CryoCath Announces Fiscal 2007 Third Quarter Results



    Toronto Stock Exchange Symbol: CYT

    MONTREAL, Aug. 9 /CNW/ - CryoCath Technologies Inc., the global leader in
cryotherapy products to treat cardiovascular disease, today announced
financial results for the third quarter, ended June 30, 2007.

    
    Selected Third Quarter Financial and Operational Highlights:

    -   Reported record third quarter revenue of $11.7 million, a 20.5%
        quarter-over-quarter increase
    -   Revenue in core EP business grew by 37.8% quarter over quarter to
        $8.3 million, reflecting strong performance of Arctic Front(R) in
        Europe
    -   Increased gross margins to 58.0% from 50.5% in the third quarter of
        2006
    -   Transformation of company into a high growth pure play EP/AFib
        company with relentless focus on its blockbuster potential through
        Arctic Front approval in the US and driving rapid profitable growth
        in Europe.
    -   Completed sale of surgical portfolio to ATS Medical in a cash
        transaction valued at US$22 million. With milestone payments, the
        agreement could increase in value to reach a total of US$30 million.
        These proceeds provide sufficient financial means to fund operations
        into the US launch of Arctic Front.
    

    "The third quarter of 2007 was one of solid revenue growth while we also
made significant progress in several key strategic areas. We achieved record
sales, driven by a marked uptake in growth of our core EP business," said Jan
Keltjens, President and CEO. "This increase in EP revenue is composed of
ongoing growth in our core focal cryoablation business, compounded by the
rapidly accelerating growth in the number of Atrial Fibrillation ablations
utilizing our flagship Arctic Front system in an increasing number of trained
sites in Europe. Last but not least, we successfully completed the sale of our
surgical portfolio to ATS Medical, providing financial runway to the US
commercial launch of Arctic Front while creating the required focus on this
blockbuster opportunity".
    "We also made good progress towards our goal of achieving Arctic Front
approval in the US. We continue to believe that we can complete enrolment
towards the end of this calendar year. Furthermore the on-going clinical
results that we receive from commercial use in Europe continue to create
confidence in the efficacy of our products."
    The Company's total sales reached $11.7 million for the third quarter, an
increase of 20.5% over the $9.7 million for the same quarter last year. For
the nine-month period ending June 30, 2007, sales increased 14.6% to
$33.1 million compared to $28.9 million in the same period a year ago.
    Gross margins for the third quarter of fiscal 2007 were $6.8 million or
58.0% of sales, an increase over the $4.9 million or 50.5% seen in the third
quarter of fiscal 2006. On a nine-month year-to-date basis, gross margins were
$20.1 million or 60.7% of sales, versus $16.7 million or 57.6% from the same
period a year ago. The increase in gross margins reflects higher revenues and
the impact of ongoing improvements in our manufacturing operation, partially
offset by mix and one-time charges taken last year.
    The Company's sales and marketing expenses for the third quarter of 2007
decreased to $6.8 million compared to $7.1 million in the same period last
year. On a nine-month year-to-date basis, sales and marketing expenses were
$19.1 million versus $20.0 million for the same period a year ago. The
decreases are associated with lower headcount and better control over
discretionary expenses.
    Net research and development expenses for the quarter ended June 30, 2007
was $3.4 million compared to $3.2 million in the same quarter last year
primarily as a result of higher clinical costs. On a nine-month year-to-date
basis, net R&D expenses were $8.6 million versus $9.3 million in the same
period in 2006. The decrease year to date is due to a significant decrease in
non-core R&D projects partly offset by higher clinical costs incurred in the
STOP AF IDE trial.
    Administrative expenses for the third quarter of 2007 increased to
$1.8 million from $1.7 million for the same period last year. On a nine-month
year-to-date basis, administrative expenses were $4.9 million versus
$4.1 million for the same period a year ago. The increase in both periods is
driven by continued spending to develop the robust infrastructure to support
rapid and sustainable growth.
    Other expenses, primarily composed of non-cash items, totaled
$2.8 million in the quarter as compared to $1.5 million in the same quarter
last year. For the nine months year to date, other expenses were $5.1 million
compared to $3.5 million last year. The increased expense in both periods was
driven by foreign exchange losses due to the appreciation of the Canadian
dollar and high interest expense related to the additional debt taken on in
July 2006.
    CryoCath's net income for the third quarter ended June 30, 2007 was
$2.4 million or $0.06 per share as a result of the $10.1 million gain recorded
on the sale of the surgical business. In the third quarter of fiscal 2006, the
company recorded a net loss of $8.4 million or ($0.22) per share. On a nine
month year-to-date basis, the company posted a net loss of $7.2 million or
($0.19) per share. For the same period one year ago, the company recorded a
net loss of $19.5 million or ($0.52) per share.
    Operating burn for the quarter decreased by 17.0% to $4.7 million versus
$5.6 million in the third quarter of 2006. On a nine-month year-to-date basis,
operating burn decreased to $10.0 million from $13.3 million in 2006. The
decrease in burn is primarily related to higher revenues and gross margins.
    The Company, as of June 30, 2007, had access to approximately
$35.3 million in cash and borrowing facilities. The increase is the direct
result of the sale of the surgical portfolio to ATS Medical and provides
sufficient runway to the US commercial launch of Arctic Front expected in late
2009.

    The Company will host a conference call to discuss the third quarter and
provide an update on its business on Friday, August 10 at 8:30AM (EST.) The
call will be audio-cast 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 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.



    
    Balance Sheets (unaudited)


    As at                                              June 30  September 30
                                                          2007          2006
                                                             $             $

    ASSETS

    Current assets
    Cash and cash equivalents                       31,979,747     9,178,123
    Cash subject to restrictions                       568,750             -
    Short-term investments held to maturity                  -     5,616,907
    Accounts receivable                             10,205,449     8,119,660
    Investment tax credits receivable                  993,148       502,033
    Inventories                                      7,852,349     7,105,974
    Prepaid expenses                                   180,146     1,044,039
    -------------------------------------------------------------------------
    Total current assets                            51,779,589    31,566,736
    Cash subject to restrictions                       853,125             -
    Balance of sale                                  1,608,168             -
    Net investments in leases                                -         5,967
    Deferred financing charges                               -     2,636,636
    Consoles at customers' premises                  1,904,786     1,858,465
    Property, plant, and equipment                   3,516,517     3,212,551
    Intellectual property                            2,887,372    15,194,606
    -------------------------------------------------------------------------
                                                    62,549,557    54,474,961
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
    Bank indebtedness                                7,700,000             -
    Accounts payable and accrued liabilities        14,113,534    10,201,378
    Fair value of derivative financial instruments      48,860             -
    Current portion of long-term debt                1,148,269             -
    Current portion of deferred revenue                538,900       491,683
    -------------------------------------------------------------------------
    Total current liabilities                       23,549,563    10,693,061
    Long-term debt                                  23,560,084    22,399,317
    Deferred revenue                                   294,922       228,774
    -------------------------------------------------------------------------
    Total liabilities                               47,404,569    33,321,152
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock                                  180,777,848   180,655,193
    Contributed surplus                              8,539,199     7,469,343
    Deficit                                       (174,172,059) (166,970,727)
    -------------------------------------------------------------------------
    Total shareholders' equity                      15,144,988    21,153,809
    -------------------------------------------------------------------------
                                                    62,549,557    54,474,961
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------




    Statement of Operations and Deficit (unaudited)

                      Three months  Three months   Nine months   Nine months
                             ended         ended         ended         ended
                     June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
                                 $             $             $             $

    REVENUES

    Sales               11,700,212     9,707,584    33,120,310    28,909,279
    Cost of sales
     (including
     amortization,
     and console write-
     downs of $868,179
     and $2,421,486;
     2006 - $1,164,673
     and $2,613,473)     4,908,403     4,806,476    13,015,264    12,258,894
    -------------------------------------------------------------------------

    Gross Profit         6,791,809     4,901,108    20,105,046    16,650,385
    Surgical distribution
     rights                      -       209,600             -       209,600
    -------------------------------------------------------------------------
    Interest income      6,791,809     5,110,708    20,105,046    16,859,985
                           107,810       147,106       280,838       457,907
    -------------------------------------------------------------------------
                         6,899,619     5,257,814    20,385,884    17,317,892
    -------------------------------------------------------------------------
    EXPENSES

    Research and
     development         3,499,617     3,385,375     9,051,234     9,764,437
    Investment tax
     credits              (136,140)     (140,394)     (491,115)     (494,712)
    -------------------------------------------------------------------------
    Net research and
     development         3,363,477     3,244,981     8,560,119     9,269,725
    Administrative       1,748,761     1,698,116     4,899,034     4,064,450
    Sales and marketing  6,770,695     7,124,941    19,128,230    19,967,145
    Amortization of
     intellectual
     property               58,625        56,139       173,459       165,218
    Amortization of
     property, plant,
     and equipment         239,070       269,256       670,064       813,945
    Amortization of
     deferred
     financing charges      84,424        57,856       343,122       155,686
    Interest on long-
     term debt             645,399       282,036     1,858,447       783,394
    Foreign exchange
     loss                1,381,492       253,561       655,332       166,452
    Loss on foreign
     exchange embedded
     derivative             62,882             -        48,860             -
    Non-cash compensation
     expense               300,100       445,000     1,069,856     1,245,894
    Other expenses
                                 -       179,490       299,274       179,490
    -------------------------------------------------------------------------
                        14,654,925    13,611,376    37,705,797    36,811,399
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income (loss)
     and other
     comprehensive income
     (loss) before
     undernoted item    (7,755,306)   (8,353,562)  (17,319,913)  (19,493,507)
    Gain on sale of
     surgical
     portfolio          10,118,581             -    10,118,581             -
    -------------------------------------------------------------------------
    Net income (loss)
     and other
     comprehensive
     income (loss)       2,363,275    (8,353,562)   (7,201,332)  (19,493,507)
    Deficit, beginning
     of period        (176,535,334) (148,144,210) (166,970,727) (137,004,265)
    -------------------------------------------------------------------------
    Deficit, end of
     period           (174,172,059) (156,497,772) (174,172,059) (156,497,772)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average
     number of common
     shares             38,016,719    37,866,322    37,985,809    37,748,090
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings
     (loss) per share         0.06         (0.22)        (0.19)        (0.52)
    -------------------------------------------------------------------------
    Diluted earnings
     (loss) per share         0.05         (0.22)        (0.19)        (0.52)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Statement of Cash Flows (unaudited)

                      Three months  Three months   Nine months   Nine months
                             ended         ended         ended         ended
                     June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
                                 $             $             $             $

    OPERATING ACTIVITIES

    Net income (loss)
     and other
     comprehensive income
     (loss) for the
     period              2,363,275    (8,353,562)   (7,201,332)  (19,493,507)
    Items not affecting
     cash
    Gain on sale of
     surgical
     portfolio         (10,118,581)            -   (10,118,581)            -
    Non-cash compensation
     expense               300,100       445,000     1,069,856     1,245,894
    Interest on long-
     term debt             591,769       282,036     1,732,124       783,394
    Amortization of
     intellectual
     property              552,085       639,168     1,526,502     1,277,443
    Amortization of
     consoles at
     customers' premises   264,289       486,089      742,601      1,226,329
    Amortization of
     property, plant,
     and equipment         349,499       364,811      995,906      1,088,864
    Amortization of
     deferred financing
     charges                84,424        57,856      343,122        155,686
    Unrealized loss on
     foreign exchange
     embedded derivatives   62,882             -       48,860              -
    Unrealized foreign
     exchange loss         871,489       440,688      871,489        366,656
    -------------------------------------------------------------------------
                        (4,678,769)   (5,637,914)  (9,989,453)   (13,349,241)
    Net change in non-
     cash working capital
     balances relating
     to operations       4,261,128      (163,176)    1,276,530    (1,138,364)
    Increase in net
     investments in
     leases                      -        16,376         5,967        49,557
    Increase (decrease)
     in deferred
     revenue               (60,505)      (49,023)      117,804       (18,101)
    -------------------------------------------------------------------------
    Cash flows related
     to operating
     activities           (478,146)   (5,833,737)   (8,589,152)  (14,456,149)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Net proceeds from
     sale of surgical
     portfolio          20,222,586             -    20,222,586             -
    Proceeds from
     maturities of
     short-term
     investments                 -    18,189,541     5,616,907    45,709,482
    Acquisition of
     short-term
     investments                 -   (12,633,678)            -   (22,140,941)
    (Increase) decrease
     in cash subject
     to restrictions       109,375             -    (1,421,875)            -
    Acquisition of
     intellectual
     property             (106,897)      (72,491)     (330,089)     (365,413)
    Acquisition of
     property, plant,
     and equipment        (755,296)     (460,080)   (1,329,252)   (1,401,969)
    Increase in consoles
     at customers'
     premises             (481,950)     (476,400)   (1,407,958)   (1,572,615)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flows related
     to investing
     activities         18,987,818     4,546,892    21,350,319    20,228,544
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Issuance of common
     shares                      -        75,000       120,105       473,612
    Decrease in employee
     share purchase
     loans                       -        30,000         2,550        46,320
    Decrease (increase)
     in deferred
     financing charges           -           506          (167)          506
    Repayment of bank
     indebtedness                -      (220,000)            -      (220,000)
    Increase in long-
     term debt                   -             -     3,534,000             -
    Repayment of long-
     term debt            (221,284)            -      (663,407)            -
    Increase in bank
     indebtedness        4,700,000             -     7,700,000     5,000,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow related to
     financing
     activities          4,478,716      (114,494)   10,693,081     5,300,438
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Effect of exchange
     rate change on
     cash and cash
     equivalents          (652,624)      (17,567)     (652,624)       (2,769)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net change in cash
     and cash
     equivalents        22,335,764    (1,418,906)   22,801,624    11,070,064
    Cash and cash
     equivalents,
     beginning of
     period              9,643,983    13,141,131     9,178,123       652,161
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period      31,979,747    11,722,225    31,979,747    11,722,225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash
     equivalents
     consist of:
    Cash                29,840,947     6,241,477    29,840,947     6,241,477
    Cash equivalents
     - commercial
     paper and other
     investments with
     maturities less
     than 90 days        2,138,800     5,480,748     2,138,800     5,480,748
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                        31,979,747    11,722,225    31,979,747    11,722,225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash
     flow information
    Cash paid during
     the period for:
     interest              217,612        67,625       376,948       104,085
    -------------------------------------------------------------------------
    

    %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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