CLOSURE Medical Reports Third Quarter 2004 Results RALEIGH, N.C.,
Oct. 13 /PRNewswire-FirstCall/ -- CLOSURE Medical Corporation
(NASDAQ:CLSR), a global leader in biomaterial-based medical
devices, today announced results for the third quarter and nine
months ended September 30, 2004. Total revenues for the third
quarter 2004 were $9.2 million compared to $8.9 million during the
same period of 2003. For the nine months ended September 30, 2004,
revenues increased 21 percent to $31.0 million, up from $25.5
million in the same period of 2003. Net income for the third
quarter 2004 was $2.0 million, or $0.14 per diluted share, compared
to $2.0 million, or $0.13 per diluted share, in the prior year
period. Net income for the nine months ended September 30, 2004,
increased 28 percent to $7.1 million, or $0.46 per diluted share,
up from $5.5 million, or $0.39 per diluted share, in the same
period of 2003. For the third quarter 2004, the Company increased
its R&D and regulatory expenditures, which were $2.6 million,
or 29 percent of revenues, versus $2.0 million, or 23 percent of
revenues, during the 2003 period. The increased expenses were
primarily for the vascular sealant clinical study and other
regulatory preparation efforts for the product. Gross margins were
75 percent and 74 percent during the three- and nine-month periods
ended September 30, 2004, compared to 76 percent during both
periods of 2003. Gross margin improved sequentially from 72 percent
for the second quarter 2004 primarily due to a product mix of
greater than 80 percent of the higher-margin DERMABOND product. In
addition, higher-than-normal royalty revenue, $373,000, contributed
approximately 100 basis points of the improvement. Daniel A. Pelak,
President and CEO, commented, "The clinical trial of our vascular
sealant product continues to make good progress. During the past
month, we have applied for the European CE mark and expect a
favorable response on this application prior to the end of the
year. OMNEX(TM) Surgical Sealant has been selected as the
commercial name for the vascular sealant product. In addition, we
are in discussions with several major multi-national medical device
companies that have an interest in partnering with us to distribute
OMNEX(TM)." Pelak added, "As we apply our core technology to a
broader range of medical uses, our business will continue to
expand. We are encouraged by the opportunities we see for our
professional products, DERMABOND and OMNEX(TM), in surgery and
other clinical uses. DERMABOND continues to experience attractive
dollar volume growth at the end-user level, with current
penetration of applicable U.S. procedures in the range of 12-15
percent. That leaves, we believe, plenty of room for market share
expansion. In addition, we continue to deliver solid net margins in
excess of 20 percent, while financing increased R&D and
regulatory expense for new products." General and administrative
expense as a percentage of revenues decreased to 15 percent for the
three- and nine-month periods ended September 30, 2004, compared to
19 percent for both 2003 periods. For the nine-month period, the
Company's operating margin increased to 34 percent compared to 33
percent in the 2003 period. At September 30, 2004, the Company had
cash and investments of $46.1 million and net working capital of
$40.0 million. Total assets were $64.6 million, up from $53.8
million at the beginning of the year, and stockholders' equity was
$58.9 million. The Company had no outstanding debt and a $3.0
million available line of credit. The Company expects fourth
quarter revenues to be in the range of $9.0 to $10.0 million and
earnings per diluted share to be in the range of $0.13 to $0.16.
For the full year the Company reiterates the guidance provided in
its press release dated September 29, 2004, which included total
revenues in the range of $40.0 to $41.0 million and earnings per
diluted share from $0.59 to $0.62. 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 inventory management policies
adopted by the Company's marketing partners; end-user growth for
the products sold by the Company's marketing partners; 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 NINE MONTHS ENDED SEPTEMBER 30,
SEPTEMBER 30, 2004 2003 2004 2003 Product sales $9,181 $8,597
$30,605 $24,713 License and product development revenue 59 264 381
790 Total revenues 9,240 8,861 30,986 25,503 Cost of products sold
2,289 2,140 8,117 6,082 Gross profit 6,951 6,721 22,869 19,421
Research, development and regulatory affairs expenses 2,640 2,042
7,603 6,030 General and administrative expenses 1,431 1,657 4,730
4,876 Total operating expenses 4,071 3,699 12,333 10,906 Income
from operations 2,880 3,022 10,536 8,515 Interest income, net 195
69 428 216 Income before income taxes 3,075 3,091 10,964 8,731
Provision for income taxes 1,070 1,140 3,890 3,190 Net income
$2,005 $1,951 $7,074 $5,541 Shares used in computation of net
income per common share: Basic 14,323 13,768 14,269 13,680 Diluted
14,778 14,746 15,344 14,071 Net income per common share: Basic $
0.14 $ 0.14 $ 0.50 $ 0.41 Diluted $ 0.14 $ 0.13 $ 0.46 $ 0.39
CLOSURE Medical Corporation Balance Sheet Data (In thousands)
September 30, December 31, 2004 2003 Cash, cash equivalents and
investments $46,066 $33,427 Working capital $40,047 $30,974 Total
assets $64,643 $53,768 Total debt obligations $ -- $ -- Total
stockholders' equity $58,875 $47,428 Total shares outstanding
14,360 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:///
http://www.allencaron.com/ Web site: http://www.closuremed.com/
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