NUCRYST Announces Second Quarter 2008 Financial Results



    WAKEFIELD, MA, Aug. 12 /CNW/ - NUCRYST Pharmaceuticals, a developer and
manufacturer of medical products that fight infection and inflammation, today
announced its financial results for the second quarter ended June 30, 2008.
NUCRYST also announced today (see separate press release) that its Board of
Directors has authorized a program for the Company to repurchase up to 900,000
shares of its outstanding common stock.
    Total revenues were $4.7 million for the second quarter of 2008. Total
revenues include wound care revenues in the second quarter 2008 of $5.8
million, which was offset by the recognition during the quarter of $1.1
million of a $4.5 million manufacturing cost rebate paid annually to Smith &
Nephew pursuant to the companies' existing supply agreement.
    Net loss for the second quarter of 2008 of $1.7 million, or $0.09 per
share, represents an improvement of $1.3 million, or 43% from the net loss of
$3.0 million, or $0.16 per share, for the same period in 2007.
    The Company's operating loss before interest income and foreign exchange
losses was $1.6 million for the second quarters of 2008 and 2007,
respectively, and included $0.6 million in depreciation and amortization, and
non-cash equity compensation expenses in both periods.
    As of June 30, 2008, NUCRYST had $26.9 million in cash and cash
equivalents, an increase of $9.1 million from December 31, 2007.
    "We remain focused on improving our operating efficiencies and reducing
costs to decrease net losses," said Thomas E. Gardner, Chairman and Chief
Executive Officer of NUCRYST. "We also continue to tightly manage our cash
position while evaluating strategic growth opportunities that leverage our
expertise in wound care management. The restructuring actions that we have
implemented to date have helped us mitigate the impact of the manufacturing
cost rebate we are providing to Smith & Nephew."

    Second Quarter 2008 Financial Detail

    For the quarter ended June 30, 2008, NUCRYST reported total revenues of
$4.7 million, which includes an offset due to recognition during the quarter
of $1.1 million of a $4.5 million manufacturing cost rebate payable to Smith &
Nephew under the companies' supply agreement. There was no manufacturing cost
rebate recorded in the second quarter of 2007. Wound care revenues, which
reflect product revenues and royalties on Acticoat(TM) sales by Smith &
Nephew, were $5.8 million in the second quarter of 2008, as compared with
$6.1 million in the second quarter of 2007.
    Gross margin on revenues was 42% and 35% for the second quarters of 2008
and 2007, respectively. The improved gross margin on revenues is the result of
higher production volumes, an improved product mix and lower manufacturing
costs that offset the negative impact of the manufacturing cost rebate.
NUCRYST recognizes manufacturing revenue when the Company ships product to
Smith & Nephew and recognizes royalty income when Smith & Nephew sells
Acticoat(TM) products to its customers. Consequently, NUCRYST's gross margin
percent may vary from period to period due to differences in timing of product
shipments to Smith & Nephew and when Smith & Nephew sells product to its
customers.
    Research and development spending for the second quarter of 2008 totaled
$1.5 million compared to $1.7 million for the comparable period in 2007. The
current quarter included $0.2 million in severance costs as the Company
continues to reduce its research staff in the U.S. and transition programs to
its facility in Fort Saskatchewan, Canada.
    For the second quarter of 2008, general and administrative costs totaled
$2.2 million including $0.1 million in severance costs, as compared with
$2.1 million in the same period in 2007. The Company continues to evaluate
alternatives to further reduce general and administrative costs.
    Included in other income and expenses are foreign exchange losses in the
second quarter of 2008 of $0.2 million compared to foreign exchange losses of
$1.5 million in the same period in 2007 as the exchange rate for the U.S.
dollar against the Canadian dollar was relatively stable during the second
quarter of 2008.

    Conference Call

    NUCRYST will hold a conference call today, August 13, 2008 at 9:00 a.m.
ET, to provide a company update and discuss the financial results for the
quarter. The conference call will be simultaneously web cast on NUCRYST's web
site and archived for ninety days.

    
    Conference call details:

    Date:        Wednesday, August 13, 2008
    Time:        9:00 AM ET
    Dial-in:     877-419-6593 (U.S.)
                 719-325-4916 (International)
    Web cast:    http://www.nucryst.com (Investor Relations section)

    An audio replay of the call will be available for seven days:
    Access:      888-203-1112 (U.S.)
                 719-457-0820 (International)
                 Replay Passcode: 9742016
    

    About NUCRYST Pharmaceuticals

    NUCRYST Pharmaceuticals (NASDAQ:   NCST; TSX: NCS) develops, manufactures
and commercializes medical products that fight infection and inflammation
using SILCRYST(TM), its patented atomically disordered nanocrystalline silver
technology. NUCRYST licensed world-wide rights for SILCRYST(TM) wound care
coating products to Smith & Nephew plc, which markets these products in over
30 countries under their Acticoat(TM) trademark. NUCRYST is also developing
pharmaceutical products to address medical conditions that are characterized
by pain, infection and inflammation. The Company has developed its proprietary
nanocrystalline silver in a powder form, referred to as NPI 32101 for use in
medical devices and as an active pharmaceutical ingredient.
    A more detailed discussion of NUCRYST's 2008 second quarter results can
be found in our 10-Q filing which will be available at www.sec.gov and
www.sedar.com. NUCRYST filings are also available at
www.nucryst.com/Regulatory_Filings.htm.

    All amounts in US dollars
    SILCRYST(TM) is a trademark of NUCRYST Pharmaceuticals Corp.
    Acticoat(TM) is a trademark of Smith & Nephew plc

    The financial results in this news release are unaudited, and are not a
complete disclosure of our quarterly or annual financial results.

    This news release contains forward-looking statements within the meaning
of securities legislation in the United States and Canada (collectively
"forward-looking statements"). The words "believes", "expects", "plans",
"anticipates", "estimates", "intends", "projects", "may", "might", "would",
"will", "could", "should" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. Forward-looking statements in this news
release include, but are not limited to, statements about: our strategy,
future operations, prospects and plans of management and our ability to
successfully expand the company's business and achieve operating efficiencies
and cost reductions. With respect to the forward-looking statements contained
in this news release, readers are cautioned that numerous risks, uncertainties
and other factors could cause our actual results to differ materially from
those indicated in these statements including, but not limited to:
difficulties or delays in the initiation, timing, progress and results of our
preclinical trials and research and development programs; our ability to
maintain our collaboration with Smith & Nephew; our reliance on sales of
Acticoat(TM) products with our SILCRYST(TM) coatings by Smith & Nephew; the
future financial and operating performance of Smith & Nephew; our cost
reduction plans may not be sufficient to offset the impact of the
manufacturing cost rebate we provide to Smith & Nephew; our future operation
results are uncertain and likely to fluctuate; we may not be able to retain
existing and obtain new regulatory approvals for any future products; we may
not be able to establish successful commercialization programs, through new
corporate collaborations or otherwise for other future products; the impact of
competition from other silver-based pharmaceutical or medical device
companies; changes in currency exchange rates; our ability to protect our
intellectual property rights and to not infringe on the intellectual property
rights of others; our ability to comply with governmental regulations and
standards; our ability to successfully attract and retain skilled and
experienced personnel; changes in general economic and capital market
conditions; other risks and uncertainties unidentified at this time; and
management's response to these factors. Although we have attempted to identify
the important risks, uncertainties and other factors that could cause actual
results or events to differ materially from those expressed or implied in
forward-looking statements, there may be other factors that cause actual
results or events to differ from those expressed or implied in forward looking
statements. For a more thorough discussion of the risks associated with our
business, see the "Risk Factors" section in our Annual Report on Form 10-K for
the year ended December 31, 2007, in our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2008 and in subsequent reports filed with the U.S.
Securities and Exchange Commission on EDGAR at www.sec.gov and with securities
authorities in Canada on SEDAR at www.sedar.com. All forward-looking
statements are expressly qualified in their entirety by this cautionary
statement and NUCRYST disclaims any intention or obligation to revise or
update any forward-looking statements whether as a result of new information,
future developments or otherwise after the date hereof.


    
                        NUCRYST PHARMACEUTICALS CORP.
                             Financial Highlights
                                 (unaudited)
         (thousands of U.S. dollars except share and per share data)

    ------------------------------------------------- -----------------------
                                  Three Months             Six Months
    Condensed Consolidated        Ended June 30           Ended June 30
     Statements of            ----------------------- -----------------------
     Operations                     2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Revenue                   $    4,708  $    6,098  $    9,897  $   11,332
                              ----------- ----------- ----------- -----------
    Operating expenses:
      Cost of goods sold           2,726       3,986       6,826       7,134
      Research and development     1,463       1,654       2,950       3,658
      General and
       administrative              2,164       2,110       4,652       4,049
                              ----------- ----------- ----------- -----------
        Total operating
         expenses                  6,353       7,750      14,428      14,841
                              ----------- ----------- ----------- -----------
    Loss from operations          (1,645)     (1,652)     (4,531)     (3,509)
    Other Income and Expenses        (71)     (1,344)        637      (1,351)
                              ----------- ----------- ----------- -----------

    Net loss                  $   (1,716) $   (2,996) $   (3,894) $   (4,860)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Basic and diluted net
     loss per common share    $    (0.09) $    (0.16) $    (0.21) $    (0.27)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Weighted average common
     shares outstanding       18,374,506  18,318,438  18,372,299  18,315,218
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------



    -------------------------------------------------------------------------
                                                        June 30  December 31
    Selected Consolidated Balance Sheet Data               2008         2007
    -------------------------------------------------------------------------

    Cash and cash equivalents                        $   26,878   $   17,841
    Current assets                                       34,716       37,618
    Total assets                                         47,585       51,299
    Current liabilities                                   4,723        3,828
    Non-current liabilities                                 649          726
    Shareholders' equity                                 42,213       46,745



    ------------------------------------------------- -----------------------
                                  Three Months             Six Months
                                  Ended June 30           Ended June 30
                              ----------------------- -----------------------
    Other Data                      2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Revenue
      Wound care revenue      $    5,833  $    6,098  $   12,147  $   11,332
      Manufacturing cost
       rebate                     (1,125)          -      (2,250)          -
                              ----------- ----------- ----------- -----------
    Total revenue             $    4,708  $    6,098  $    9,897  $   11,332

    Cost of Goods Sold        $    2,726  $    3,986  $    6,826  $    7,134

    Gross margin              $    1,982  $    2,112  $    3,071  $    4,198

    Gross margin percent             42%         35%         31%         37%
    

    %SEDAR: 00023031E




For further information:

For further information: David B. Holtz, Vice President and Chief
Financial Officer, NUCRYST Pharmaceuticals, (781) 224-1444, info@nucryst.com;
Gregory W. Gin, Lazar Partners, (212) 867-1762

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