CLOSURE Medical Reports 33 Percent Increase in Revenues and 52
Percent Increase in Net Income for Second Quarter 2004 RALEIGH,
N.C., July 22 /PRNewswire-FirstCall/ -- CLOSURE Medical Corporation
(NASDAQ:CLSR), a global leader in biomaterial-based medical
devices, today announced results for the second quarter and six
months ended June 30, 2004. Second-quarter 2004 revenues increased
33 percent to $11.3 million from $8.5 million during the same
period of 2003. For the six months ended June 30, 2004, revenues
were $21.7 million compared to $16.6 million in the same period of
2003, representing an increase of 31 percent. Net income for the
second quarter of 2004 increased 52 percent to $2.5 million, or
$0.17 per diluted share, compared to $1.7 million, or $0.12 per
diluted share in the prior year period. For the six months ended
June 30, 2004, net income was $5.1 million, or $0.32 per diluted
share, increasing from $3.6 million, or $0.26 per diluted share, in
the same period of 2003. Daniel A. Pelak, President and CEO,
commented, "Our operational growth through the first half of 2004
has met our expectations. The DERMABOND products have increased
their penetration into the wound closure market and contributed the
majority of our revenue and earnings during the first six months of
this year. We are encouraged by the acceptance rate of the new
DERMABOND ProPen which was launched by our marketing partner,
ETHICON, Inc., a Johnson & Johnson Company, in the first
quarter of this year." Pelak continued, "As expected, we initiated
patient enrollment in our vascular sealant clinical study during
the quarter. We are encouraged by the clinical performance of our
sealant and we expect to complete enrollment by the end of this
year. Planning is currently underway for the launch of the product
in Europe during the first half of 2005." The Company's operating
margin continued to increase to 34 and 35 percent for the three and
six month periods ended June 30, 2004, respectively, compared to 30
and 33 percent in the 2003 periods, respectively. Consistent with
the prior year, second-quarter R&D and regulatory expenses were
24 percent of revenues primarily to support the continued progress
of the vascular sealant study, while general and administrative
expenses decreased from 20 to 15 percent of revenues. As
anticipated, gross margin, 72 percent during the current quarter,
decreased as a result of start-up costs and inefficiencies
associated with manufacturing the ProPen product in-house beginning
in April. With the current increased volumes and efficiencies in
the ProPen manufacturing process, the Company expects overall gross
margin to reach approximately 75 percent by the end of 2004. Benny
Ward, Vice President of Finance and CFO, commented, "Inefficiencies
are inherent with new manufacturing processes. However, we are
focused on and dedicated to improving our gross margin by the end
of the year. We are also pleased with our progress during the
quarter as our margin improved during June and expect that to
continue during the balance of the year." At June 30, 2004, the
Company had cash and investments of $42.5 million and net working
capital of $45.7 million. Total assets were $63.1 million and
stockholders' equity was $56.0 million. The Company had no
outstanding debt and a $3.0 million available line of credit. The
Company expects third quarter revenues to be in the range of $9.5
to $10.5 million and earnings per diluted share to be in the range
of $0.12 to $0.15. These expectations include reduced BAND-AID(R)
Brand Liquid Bandage revenues due to the recent introduction of a
new, lower-priced competitive product in the U.S. marketplace. The
Company's marketing partner for the liquid bandage product has
launched promotional initiatives to respond to this new product and
changing market conditions. The results of these initiatives will
be available at the end of the third quarter. For the full year,
the Company feels the previously provided 2004 guidance is still
appropriate, which includes revenues in the range of $45.0 to $47.0
million and earnings per diluted share from $0.65 to $0.70,
respectively. About CLOSURE Medical Corporation CLOSURE Medical
Corporation is a global leader in the development and manufacture
of innovative biomaterial-based medical devices that fulfill the
needs of healthcare practitioners, patients and consumers. For
additional information on CLOSURE Medical visit its website at
http://www.closuremed.com/ or visit the "Clients" section of the
Allen & Caron website at http://www.allencaron.com/. This
release contains certain forward-looking statements which involve
known and unknown risks, delays, uncertainties or other factors not
under the Company's control which may cause actual results,
performance or achievements of the Company to be materially
different from the results, performance, or other expectations
implied by these forward-looking statements. These factors include,
but are not limited to the early stage of commercialization of the
Company's products; the ability of the Company to increase the
efficiencies in its manufacturing processes; the effectiveness of
initiatives launched in response to the Company's competitors'
product introductions; the progress and success of its research and
development programs for future products; the success of its
clinical study for its vascular sealant product and future clinical
studies; the successful enrollment of current and future clinical
studies; the need for regulatory approval and effects of
governmental regulation; technological uncertainties; the Company's
success in securing marketing partners for future products; the
satisfactory conclusion of negotiations with, and dependence on
marketing partners, and dependence on patents and trade secrets, as
well as those detailed in the Company's Annual Report on Form 10-K
for the year ended December 31, 2003, filed with the Securities and
Exchange Commission. Although the Company believes that the
expectations in the forward-looking statements are reasonable, the
Company cannot guarantee such results. The Company undertakes no
obligation to publicly revise these forward-looking statements to
reflect events or circumstances that arise after the date hereof.
TABLES FOLLOW CLOSURE Medical Corporation Statements of Operations
(In thousands, except per share data) THREE MONTHS ENDED SIX MONTHS
ENDED JUNE 30, JUNE 30, 2004 2003 2004 2003 Product sales $11,220
$8,217 $21,424 $16,116 License and product development revenue 59
264 322 526 Total revenues 11,279 8,481 21,746 16,642 Cost of
products sold 3,161 2,048 5,828 3,941 Gross profit 8,118 6,433
15,918 12,701 Research, development and regulatory affairs expenses
2,656 2,158 4,963 3,988 General and administrative expenses 1,638
1,693 3,300 3,220 Total operating expenses 4,294 3,851 8,263 7,208
Income from operations 3,824 2,582 7,655 5,493 Interest income, net
124 69 233 147 Income before income taxes 3,948 2,651 7,888 5,640
Provision for income taxes 1,410 980 2,820 2,050 Net income $2,538
$1,671 $5,068 $3,590 Shares used in computation of net income per
common share: Basic 14,265 13,665 14,241 13,635 Diluted 15,304
14,129 15,620 13,819 Net income per common share: Basic $0.18 $0.12
$0.36 $0.26 Diluted $0.17 $0.12 $0.32 $0.26 CLOSURE Medical
Corporation Balance Sheet Data (In thousands) June 30, December 31,
2004 2003 Cash, cash equivalents and investments $42,456 $33,427
Working capital $45,656 $30,974 Total assets $63,130 $53,768 Total
debt obligations $-- $-- Total stockholders' equity $56,020 $47,428
Total shares outstanding 14,295 14,127 DATASOURCE: CLOSURE Medical
Corporation CONTACT: investors, Joe Allen, +1-212-691-8087, , or
media, Len Hall, +1-949-474-4300, , both of Allen & Caron Inc
for CLOSURE Medical Corporation; or Benny Ward, CFO of CLOSURE
Medical Corporation, +1-919-876-7800 Web site:
http://www.allencaron.com/ Web site: http://www.closuremed.com/
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