Angiotech Pharmaceuticals, Inc. today announced its financial results for the fourth quarter and year ended December 31, 2008.
“During 2008 we achieved solid sales results in our Medical Products Business and were able to sustain progress on our most important new technology initiatives despite a challenging year for TAXUS,” said Dr. William Hunter, President and CEO of Angiotech. “Not only did we increase Medical Products sales compared to 2007, but we were able to achieve this growth while making reductions to our operating expenses. This has been a challenging year with many factors including the turmoil in the capital and credit markets impacting our company, and under those circumstances I am proud of the results our team was able to deliver in 2008.”
- Fourth Quarter Financial Highlights Total revenue was $62.1 million.
- Net product sales were $46.1 million.
- Royalty revenue was $15.7 million.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted to exclude certain non-cash and non-recurring items) was $10.3 million.
- Research and development expenses were $7.7 million, and as adjusted to exclude non-cash stock-based compensation expenses and non-recurring termination related costs were $6.9 million.
These results compare to $10.7 million and $8.8 million, respectively, in the third quarter of 2008, reflecting a reduction in expenses of 21.6% in a single quarter on an adjusted basis. This reduction is in addition to the 49% reduction in research and development expenses already reported in the third quarter as compared to the second quarter of 2008. · Selling, general and administrative expenses were $21.4 million, and as adjusted to exclude non-cash stockbased compensation expenses, non-recurring termination related costs and intellectual property litigation costs, were $19.0 million. These results compare to $23.4 million and $20.5 million, respectively, in the third quarter of 2008 and to $26.8 million and $23.5 million, respectively, in the comparable period of 2007.
Importantly, we were able to achieve higher sales during 2008 on lower absolute levels of selling, general and administrative expenses as compared to 2007.
- GAAP net loss and net loss per share from continuing operations for the quarter were $77.0 million and $0.90, respectively, compared to $27.9 million and $0.29 for the fourth quarter of 2007.
The increase in the net loss of $49.1 million is due primarily to a write-down of goodwill recorded during the quarter. Under GAAP, circumstances that could indicate a “goodwill impairment” include significant declines in a company’s share price, adverse changes or outcomes in legal or regulatory matters, technological advances that may significantly impact a company’s or a partner’s products or services, or unanticipated competition. Due to the continued decline in our market value in the fourth quarter of 2008 and the further negative indicators for the capital markets and the economy as a whole, we updated our impairment tests of goodwill and acquired intangible assets and concluded a further impairment had occurred in the carrying amounts of goodwill associated with both our Medical Products and Pharmaceutical Technologies segments. Accordingly, we recorded an impairment charge to goodwill, which is a non-cash accounting item, of $50.3 million in the fourth quarter of 2008, in addition to the write-down of goodwill of $599.4 million recorded in the third quarter of 2008, leaving no goodwill on our books as of December 31, 2008.
- As of December 31, 2008, cash, short and long-term investments were $41.4 million and net debt was $535.2 million.
Significant Recent Developments New Senior Secured Credit Facilities.
On March 2, 2009 we announced that we had completed a financing transaction with Wells Fargo Foothill, LLC. The financing includes a delayed draw secured term loan facility of up to $10 million, and a secured revolving credit facility with a borrowing base derived from the value of certain of the Company’s finished goods inventory and accounts receivable, providing up to an additional $22.5 million in available credit, subject to certain terms and conditions. Any borrowings outstanding under the term loan and revolving credit facility bear interest ranging from LIBOR + 3.25% to LIBOR +3.75%, with a minimum Base LIBOR Rate of 2.25%. The term loan and the revolving credit facility include certain covenants and restrictions with respect to our operations, require us to maintain certain levels of Adjusted EBITDA and interest coverage ratios, among other terms and conditions, and are secured by the assets of the Company and its Canadian and U.S. subsidiaries.