LA JOLLA, Calif., May 5 /PRNewswire/ -- Advanced Tissue Sciences, Inc.
(Nasdaq: ATIS) today announced its financial results for the quarter ended
March 31, 1998. Total revenues were $5.3 million for the three months ended
March 31, 1998 compared to $2.6 million for the three months ended March 31,
1997. The net loss for the quarter ended March 31, 1998 was $11.0 million or
$.28 per share compared to $7.5 million or $.20 per share for the quarter
ended March 31, 1997.
Revenues increased in 1998 compared to 1997 as a result of sales of
Dermagraft(R)and Dermagraft-TC(R) to the Company's joint venture with Smith &
Nephew, and due to the introduction of Dermagraft-TC in the second quarter of
1997 to customers in the United States. Sales to the Dermagraft joint venture
at cost totaled $2.4 million in the quarter ended March 31, 1998. Dermagraft-
TC sales to customers in the United States in the three months ended March 31,
1998 were $227,000, a decline of $76,000 as compared to the fourth quarter of
1997. Both the first and second quarters of 1998 have been affected by the
availability of the product. In late March 1998, following a recent facility
inspection by the U.S. Food and Drug Administration (FDA), the Company
voluntarily recalled certain lots of Dermagraft and Dermagraft-TC which
complied with finished product specifications, but contained a raw material
that was out of specification. The Company has provided a response to the FDA
regarding the issues raised during the facility inspection. The Company is
continuing to manufacture and, based on product availability, ship and sell
Dermagraft and Dermagraft-TC.
The increase in the net loss in the three months ended March 31, 1998 as
compared to the corresponding period in 1997 reflects several factors.
Research and development expenses decreased by $1.1 million as lower costs
were incurred for both clinical trials and production for clinical trials.
Costs of goods related to product sales increased to $3.9 million as the
Company initiated production of Dermagraft in its commercial facility in
January 1998. Selling, general and administrative costs also increased by
$492,000 primarily reflecting marketing and administrative costs relating to
the Dermagraft joint venture. In addition, the Company's share of the
Dermagraft joint venture's losses increased by $2.5 million principally
reflecting increased product costs and expenses relating to the introduction
of Dermagraft.
As of March 31, 1998, the Company had cash and investments of $26.1
million, which includes $20 million raised in January 1998 from the sale of
equity to Smith & Nephew in connection with the expansion of the Dermagraft
joint venture. In addition, funds available under loan commitments totaled
$6.6 million as of March 31, 1998. The Company can also access, subject to
certain conditions, up to $50 million through sales of its common stock to an
investor group under an equity line available through February 1999.
Advanced Tissue Sciences, Inc. is a tissue engineering company utilizing
its proprietary core technology to develop and manufacture human tissue
products for tissue repair and transplantation. Dermagraft, a bioengineered
living, human dermal replacement, is currently being marketed for the
treatment of diabetic foot ulcers in several countries outside the U.S.
through a joint venture with Smith & Nephew. Dermagraft-TC is the first
human, fibroblast-derived temporary skin substitute for the treatment of
partial and full-thickness burns being marketed in the United States by
Advanced Tissue Sciences. In addition to Dermagraft and Dermagraft-TC, the
Company also is developing products for cartilage and cardiovascular
applications.
The events discussed in this report involve risks and uncertainties. In
particular, the Company will need to correct or resolve the issues raised by
the FDA following the FDA's recent inspection of the Company's manufacturing
facility in order for the FDA to consider approving the Company's pending
premarket approval application for Dermagraft for the treatment of diabetic
foot ulcers. There can be no assurance that the Company's corrective actions
will satisfy the FDA's concerns, that the FDA will not raise additional
issues, or that other actions will not be taken by the FDA with respect to the
Company's manufacturing and quality assurance processes and systems.
Moreover, sales of Dermagraft and Dermagraft-TC may be adversely affected
while the Company investigates and corrects the manufacturing and quality
assurance issues raised by the FDA. No assurance can be given that the
Company will successfully obtain FDA or other regulatory approvals of
Dermagraft (or that any such approvals will be obtained on a timely basis),
scale up manufacturing processes, launch its products within reasonable
timeframes, obtain reimbursement for, or successfully commercialize any such
products. These and other risks are detailed in the Company's publicly
available filings with the Securities and Exchange Commission including 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 and results for interim periods are not necessarily
indicative of the results to be expected for the full year.
Advanced Tissue Sciences, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
1998 1997
Revenues:
Product sales (A) $2,642 $ --
Contracts and fees 2,664 2,649
Total revenues 5,306 2,649
Costs and expenses:
Research and development 3,854 4,968
Selling, general and administrative 3,612 3,120
Professional and consulting 328 674
Cost of goods sold (A) 3,928 --
Total costs and expenses 11,722 8,762
Loss from operations before equity in
losses of joint ventures (6,416) (6,113)
Equity in losses of joint ventures (4,252) (1,707)
Loss from operations (10,668) (7,820)
Other income (expense), net (287) 288
Net loss $(10,955) $(7,532)
Basic and diluted loss per share $(.28) $(.20)
Weighted average shares 38,930 37,488
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
1998 1997
(Unaudited)
Assets:
Cash, cash equivalents and
short-term investments $26,131 $17,086
Other current assets 7,440 6,038
Property, net 23,648 23,190
Other assets 3,641 4,146
Total assets $60,860 $50,460
Liabilities and stockholders' equity:
Current liabilities $9,515 $9,908
Long-term liabilities (B) 27,490 26,586
Stockholders' equity (C) 23,855 13,966
Total liabilities and stockholders'
equity $60,860 $50,460
(A) Product sales for the three months ended March 31, 1998 include sales
of Dermagraft-TC(R) of $227,000 and sales of Dermagraft(R) and Dermagraft-TC
to a related party at cost in the amount of $2,415,000.
(B) Through March 1998, the Company has borrowed $13.4 million from its
joint venture partner, Smith & Nephew, as provided under its joint venture
agreements. An additional $6.6 million remains available to the Company under
these loan facilities. In August 1997, a subsidiary of the Company entered
into a term loan agreement with The Chase Manhattan Bank for up to $16
million. The Company has drawn the entire amount as of March 31, 1998.
(C) In January 1998, Smith & Nephew acquired 1,533,115 shares of Advanced
Tissue Sciences' common stock for $20 million in conjunction with an expansion
of the parties' Dermagraft joint venture.
SOURCE Advanced Tissue Sciences, Inc.
 back to top
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 532975
CONTACT:
Beth A. Kriegel, Director, Investor Relations
of Advanced Tissue Sciences, Inc., 619-450-5802
|
