NUCRYST Pharmaceuticals announces year-end results



    WAKEFIELD, Massachusetts, Feb. 14 /CNW/ - NUCRYST Pharmaceuticals Corp.
(NASDAQ:   NCST; TSX: NCS) today announced results for the year ended
December 31, 2007. Net loss narrowed to $4.0 million, or 22 cents per share,
on revenues of $30.1 million. This compares to a net loss of $10.5 million, or
58 cents per share, on revenues of $24.4 million in the previous year. The
lower net loss for 2007 is primarily attributable to the combined impact of
the $5 million milestone earned from Smith & Nephew in the third quarter
together with an additional $5 million milestone earned in the fourth quarter.
The impact of these milestones was partially offset by the $4.5 million
manufacturing cost rebate paid to Smith & Nephew in 2007 under our supply
agreement. No milestone payments were earned in 2006.
    For the three months ended December 31, 2007, the company posted net
income of $3.2 million, or 17 cents per share, on revenues of $11.2 million.
This compares to a net loss of $1.6 million in the fourth quarter of 2006, or
9 cents per share on revenues of $4.5 million.
    At December 31, 2007, NUCRYST had $17.8 million in cash and cash
equivalents.
    "While the fourth quarter of 2007 saw us continue to explore
opportunities to rebuild our new products pipeline, following the fourth
quarter 2006 cancellation of our clinical program in atopic dermatitis, the
principal focus of our Board and Management in late-2007 was on extracting
value from our advanced wound care assets," said Thomas E. Gardner, President,
CEO and Chairman of NUCRYST. "I am pleased with the improved results generated
in the fourth quarter of 2007, and believe they reflect in large part our
reinvigorated relationship with Smith & Nephew plc following a September 30,
2007 revision of our basic agreements."
    NUCRYST continues to seek partners for its two development projects, use
of NPI 32101 as an antimicrobial barrier cream and use of NPI 32101 in
inflammatory bowel disease. The company has already received a
510(k)regulatory approval from the FDA for the antimicrobial barrier cream.

    NUCRYST Pharmaceuticals (NASDAQ:   NCST; TSX: NCS) develops, manufactures
and commercializes medical products that fight infection and inflammation
using its patented atomically disordered nanocrystalline silver technology.
Smith & Nephew plc sell a range of advanced wound care products under their
Acticoat(TM) trade mark. Acticoat(TM) products incorporate NUCRYST's
SILCRYST(TM) coatings and are sold in over 30 countries. NUCRYST is also
developing pharmaceutical products to address medical conditions that are
characterized by both 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 2007 year end results can be
found in the 2007 Consolidated Financial Statements and Management's
Discussion and Analysis, which will be available at www.sec.gov and
www.sedar.com. NUCRYST filings are also available at
www.nucryst.com/Regulatory_Filings.htm.

    Eliot M. Lurier, Vice President, Finance and Administration and CFO
NUCRYST Pharmaceuticals Corp., (781) 224-1444, info@nucryst.com,
www.nucryst.com

    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.

    Some of the statements above may constitute forward-looking statements
within the meaning of securities legislation in the United States and Canada
(collectively "forward looking statements"). The words "efforts", "seek",
"explore" and "continue" 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: prospects and plans
for the development of future products containing our nanocrystalline silver,
plans for our gastrointestinal program, regulatory approval of our barrier
cream, and plans and prospects for our barrier cream. 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; we may not be able to obtain and retain regulatory
approval for our barrier cream and any future products; 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; we may
not be able to establish or maintain sales and marketing collaborations for
our barrier cream and other new products; we may not be able to attract and
retain collaborations relating to the development and commercialization of
future products; our cost reduction plans may not be sufficient to conserve
cash and control expenses; competition from other silver-based pharmaceutical
or medical device companies; our ability to raise additional financing
required to fund further research and development, clinical studies and obtain
regulatory approvals, on commercially acceptable terms or at all; 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; changes in general economic
conditions; other risks and uncertainties unidentified at this time;
management's response to these factors; and other factors described under
"Risk Factors" in our Quarterly Report on 10-Q for the quarter ended September
30, 2007 and our Annual Report on Form 10-K for the year ended December 31,
2006, both of which have been filed with the U.S. Securities and Exchange
Commission at www.sec.gov and with securities authorities in Canada 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.
    Consolidated Statements of Operations
    (unaudited)

    -------------------------------------------------------------------------
    (thousands of U.S.          Three Months Ended       Twelve Months Ended
     dollars except                    December 31               December 31
     share and per        ------------------------- -------------------------
     share data)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Revenue
      Wound care product
       revenue            $     6,235  $     4,539  $    20,092  $    24,369
      Milestone revenue         5,000            -       10,000            -
    -------------------------------------------------------------------------
                               11,235        4,539       30,092       24,369

    Costs
      Manufacturing             3,502        2,750       14,477       16,053
      Research and
       development              1,454        1,862        6,303       11,162
      General and
       administrative           2,685        1,812        9,067        6,723
      Depreciation and
       amortization                94           86          355          430
      Write down of
       capital assets               -        1,049        1,173        1,049
    -------------------------------------------------------------------------
    Income (loss) from
     operations                 3,500       (3,020)      (1,283)     (11,048)

      Foreign exchange
       (loss) gain               (281)       1,109       (3,283)        (298)
      Interest income             109          242          685        1,123
      Interest expense              -            -            -         (310)
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes and
     cumulative effect of
     a change in
     accounting principle       3,328       (1,669)      (3,881)     (10,533)
    Current income tax
     (expense) recovery          (140)          69         (140)          41
    -------------------------------------------------------------------------
    Income (loss) before
     cumulative effect of
     a change in
     accounting principle       3,188       (1,600)      (4,021)     (10,492)
    Cumulative effect of
     a change in
     accounting principle           -            -            -           (7)
    -------------------------------------------------------------------------
    Net income (loss)     $     3,188  $    (1,600) $    (4,021) $   (10,499)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Income (loss) per
     common share
      Net income (loss)
       - basic            $      0.17  $     (0.09) $     (0.22) $     (0.58)
      Net income (loss)
       - diluted                 0.17        (0.09)       (0.22)       (0.58)

    Weighted average
     number of common
     shares outstanding:
      - basic              18,363,552   18,301,264   18,333,810   17,964,332
      - diluted            18,413,248   18,301,264   18,333,810   17,964,332
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NUCRYST Pharmaceuticals Corp.
    Consolidated Balance Sheets
    (unaudited)

    -------------------------------------------------------------------------
    (thousands of U.S. dollars, except share        December 31  December 31
     data)                                                 2007         2006
    -------------------------------------------------------------------------

    ASSETS

    Current
      Cash and cash equivalents                     $    17,841  $    18,926
      Accounts receivable - net                          14,924        7,041
      Inventories                                         4,426        7,297
      Other                                                 427          327
    -------------------------------------------------------------------------
                                                         37,618       33,591

    Restricted cash                                         140          135
    Capital assets - net                                 12,734       11,350
    Intangible assets - net                                 807          816
    -------------------------------------------------------------------------

                                                    $    51,299  $    45,892
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current
      Accounts payable and accrued liabilities      $     3,650  $     2,261
      Accounts payable and accrued liabilities to
       related party                                         67           45
      Deferred lease inducement                             111            -
    -------------------------------------------------------------------------
                                                          3,828        2,306

    Long term deferred lease inducement                     726            -
    -------------------------------------------------------------------------
                                                          4,554        2,306
    -------------------------------------------------------------------------

    Guarantees
    Commitments

    Shareholders' equity
      Common shares no par value, unlimited shares
       authorized: issued and outstanding -
       18,367,563 and 18,309,613 shares at
       December 31, 2007 and 2006, respectively          82,776       82,672
      Additional paid-in capital                          1,511          482
      Accumulated other comprehensive income (loss)         557       (5,490)
      Accumulated deficit                               (38,099)     (34,078)
    -------------------------------------------------------------------------
    Total shareholders' equity                           46,745       43,586
    -------------------------------------------------------------------------

    Total                                           $    51,299  $    45,892
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NUCRYST Pharmaceuticals Corp.
    Consolidated Cash Flow Statements
    (unaudited)

    -------------------------------------------------------------------------
                                Three Months Ended       Twelve Months Ended
                                       December 31               December 31
    (thousands of U.S.    ------------------------- -------------------------
     dollars)                    2007         2006         2007         2006
    -------------------------------------------------------------------------
    Operating activities
    Net income (loss)     $     3,188  $    (1,600) $    (4,021) $   (10,499)
      Items not affecting
       cash
        Depreciation and
         amortization             408          396        1,638        1,656
        Stock-based
         compensation
         expense                  588          147        1,121          496
        Amortized lease
         inducement               (28)           -          (71)           -
        Write down of
         capital assets             -        1,049        1,173        1,049
        Foreign exchange
         loss                       -            -            -         (356)
        Cumulative effect
         of a change in
         accounting
         principle                  -            -            -            7
    Changes in non cash
     working capital
        Accounts
         receivable            (4,139)       1,269       (7,009)        (606)
        Inventories             1,516         (534)       4,001         (777)
        Other                   1,189           71          (13)        (212)
        Accounts payable
         and accrued
         liabilities           (5,095)      (1,079)         668       (2,376)
        Accounts payable
         and accrued
         liabilities to
         related party            (72)        (513)        (177)        (969)
    -------------------------------------------------------------------------
    Cash used in operating
     activities                (2,445)        (794)      (2,690)     (12,587)
    -------------------------------------------------------------------------

    Investing activities
        Restricted cash            (4)          (1)          (5)          (5)
        Purchase of
         short-term
         investments                -            -            -      (22,191)
        Maturity of
         short-term
         investments                -            -            -       22,748
        Capital
         expenditures            (336)        (632)      (1,920)      (4,978)
        Intangible assets         (10)         (32)         (66)        (153)
    -------------------------------------------------------------------------

    Cash used in
     investing activities        (350)        (665)      (1,991)      (4,579)
    -------------------------------------------------------------------------

    Financing activities
        Issuance of common
         shares, net of
         share issuance
         costs                      -           36           12          286
        Deferred lease
         inducement                 -            -          822            -
    -------------------------------------------------------------------------

    Cash provided from
     financing activities           -           36          834          286
    -------------------------------------------------------------------------

    Effect of exchange
     rate changes on cash
     and cash equivalents         207         (826)       2,762          (95)
    -------------------------------------------------------------------------

    Net decrease in cash
     and cash equivalents      (2,588)      (2,249)      (1,085)     (16,975)
    Cash and cash
     equivalents at
     beginning of year         20,429       21,175       18,926       35,901
    -------------------------------------------------------------------------

    Cash and cash
     equivalents at end
     of year              $    17,841  $    18,926  $    17,841  $    18,926
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NUCRYST Pharmaceuticals Corp.
    Consolidated Statements of Shareholders' Equity
    (unaudited)

    -------------------------------------------------------------------------
                             Common Shares                       Accumulated
    (thousands of     ---------------------------   Additional         Other
     U.S. dollars,                        Stated       Paid-in Comprehensive
     except share data)     Number        Amount       Capital  Income (Loss)
    -------------------------------------------------------------------------
    December 31, 2005   14,227,500        42,629             -        (5,281)

    Issuance of common
     shares upon
     conversion of
     indebtedness to
     related party
     (note 9)            3,964,200        39,642             -             -
    Issuance of common
     shares in connection
     with restricted
     shares and exercises
     of stock options
     and share
     appreciation rights   117,913           401             -             -
    Stock-based
     compensation                -             -           482             -
    Foreign currency
     translation
     adjustments                 -             -             -          (209)
    Net loss                     -             -             -             -
    -------------------------------------------------------------------------
    December 31, 2006   18,309,613    82,672 482        (5,490)      (34,078)

    Issuance of common
     shares in connection
     with restricted
     shares and exercises
     of stock options       57,950           104              -            -
    Stock-based
     compensation                -             -          1,029            -
    Foreign currency
     translation
     adjustments                 -             -              -        6,047
    Net loss                     -             -              -            -
    -------------------------------------------------------------------------
    December 31, 2007   18,367,563   $    82,776   $     1,511   $       557
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------
    (thousands of                          Total         Total
     U.S. dollars,     Accumulated Comprehensive  Shareholders'
     except share data)    Deficit          Loss        Equity
    -------------------------------------------------------------
    December 31, 2005      (23,579)       (3,742)       13,769

    Issuance of common
     shares upon
     conversion of
     indebtedness to
     related party
     (note 9)                    -             -        39,642
    Issuance of common
     shares in connection
     with restricted
     shares and exercises
     of stock options
     and share
     appreciation rights         -             -           401
    Stock-based
     compensation                -             -           482
    Foreign currency
     translation
     adjustments                 -          (209)         (209)
    Net loss               (10,499)      (10,499)      (10,499)
    -------------------------------------------------------------
    December 31, 2006      (34,078)      (10,708)       43,586

    Issuance of common
     shares in connection
     with restricted
     shares and exercises
     of stock options            -             -            104
    Stock-based
     compensation                -             -          1,029
    Foreign currency
     translation
     adjustments                 -         6,047          6,047
    Net loss                (4,021)       (4,021)        (4,021)
    -------------------------------------------------------------
    December 31, 2007  $   (38,099)  $     2,026   $     46,745
    -------------------------------------------------------------
    -------------------------------------------------------------
    

    %SEDAR: 00023031E




For further information:

For further information: Eliot M. Lurier, Vice President, Finance and
Administration and CFO NUCRYST Pharmaceuticals Corp., (781) 224-1444,
info@nucryst.com, www.nucryst.com

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