LA JOLLA, Calif., Feb. 25 /PRNewswire/ -- Advanced Tissue Sciences, Inc.
(Nasdaq: ATIS) today announced its financial results for the year ended
December 31, 1998. Total revenues were $20.5 million for the year ended
December 31, 1998 compared to $13.2 million for the year ended December 31,
1997. The Company reported a net loss to common stockholders for the year
ended December 31, 1998 of $43.9 million or $1.11 per share compared to
$36.1 million or $.96 per share for the year ended December 31, 1997.
Revenue increases in 1998 relate primarily to increases in sales of
Dermagraft(R) and TransCyte(TM) (formerly Dermagraft-TC(R)) to the Company's
Dermagraft Joint Venture with Smith & Nephew plc. Revenues for the year ended
December 31, 1998 also included $1,035,000 in TransCyte sales to customers in
the United States for the nine-month period ended September 30, 1998 compared
to $623,000 in the corresponding 1997 period. As previously reported,
TransCyte marketing and sales in the United States were transferred to the
Dermagraft Joint Venture in October 1998. Initial joint venture TransCyte
sales in the United States for the transitional quarter ended December 31,
1998 amounted to $329,000, bringing total U.S. TransCyte sales for the year to
$1,364,000, as compared to $976,000 in the year ended December 31, 1997.
The net loss to common stockholders includes the Company's share in the
losses of joint ventures of $17,628,000 for the year ended December 31, 1998
as compared to $11,990,000 for the year ended December 31, 1997. These
amounts represent the Company's share of losses of its Dermagraft and
Cartilage Joint Ventures with Smith & Nephew. The increase in 1998 reflects
increased manufacturing costs and selling, general and administrative expenses
in the Dermagraft Joint Venture.
Including a $15 million payment received from Smith & Nephew in January
1999 related to last year's expansion of the Dermagraft Joint Venture, the
Company began 1999 with $38 million in cash, cash equivalents and short-term
investments. In addition, the Company has a $50 million equity line available
through February 2000, subject to certain conditions, and the ability to
borrow an additional $4.3 million under a joint venture agreement with Smith &
Nephew.
"During the second half of 1998, we initiated additional clinical trials
and obtained Food and Drug Administration approval of our Treatment IDE
(Investigational Device Exemption) for Dermagraft in the treatment of diabetic
foot ulcers in the United States while also working to reduce our costs," said
Arthur J. Benvenuto, Chairman and Chief Executive Officer of Advanced Tissue
Sciences. "Now, we are moving ahead with clinical trials in expanded
indications for Dermagraft, as well as with efforts to optimize our human-
based products for cartilage with our partner, Smith & Nephew. Additionally,
we are continuing to make good progress in our cardiovascular research
program."
Advanced Tissue Sciences is a tissue engineering company utilizing its
proprietary core technology to develop and manufacture human-based tissue
products for tissue repair and transplantation. The Company, through its
Dermagraft Joint Venture with Smith & Nephew, currently has two products on
the market, TransCyte, a temporary covering for full (third degree) and
partial-thickness (second degree) burns, and Dermagraft, a living dermal
replacement, for the treatment of diabetic foot ulcers (currently available in
Canada and the United Kingdom). The Company is conducting a multi-center
clinical trial for Dermagraft for diabetic foot ulcers in the United States,
and is preparing to pursue additional indications for Dermagraft in venous and
pressure ulcers through the Dermagraft Joint Venture. The Company is also
developing products for cartilage and cardiovascular applications.
The discussion contained in this press release relating to
commercialization of the Company's products and the availability of capital
resources involves risks and uncertainties. In particular, the Company will
need to successfully complete an additional controlled clinical trial for
Dermagraft in the treatment of diabetic foot ulcers and submit a revised
premarket approval application to the FDA. No assurance can be given that the
Company will successfully complete the additional clinical trial, the clinical
trial will be completed within any specific timeframe, that the data from the
trial will be statistically significant or otherwise consistent with the
results of the Company's earlier pivotal trial or that the Company will obtain
FDA or other regulatory approvals of Dermagraft or any other products (or that
any such approval will be obtained on a timely basis), scale up manufacturing
processes, or successfully commercialize any such products. In addition,
there can be no assurance the Company will successfully enroll centers and
patients, or obtain adequate reimbursement, if any, under the Treatment IDE
for Dermagraft. Further, there can be no assurance that sources of funds will
be available when needed, under existing arrangements or otherwise, or that
any such funding will be on favorable terms. These and other risks are
detailed in publicly available filings with the Securities and Exchange
Commission such as the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. Actual results may differ materially from those currently
anticipated as a result of such risks.
Advanced Tissue Sciences, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Year Ended December 31,
1998 1997
(Unaudited)
Revenues:
Product sales -
Related parties(a) $10,927 $1,190
Others (b) 1,035 976
Contracts and fees 8,519 10,985
Total revenues 20,481 13,151
Cost and expenses:
Research and development 14,398 17,984
Selling, general and
administrative 13,409 14,064
Cost of goods sold (a) 15,045 2,636
Professional and consulting 2,263 2,941
Total cost and expenses 45,115 37,625
Loss from operations before
equity in losses
of joint venture (24,634) (24,474)
Equity in losses of
joint ventures (17,628) (11,990)
Loss from operations (42,262) (36,464)
Other income
(expense), net (1,023) 375
Net loss (43,285) (36,089)
Dividends on
preferred stock (578) --
Net loss applicable
to common stock $(43,863) $(36,089)
Basic and diluted loss
per common share $(1.11) $(.96)
Weighted average shares 39,373 37,548
Condensed Consolidated Balance Sheets
(In thousands)
December 31,
1998 1997
(Unaudited)
Assets:
Cash, cash equivalents and
short-term investments (c) $23,054 $17,086
Other current assets 5,776 6,038
Property, net 20,624 23,190
Other assets 4,531 4,146
Total assets $53,985 $50,460
Liabilities and
stockholders' equity:
Current liabilities $8,388 $9,908
Long-term liabilities 28,070 26,586
Redeemable preferred stock 5,000 --
Stockholders' equity 12,527 13,966
Total liabilities and
stockholders' equity $53,985 $50,460
(a) Product sales to related parties include sales of Dermagraft(R) and
TransCyte(TM) (formerly Dermagraft-TC(R)) to a joint venture between the
Company and Smith & Nephew plc at cost. Product sales for the year ended
December 31, 1998 include $824,000 of TransCyte inventory sold to the
Dermagraft Joint Venture in connection with the transfer of the selling and
marketing of TransCyte to the joint venture effective October 1998 (see (b)
below).
(b) Product sales to others include sales of TransCyte to outside
customers in the United States by the Company. Commencing October 1998,
TransCyte has been sold to outside customers exclusively through the
Dermagraft Joint Venture, and, accordingly, such sales for the three months
ended December 31, 1998 are reflected in the joint venture's separate
financial statements and not included herein.
(c) In addition, in January 1999, the Company received $15 million from
Smith & Nephew in connection with a 1998 expansion of the Dermagraft Joint
Venture to include Dermagraft for venous and pressure ulcers and the marketing
of TransCyte outside the United States.
SOURCE Advanced Tissue Sciences, Inc.
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800-758-5804, ext. 532975
CONTACT:
Cheryl B. Monblatt, Director, Corporate
Communications and Investor Relations of Advanced Tissue
Sciences, Inc., 619-713-7802
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