Angiotech Pharmaceuticals, Inc. (Angiotech), a cardiovascular devices and wound management company, has reported total revenues of $283.2 million for the full year of 2008, compared with the total revenues of $287.6 million in the previous year-end. It has also reported a net loss of $741.1 million, or $8.71 loss per share, for the full year of 2008, compared with net loss of $65.9 million, or $0.66 loss per share, in the previous year-end.
“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 William Hunter, president and chief executive officer 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.