CryoCath Announces Fiscal 2008 Third Quarter Results



    www.cryocath.com
    Toronto Stock Exchange Symbol: CYT

    MONTREAL, Aug. 5 /CNW/ - CryoCath(R) Technologies Inc., the global leader
in cryotherapy products to treat cardiac arrhythmias, today announced
financial results for the third quarter, ended June 30, 2008.

    
    Selected Third Quarter Financial and Operational Highlights:
    -  Grew revenue in Q3 2008 to $9.2 million or a 12.0% increase over
       comparable electrophysiology (EP) revenue in Q3 2007.
    -  Continued expansion of active Arctic Front(R) user sites outside the
       United States - from 45 at the end of Q2 2008 to 57 at the end of
       Q3 2008. Cumulatively, an estimated 3,100 procedures have been
       performed with Arctic Front.
    -  Increased the number of installed consoles worldwide by 28 in Q3 2008
       to a total of 547 consoles (net of IDE consoles).
    -  Achieved significant growth of the Company's flagship AFib products,
       led by Arctic Front with sales 76.3% over the same quarter last year.
    -  Reached a gross profit of 56.2% in Q3 2008, which represents the
       third consecutive quarter of gross profit improvement.
    -  Achieved key milestone of full enrollment and treatment of all
       required patients in its pivotal STOP AF IDE Trial in the United
       States.
    -  Introduced Arctic Front in four new jurisdictions: Italy, Belgium,
       Spain and Hong Kong, and in Hungary, subsequent to the end of the
       quarter.
    -  Secured gross proceeds of $18.0 million from an equity financing.
    -  Strengthened operational leadership with the appointments of
       Mrs. Ginette Gagné as the Company's Chief Financial Officer during
       the third quarter and Mr. Frank Vandeputte as Vice President, Europe,
       subsequent to the end of the quarter.
    

    "We have established a clear strategy to focus on commercial progress in
Europe and obtain PMA approval for Arctic Front in the U.S.," said Jan
Keltjens, President and CEO of CryoCath. "In Europe, our business continues to
grow rapidly with both an increased presence and increased unit sales. We
entered three new markets during the third quarter launching Arctic Front in
Italy, Belgium and Spain and we activated new sites at a record pace of nearly
one new user every week, with 12 new sites now using Arctic Front. We also
recruited seasoned and senior leadership with the addition of Mr. Vandeputte
to oversee and accelerate our growth in Europe. Sales of Arctic Front had a
strong finish to the quarter despite a vendor supply constraint for our
FlexCath(R) Steerable guiding catheter. This supply constraint has since been
fully resolved, but impacted sales in the first two months of the quarter. In
the U.S., now that the STOP AF IDE pivotal trial is fully enrolled and all
patients have received treatment, we are in the countdown period towards final
data. We expect the 12-month follow-up data to be available in the second
quarter of calendar 2009, which would enable a product approval in the U.S. by
the end of 2009. Access to the large U.S market will allow us to significantly
accelerate growth."

    Financial Results

    Total revenue for the third quarter of fiscal 2008 was $9.2 million
compared with $11.6 million for the third quarter of fiscal 2007, which
included sales from the divested surgical business of $3.4 million. For the
nine-month period ended June 30, 2008, total revenue was $28.0 million
compared with $32.9 million for the corresponding period last year, which
included sales from the divested surgical business of $10.8 million.
    EP disposable revenues for the third quarter of fiscal 2008 were
$6.3 million, or a growth of 14.5%, as compared to $5.5 million for the third
quarter of fiscal 2007. U.S. sales of these products were $3.0 million, a 2.8%
decrease from the corresponding period last year completely driven by foreign
exchange impact. Sales outside the U.S. (OUS) of these products were
$3.3 million as compared to $2.4 million, or an increase of 36.4%.
    Other EP revenues, which consist of console sales and rentals, as well as
various accessories and services, for the third quarter of 2008 were
$2.9 million as compared to $2.8 million for the third quarter of fiscal 2007.
U.S. sales of these products were $2.0 million as compared to $1.6 million in
the third quarter of fiscal 2007. OUS sales of these products were
$0.9 million, as compared to $1.2 million in the third quarter of fiscal 2007.
    Gross profits for the third quarter of fiscal 2008 were $5.1 million or
56.2% of sales compared to $6.8 million or 58.2% of sales in the third quarter
of fiscal 2007. For the nine-month period ended June 30, 2008, gross profits
were $15.1 million or 54.0% of sales, compared to $20.0 million or 60.8% of
sales from the corresponding period last year. The difference is primarily due
to volume loss on the surgical portfolio divestiture. Gross margins grew for
the third consecutive quarter and the Company anticipates that gross profit
will continue to fluctuate modestly as the sales mix of consoles and higher
margin consumables fluctuate. However, the Company remains confident that
gross margins will grow to at least 70% once Arctic Front is launched in the
U.S.
    Net research and development expenses for the third quarter of fiscal
2008 were $4.6 million compared to $3.2 million for the third quarter of
fiscal 2007. For the nine-month period ended June 30, 2008, research and
development expenses were $10.2 million compared to $8.2 million for the
corresponding period in 2007. The difference is directly related to the STOP
AF IDE pivotal trial in the United States and Canada and legal fees.
    Sales and marketing expenses for the third quarter of fiscal 2008 were
$5.4 million compared to $6.6 million for the third quarter of fiscal 2007.
For the nine-month period ended June 30, 2008, sales and marketing expenses
were $15.1 million compared to $18.6 million for the corresponding period in
2007. The change is a result of the surgical portfolio divestiture with the
elimination of commissions and fees combined with increasing efficiencies in
the sales and marketing process which was partially offset by an increase in
certain investments made in Europe to increase the Company's presence in the
region to support Arctic Front.
    Administrative expenses for the third quarter of fiscal 2008 were
$2.7 million compared to $2.0 million for the third quarter of fiscal 2007.
For the nine-month period ended June 30, 2008, administrative expenses were
$8.0 million compared to $5.9 million for the corresponding period in 2007.
The change is primarily related to investments in resources to build a robust
infrastructure required to support rapid, sustainable growth while continuing
the required programs on controls and compliance.
    CryoCath's net loss for the third quarter of fiscal 2008 was $7.9 million
or ($0.20) per share compared to a gain of $2.4 million or $0.06 per share in
the third quarter of fiscal 2007. Excluding the $10.1 million from the sale of
the surgical portfolio, net loss for the third quarter of fiscal 2007 was
$7.8 million or ($0.20) per share.
    Operating burn for the third quarter of fiscal 2008 was $6.4 million
compared to $4.7 million in the third quarter of fiscal 2007. For the
nine-month period ended June 30, 2008, the operating burn was $16.1 million
compared to $10.0 million for the corresponding period in 2007. Variations are
mainly due to the divested surgical business combined with the impact of
interests on long-term debt no longer capitalized and unrealized foreign
exchange variations.
    EBITDA for the third quarter of fiscal 2008 was at ($6.3) million,
compared to $3.7 million for the third quarter of fiscal 2007. EBITDA for the
corresponding period for 2007 was ($6.4) million, excluding the $10.1 million
from the sale of the surgical business. For the nine-month period ended
June 30, 2008, EBITDA was ($15.6) million as compared to ($3.4) million for
the corresponding period last year. Excluding the sale of the surgical
business, EBITDA was ($13.5) million for the nine-month period ended June 30,
2007.
    As of June 30, 2008, the Company had access to approximately
$28.6 million in cash and borrowing facilities as compared to $15.9 million at
the end of March, 2008.

    Notice of Conference Call

    CryoCath will host a conference call to discuss the third quarter results
and provide an update on its business today, on Tuesday, August 5, 2008, at
9:00 a.m. (ET) hosted by Mr. Jan Keltjens, President and Chief Executive
Officer and Mrs. Ginette Gagné, Chief Financial Officer. To access the
conference call by telephone, dial 416-644-3427 or 1-866-250-4892. The call
will be audiocast live from CryoCath's website and archived for 90 days.

    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 annual
sales in excess of $40 million, its products are routinely used in more than
500 centers around the world. The Company's flagship product, Arctic Front, is
a minimally invasive cryo-balloon catheter designed specifically to treat
Atrial Fibrillation, an emerging $2 billion market opportunity. Marketed in
Europe and the subject of a pivotal study in the United States, Arctic Front
has been used to treat 3,100 patients.

    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.


    
    Consolidated Balance Sheets (unaudited)

    As at                                              June 30  September 30
                                                          2008          2007
                                                             $             $

    ASSETS

    Current Assets
    Cash and cash equivalents                        5,729,278     9,139,844
    Cash subject to restrictions                             -       612,500
    Short-term investments held-to-maturity         12,947,802    14,894,481
    Accounts receivable                              9,414,247     7,027,518
    Investment tax credits receivable                  866,120       296,840
    Inventories                                      7,301,097     7,701,067
    Prepaid expenses                                   834,100     1,143,381
    -------------------------------------------------------------------------
    Total current assets                            37,092,644    40,815,631
    Cash subject to restrictions                             -       700,000
    Balance of sale receivable                       1,771,480     1,563,195
    Consoles at customers' premises                  1,580,688     1,475,631
    Property, plant, and equipment                   2,237,784     2,881,313
    Intellectual property                            2,853,921     2,876,325
    -------------------------------------------------------------------------
                                                    45,536,517    50,312,095
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities
    Bank indebtedness                                1,112,908     6,476,288
    Accounts payable and accrued liabilities        14,917,692    14,410,438
    Fair value of derivative financial instruments           -        41,175
    Current portion of long-term debt                1,126,518     1,236,032
    Current portion of deferred revenue                864,313       615,546
    -------------------------------------------------------------------------
    Total current liabilities                       18,021,431    22,779,479
    Long-term debt                                  24,494,857    22,927,229
    Deferred revenue                                   300,823       294,169
    -------------------------------------------------------------------------
    Total liabilities                               42,817,111    46,000,877
    -------------------------------------------------------------------------
    Shareholders' Equity
    Capital stock                                  198,109,081   181,041,609
    Contributed surplus                             10,671,104     9,215,635
    Deficit                                       (206,060,779) (185,946,026)
    -------------------------------------------------------------------------
    Total shareholders' equity                       2,719,406     4,311,218
    -------------------------------------------------------------------------
                                                    45,536,517    50,312,095
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statement of Operations and Comprehensive Loss and Deficit
    (unaudited)

                      Three months  Three months   Nine months   Nine months
                             ended         ended         ended         ended
                           June 30,      June 30,      June 30,      June 30,
                              2008          2007          2008          2007
                                 $             $             $             $
    REVENUES

    Sales (including
     rental income of
     $237,080 and
     $765,976; 2007 -
     $224,989 and
     $609,974)           9,160,954    11,604,616    28,044,289    32,897,067

    Cost of sales
     (including
     amortization and
     console write-offs
     of $505,123 and
     $1,192,807; 2007 -
     $264,289 and
     $742,601)           4,016,290     4,851,075    12,900,799    12,902,411
    -------------------------------------------------------------------------

    Gross Profit         5,144,664     6,753,541    15,143,490    19,994,656
    -------------------------------------------------------------------------

    EXPENSES

    Research and
     development         4,658,260     3,361,027    10,763,591     8,557,714
    Investment tax
     credits               (99,999)     (136,140)     (568,769)     (491,115)
    -------------------------------------------------------------------------
    Net research and
     development         4,558,261     3,224,887    10,194,822     8,066,599
    Administrative       2,672,355     1,999,565     8,042,524     5,856,858
    Sales and marketing  5,364,133     6,620,213    15,107,474    18,553,536
    Amortization of
     intellectual
     property              118,855        58,625       240,517       173,459
    Amortization of
     property, plant,
     and equipment         250,253       239,070       802,177       670,064
    Amortization of
     deferred financing
     charges               176,722        84,424       382,610       343,122
    Interest on long-term
     debt                  637,277       645,399     1,876,231     1,858,447
    Loss (gain) on
     foreign exchange
     embedded derivatives        -        62,882       (41,175)       48,860
    Foreign exchange
     (gain) loss           148,830     1,381,492      (535,436)      655,332
    Stock-based
     compensation
     expense               511,443       300,100     1,548,400     1,069,856
    Interest income       (170,802)     (107,810)     (566,960)     (280,838)
    Other expenses         315,384             -       456,384       299,274
    -------------------------------------------------------------------------
                        14,582,711    14,508,847    37,507,568    37,314,569
    -------------------------------------------------------------------------
    Net loss and other
     comprehensive loss
     before undernoted
     items              (9,438,047)   (7,755,306)  (22,364,078)  (17,319,913)
    Income from
     manufacturing
     agreement           1,485,671             -     2,242,651             -
    Gain on sale of
     surgical portfolio          -    10,118,581             -    10,118,581
    -------------------------------------------------------------------------
    Net loss and other
     comprehensive loss
     before income
     taxes              (7,952,376)    2,363,275   (20,121,427)   (7,201,332)
    Income taxes           (16,890)            -        (6,674)            -
    -------------------------------------------------------------------------
    Net loss and other
     comprehensive
     loss               (7,935,486)    2,363,275   (20,114,753)   (7,201,332)
    Deficit, beginning
     of period        (198,125,293) (176,535,334) (185,946,026) (166,970,727)
    -------------------------------------------------------------------------
    Deficit, end
     of period        (206,060,779) (174,172,059) (206,060,779) (174,172,059)
    -------------------------------------------------------------------------
    Weighted average
     number of common
     shares             40,636,741    38,016,719    39,064,455    37,985,809
    -------------------------------------------------------------------------
    Basic income (loss)
     per share               (0.20)         0.06         (0.51)        (0.19)
    -------------------------------------------------------------------------
    Diluted income (loss)
     per share               (0.20)         0.05         (0.51)        (0.19)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statement of Cash Flows (unaudited)

                      Three Months  Three Months   Nine Months   Nine Months
                             Ended         Ended         Ended         Ended
                           June 30,      June 30,      June 30,      June 30,
                              2008          2007          2008          2007
                                 $             $             $             $
    OPERATING ACTIVITIES

    Net income (loss)
     and other
     comprehensive loss
     for the period     (7,935,486)    2,363,275   (20,114,753)   (7,201,332)
    Items not affecting
     cash
    Gain on sale of
     surgical portfolio          -   (10,118,581)            -   (10,118,581)
    Stock-based
     compensation
     expense               511,443       300,100     1,548,400     1,069,856
    Interest capitalized
     on long-term debt           -       591,769             -     1,732,124
    Amortization of
     intellectual
     property              114,110       552,085       241,612     1,526,502
    Amortization of
     consoles at
     customers'
     premises              211,464       264,289       651,934       742,601
    Amortization of
     property, plant,
     and equipment         383,358       349,499     1,176,836       995,906
    Amortization of
     deferred financing
     charges               176,722        84,424       382,610       343,122
    Unrealized (gain)
     loss on foreign
     exchange embedded
     derivatives                 -        62,882       (41,175)       48,860
    Unrealized foreign
     exchange loss         198,352       813,397       198,352       871,489
    Accretion in balance
     of sale receivable    (57,132)            -      (169,157)            -
    -------------------------------------------------------------------------
                        (6,397,169)   (4,736,861)  (16,125,341)   (9,989,453)
    Net change in
     non-cash working
     capital balances
     relating to
     operations          1,516,600     4,277,372    (1,471,695)    1,276,530
    Decrease in net
     investments in
     leases                      -             -             -         5,967
    (Decrease) increase
     in deferred
     revenue               225,086       (60,505)      255,421       117,804
    -------------------------------------------------------------------------
    Cash flows related
     to operating
     activities         (4,655,483)     (519,994)  (17,341,615)   (8,589,152)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES

    Net proceeds from
     sale of surgical
     portfolio                   -    20,222,586             -    20,222,586
    Proceeds from
     maturities of
     short-term
     investments         1,990,731             -    14,882,979     5,616,907
    Acquisition of
     short term
     investments       (12,936,300)                (12,936,300)
    Decrease (increase)
     in cash subject
     to restrictions     2,000,000       109,375     1,312,500    (1,421,875)
    Acquisition of
     intellectual
     property              (63,260)     (106,897)     (219,208)     (330,089)
    Acquisition of
     property, plant,
     and equipment        (200,042)     (755,296)     (325,794)   (1,329,252)
    Placement of consoles
     at customers'        (500,372)     (481,950)   (1,240,928)   (1,407,958)
    -------------------------------------------------------------------------
    Cash flows related
     to investing
     activities         (9,709,243)   18,987,818     1,473,249    21,350,319
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES

    Share issuance
     costs              (1,467,185)            -    (1,467,185)            -
    Issuance of common
     shares             18,005,922             -    18,441,725       120,105
    Repayment of
     employee share
     purchase loans              -             -             -         2,550
    Increase in deferred
     financing charges     (12,851)            -       (82,851)         (167)
    Increase in
     long-term debt         42,750             -     4,042,750     3,534,000
    Repayment of
     long-term debt       (249,395)     (221,284)   (2,884,395)     (663,407)
    Increase (decrease)
     in bank
     indebtedness       (4,484,980)    4,700,000    (5,363,380)    7,700,000
    -------------------------------------------------------------------------
    Cash flows related
     to financing
     activities         11,834,261     4,478,716    12,686,664    10,693,081
    -------------------------------------------------------------------------
    Effect of exchange
     rate change on
     cash and cash
     equivalents          (228,864)     (610,776)     (228,864)     (652,624)
    -------------------------------------------------------------------------
    Net change in cash
     and cash
     equivalents        (2,759,329)   22,335,764    (3,410,566)   22,801,624
    Cash and cash
     equivalents,
     beginning of
     period              8,488,607     9,643,983     9,139,844     9,178,123
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period           5,729,278    31,979,747     5,729,278    31,979,747
    -------------------------------------------------------------------------
    Cash and cash
     equivalents
     consist of:
    Cash                 2,610,478    29,840,947     2,610,478    29,840,947
    Cash equivalents -
     commercial paper
     and other
     investments with
     maturities less
     than 90 days        3,118,800     2,138,800     3,118,800     2,138,800
    -------------------------------------------------------------------------
                         5,729,278    31,979,747     5,729,278    31,979,747
    -------------------------------------------------------------------------
    Supplemental cash
     flow information
    Cash paid during
     the period for
    Interest               720,954       217,612     2,223,294       376,948
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00015053EF




For further information:

For further information: visit our website at www.cryocath.com, or
contact: Ross Marshall, Investor Relations, Phone: (416) 815-0700 ext. 238,
Fax: (416) 815-0080, E-mail: rmarshall@equicomgroup.com

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