 million revenue number, total electrophysiology (EP)
disposables revenue for the quarter reached $5.9 million, a 21% increase over
the same period last year, representing 67.6% of revenue with the remainder
largely made up of cryoconsole sales.
    Gross profit for the first quarter of fiscal 2008 was $4.5 million or
51.8% of sales, a decrease from $6.2 million or 61.1% in the first quarter of
fiscal 2007. Driving the reduced margins primarily were lower volumes due to
the sale of the surgical business and an unfavorable product mix change in
favor of lower margin consoles.
    Total expenses were $11.2 million in the first quarter of 2008, an
increase of $1.4 million over expenses in the same quarter of 2007. The
increase is primarily related to foreign exchange (a $1.2 million higher
expense in Q1 2008 as compared to the prior quarter) along with an increase in
administrative costs related to higher professional fees as we strengthened
out internal control structure. These increases were partially offset by lower
sales and marketing costs.
    Net research and development expenses for the first quarter of 2008 were
$2.3 million compared to $2.0 million in the same quarter last year, driven
primarily by the increase in enrollment for the STOP AF study.
    The Company's sales and marketing expenses for the first quarter of 2008
decreased to $4.4 million compared to $5.2 million in the same period last
year. The decrease was a result of increased fiscal discipline notwithstanding
increased spending to support growth initiatives in Europe.
    Administrative expenses for the first quarter of 2008 increased to
$2.7 million from $2.0 million for the same period last year. The increase is
mostly related to increased professional fees driven by the creation of a new
structure to handle global tax payments, investments in improved compliance
and control processes, and higher costs for the FY2007 audit.
    CryoCath's net loss for the first quarter ended December 31, 2007
increased to $6.1 million or ($0.16) per share from a loss of $3.5 million or
($0.09) per share in the first quarter of fiscal 2007.
    Operating burn for the quarter increased to $4.9 million from
$2.1 million in the first quarter of 2007 while EBITDA decreased from
($2.1) million in Q1 2007 to ($4.8) million in the current quarter. The
increase in burn and resulting decrease in EBITDA are both related to lower
revenues in the wake of the sale of the surgical business, the lower gross
margin and the aforementioned increase in expenses.
    The Company, as of December 31, 2007, had access to approximately
$19.4 million in cash and borrowing facilities as compared to $28.5 million at
the end of September, 2007. The decrease is related to the higher operating
burn as well as unfavorable movements in non-cash working capital, in
particular, accounts payable which was negatively impacted by one-time
payments including costs related to the sale of the surgical business and
annual bonus payments.

    The Company will host a conference call to discuss the first quarter and
provide an update on its business this afternoon, Thursday, February 14, at
4:30 PM (EST.) The call will be audio-cast live from CryoCath's website and
archived for 90 days. CryoCath will also be holding its Annual Meeting on
Thursday, February 28, 2008 in Montreal at The Queen Elizabeth Hotel at
4:30 p.m. and welcomes all shareholders, members of the financial community
and interested parties to attend.
    Complete financials will be filed at www.sedar.com.

    About CryoCath

    CryoCath - www.cryocath.com - is a medical technology company that leads
the world in cryotherapy products to treat cardiac arrhythmias. 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.

    
    Balance Sheets (unaudited)

    As at                                       December 31     September 30
                                                       2007             2007
                                                          $                $
    ASSETS
    Current Assets
    Cash and cash equivalents                     3,700,548        9,139,844
    Cash subject to restrictions                    634,375          612,500
    Short-term investments held-to-maturity       9,923,948       14,894,481
    Accounts receivables                          7,579,662        7,027,518
    Investment tax credits receivable               665,611          296,840
    Inventories                                   6,506,000        7,701,067
    Prepaid expenses                                684,517        1,143,381
    -------------------------------------------------------------------------
    Total current assets                         29,694,661       40,815,631
    Cash subject to restrictions                    525,000          700,000
    Balance of sale receivable                    1,606,365        1,563,195
    Consoles at customers' premises               1,486,919        1,475,631
    Property, plant, and equipment                2,592,127        2,881,313
    Intellectual property                         2,882,304        2,876,325
    -------------------------------------------------------------------------
                                                 38,787,376       50,312,095
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities
    Bank indebtedness                             5,397,888        6,476,288
    Accounts payable and accrued liabilities      9,765,411       14,410,438
    Fair value of derivative financial
     instruments                                     18,464           41,175
    Current portion of long-term debt             1,280,051        1,236,032
    Current portion of deferred revenue             598,781          615,546
    -------------------------------------------------------------------------
    Total current liabilities                    17,060,595       22,779,479
    Long-term debt                               22,677,769       22,927,229
    Deferred revenue                                273,036          294,169
    -------------------------------------------------------------------------
    Total Liabilities                            40,011,400       46,000,877
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock                               181,105,223      181,041,609
    Contributed Surplus                           9,732,463        9,215,635
    Deficit                                    (192,061,710)    (185,946,026)
    -------------------------------------------------------------------------
    Total shareholders' equity                   (1,224,024)       4,311,218
    -------------------------------------------------------------------------
                                                 38,787,376       50,312,095
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Statement of Operations and Comprehensive Loss and Deficit (unaudited)

                                               Three months     Three months
                                                      ended            ended
                                                   December         December
                                                   31, 2007         31, 2006
                                                          $                $

    REVENUES

    Sales (including rental income of
     $284,559; 2006 - $166,062)                   8,651,184       10,076,565

    Cost of sales (including amortization of
     $341,488; 2006 - $667,360)                   4,173,225        3,918,941
    -------------------------------------------------------------------------

    Gross Profit                                  4,477,959        6,157,624
    Interest income                                 257,166          113,400
    -------------------------------------------------------------------------
                                                  4,735,125        6,271,024
    -------------------------------------------------------------------------
    EXPENSES
    Research and development                      2,642,315        2,103,754
    Investment tax credits                         (368,771)        (100,935)
    -------------------------------------------------------------------------
    Net research and development                  2,273,544        2,002,819
    Administrative                                2,693,084        1,992,886
    Sales and marketing                           4,389,937        5,227,574
    Amortization of intellectual property            60,307           41,747
    Amortization of property, plant, and
     equipment                                      271,788          167,891
    Amortization of deferred financing charges      103,461          139,993
    Interest on long-term debt                      666,333          586,374
    Gain on foreign exchange embedded
     derivatives                                    (22,711)         (57,701)
    Foreign exchange (gain) loss                    221,233         (965,091)
    Stock-based compensation expense                527,459          373,822
    Other expenses                                        -          299,274
    -------------------------------------------------------------------------
                                                 11,184,435        9,809,588
    -------------------------------------------------------------------------
    Net loss and other comprehensive loss
     before undernoted item                      (6,449,310)      (3,538,564)
    Income from manufacturing agreement             338,752                -
    -------------------------------------------------------------------------
    Net loss and other comprehensive loss
     before income taxes                         (6,110,558)      (3,538,564)
    Income taxes                                     (5,126)               -
    -------------------------------------------------------------------------
    Net loss and other comprehensive loss        (6,115,684)      (3,538,564)
    -------------------------------------------------------------------------
    Deficit, beginning of period               (185,946,026)    (166,970,727)
    -------------------------------------------------------------------------
    Deficit, end of period                     (192,061,710)    (170,509,291)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of common shares     38,131,284       37,969,619
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted loss per share                 ($0.16)          ($0.09)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Statement of Cash Flows (unaudited)

                                               Three months     Three months
                                                      ended            ended
                                                   December         December
                                                   31, 2007         31, 2006
                                                          $                $

    OPERATING ACTIVITIES
    Net loss and other comprehensive loss for
     the period                                  (6,115,684)      (3,538,564)
    Items not affecting cash
    Stock-based compensation expense                527,459          373,822
    Interest capitalized on long-term debt                -          569,342
    Amortization of intellectual property            63,227          460,152
    Amortization of consoles at customers'
     premises                                       218,723          208,838
    Amortization of property, plant, and
     equipment                                      391,632          208,008
    Amortization of deferred financing charges      103,461          139,993
    Unrealized (gain) loss on foreign exchange
     embedded derivatives                           (22,711)         (57,701)
    Unrealized foreign exchange loss (gain)         (46,497)        (421,659)
    Accretion in balance of sale receivable         (55,622)               -
    -------------------------------------------------------------------------
                                                 (4,936,012)      (2,057,769)

    Net change in non-cash working capital
     balances relating to operations             (3,807,083)        (940,332)
    Decrease in net investments in leases                 -            5,967
    (Decrease) increase in deferred revenue         (37,898)          48,426
    -------------------------------------------------------------------------
    Cash flows related to operating activities   (8,780,993)      (2,943,708)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Proceeds from maturities of short-term
     investments                                  4,962,754        3,702,613
    Decrease (increase) in cash subject to
     restrictions                                   153,125       (1,640,625)
    Acquisition of intellectual property           (69,206)         (110,392)
    Acquisition of property, plant, and
     equipment                                     (50,997)         (281,497)
    Placement of consoles at customers'
     premises                                     (380,668)         (426,579)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows related to investing activities   4,615,008         1,243,520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Issuance of common shares                       52,983                 -
    Repayment of employee share purchase loans           -             2,550
    Increase in deferred financing charges               -              (167)
    Increase in long-term debt                           -         3,534,000
    Repayment of long-term debt                   (308,902)         (220,900)
    Increase (decrease) in bank indebtedness    (1,078,400)                -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows related to financing activities  (1,334,319)        3,315,483
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Effect of exchange rate change on cash and
     cash equivalents                               61,008           158,048
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net change in cash and cash equivalents     (5,439,296)        1,773,343
    Cash and cash equivalents, beginning of
     period                                      9,139,844         9,178,123
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period     3,700,548        10,951,466
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents consist of:
    Cash                                         3,700,548         7,455,341
    Cash equivalents - commercial paper and
     other investments with maturities
     less than 90 days                                   -         3,496,125
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                 3,700,548        10,951,466
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow information
    Cash paid during the period for
    Interest                                       770,200            18,350
    Income taxes                                     5,126                 -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00015053EF




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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