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Angiotech Pharmaceuticals, Inc. announces financial results for the fourth quarter ended December 31, 2009
Date:3/3/2010

VANCOUVER, March 3 /PRNewswire-FirstCall/ - Angiotech Pharmaceuticals, Inc. ( ANPI, TSX: ANP) today announced its financial results for the fourth quarter and year ended December 31, 2009.

"We were pleased to report a particularly strong quarter for product sales, which was driven by the continued strong performance of our Proprietary Medical Products, where we saw sales growth of 53% compared to the same period in 2008," said Dr. William Hunter, President and CEO of Angiotech. "We are particularly pleased by the continued success of our Quill(TM) SRS product line, which we believe will continue to be a strong performer during 2010."

    Fourth Quarter Financial Highlights

    -   Total revenue was $63.6 million.

    -   Net product sales were $50.0 million. Sales of our Proprietary
        Medical Products were $18.3 million, or 37% of total product sales.
        Sales of our Base Medical Products were $31.7 million, or 63% of
        total product sales.

    -   Royalty revenue was $13.5 million.

    -   Research and development expenses were $6.2 million.

    -   Selling, general and administrative expenses were $22.4 million.

    -   Net loss and net loss per share were $15.6 million and $0.18,
        respectively.

    -   As of December 31, 2009, cash and short-term investments were
        $57.3 million and net debt was $517.7 million.

    Selected Non-GAAP Financial Measures

    -   Certain financial measures in this press release are prepared in
        accordance with United States Generally Accepted Accounting
        Principles ("GAAP"). In addition, certain financial measures
        presented below and in the appendix to this press release are non-
        GAAP, or adjusted, financial measures that exclude certain items.
        Management uses certain non-GAAP, or adjusted, financial measures to
        establish operational goals, and believes that these measures may
        assist investors in evaluating the results of our business and
        analyzing the underlying trends in our business over time. Investors
        should consider these non-GAAP adjusted financial measures in
        addition to, and not as a substitute for, or as superior to,
        financial measures prepared in accordance with GAAP. A reconciliation
        of the Company's non-GAAP adjusted financial measures to the
        corresponding GAAP financial measures, and an explanation of the
        Company's use of these non-GAAP adjusted financial measures and of
        the excluded items, are included in the appendix to this press
        release.

    -   Adjusted EBITDA (earnings before interest, taxes, depreciation and
        amortization, adjusted to exclude certain non-cash and non-recurring
        items) was $6.9 million.

    -   Adjusted revenue was $63.5 million.

    -   Adjusted costs of goods sold was $28.4 million.

    -   Adjusted research and development expenses were $5.6 million.

    -   Adjusted selling, general and administrative expenses were
        $21.2 million.

    -   Adjusted net loss and adjusted net loss per share for the quarter
        were $4.7 million and $0.06, respectively.

Fourth Quarter Highlights

Proprietary Medical Products. Our Proprietary Medical Products are marketed and sold by our two direct sales groups. We believe certain of these product lines contain technological advantages that have the potential for more substantial revenue growth potential as compared to our overall product portfolio. Our most significant commercial Proprietary Medical Products are our Quill(TM) SRS wound closure product line, Skater(TM) line of drainage catheters, Option(TM) Inferior Vena Cava Filter, HemoStream(TM) chronic dialysis catheter and BioPince(TM) full core biopsy device.

Consistent with recent prior quarters, our Proprietary Medical Products continued to demonstrate higher revenue growth as compared to our overall product portfolio in the fourth quarter. Revenue for these products in the fourth quarter of 2009 increased by 53% as compared to the fourth quarter of 2008, and by 23% as compared to the third quarter of 2009. Excluding the impact of foreign currency changes between the respective periods, the revenue growth figures indicated would have been 49% and 22%, respectively. Revenue for these products for the year ended December 31, 2009 increased by 32% as compared to the year ended December 31, 2008. Excluding the impact of foreign currency changes between the periods, the revenue growth figure would have been 35%.

Base Medical Products. Our Base Medical Products represent more mature finished goods product lines in the ophthalmology, biopsy and general surgery areas, or medical device components manufactured by us and sold to other third-party medical device manufacturers who assemble those components into finished medical devices. Sales of our Base Medical Products are supported by a small group of direct sales personnel, as well as a network of independent sales representatives and medical product distributors. Revenue from our Base Medical Products has recently exhibited greater volatility and slower relative growth as compared to our Proprietary Medical Products.

Revenue from our Base Medical Products declined by 7% in the fourth quarter of 2009 as compared to the fourth quarter of 2008 and by 6% as compared to the third quarter of 2009. Excluding the impact of foreign currency changes, revenue would have declined by 9% and 7%, respectively. Revenue for these products for the year ended December 31, 2009 declined by 9% as compared to the year ended December 31, 2008. Excluding the impact of foreign currency changes between the periods, the decline in revenue would have been 8%.

The decline in our Base Medical Products sales in 2009 was due primarily to lower sales of medical device components to other third party medical device manufacturers. We believe this aspect of our Base Medical Product sales were significantly impacted in 2009 by certain customers that unexpectedly postponed or cancelled orders, or that implemented inventory reduction programs in response to changing economic and credit market conditions. In addition, we believe our transfer of manufacturing of certain surgical needle component products to our facility in Aguadilla, Puerto Rico from our facility in Syracuse, New York may have contributed to more volatile customer ordering patterns in 2009 as compared to prior years. While we currently expect that certain of our customers may increase their order levels in 2010, there can be no assurance that we will record sales of surgical needles to these customers at levels observed in prior periods.

Royalty Revenue. We derive additional revenue from royalties paid to us by partners that develop, market and sell products incorporating certain of our proprietary technologies. Currently, the substantial majority of our royalty revenues are derived from sales by Boston Scientific Corporation ("BSC") of TAXUS(R) coronary stent systems incorporating the drug paclitaxel.

Royalty revenue derived from sales of TAXUS stent systems by BSC declined by 8% during the fourth quarter of 2009 as compared to the fourth quarter of 2008 and by 32% during the year ended December 31, 2009 as compared to the year ended December 31, 2008. The decline in royalty revenues during the fourth quarter and year ended December 31, 2009 was a result of lower sales of TAXUS stent systems by BSC, as sales of TAXUS continued to be negatively impacted by competitive pressure in the drug-eluting coronary stent market, most specifically by negative marketing campaigns conducted by BSC's competitors suggesting clinical advantages of their drug-eluting stent products as compared to TAXUS. Royalty revenue for year ended December 31, 2009 was based on BSC's net sales for the period October 1, 2008 to September 30, 2009 of $926 million, of which $411 million was in the United States, compared to net sales of $1.2 billion for the same period in the prior year, of which $637 million was in the United States. The average gross royalty rate earned in the year ended December 31, 2009 on BSC's net sales was 6.4% for sales in the United States and 6.1% for sales in other countries, compared to an average rate of 7.1% for sales in the United States and 6.4% for sales in other countries for the year ended December 31, 2008.

Shelf Registration Statement on Form S-3. On July 23, 2009, we announced that we had filed a shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the "SEC") and a corresponding preliminary short form base shelf prospectus with the securities commissions of British Columbia and Ontario. On December 7, 2009, the shelf registration statement on Form S-3 (as amended by Amendment # 1 on Form S-3/A filed with the SEC on December 4, 2009) was declared effective by the SEC and we filed a final short form base shelf prospectus with the securities commissions of British Columbia and Ontario. These filings allow us to offer Common shares, Class I Preference shares, debt securities, warrants or units for initial aggregate proceeds of up to $250.0 million to potential purchasers in the U.S., British Columbia and Ontario.

    Financial Information
    ---------------------

This press release contains financial data derived from the audited consolidated financial statements for the year ended December 31, 2009 and 2008. Full audited consolidated financial statements and Management's Discussion and Analysis for the year ended December 31, 2009 will be filed on Form 10-K on or before March 16, 2010 with the relevant regulatory agencies, as well as posted on our website at www.angiotech.com.

Amounts, unless specified otherwise, are expressed in U.S. dollars. Financial results are reported under U.S. GAAP unless otherwise noted. All per share amounts are stated on a diluted basis unless otherwise noted.

    Conference Call Information
    ---------------------------

A conference call to discuss these financial results will be held tomorrow, Thursday, March 4, 2010 at 9:00 AM ET (6:00 AM PT).

    Dial-in information:
    --------------------

North America (toll-free): (866) 770-7129

International: (617) 213-8067

Enter Passcode: 69484239

An archived replay of the call will be available until March 11, 2010.

North America (toll-free): (888) 286-8010

International: (617) 801-6888

Enter Passcode: 61713924

A live webcast will be available to all interested parties through the Investors section of Angiotech's website: www.angiotech.com/investors

                       ANGIOTECH PHARMACEUTICALS INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                      (Unaudited)                   (Audited)
                              Three months ended                  Year ended
                                     December 31,                December 31,
    -------------------------------------------------------------------------

                              2009          2008          2009          2008

    REVENUE
    Product sales,
     net               $    49,975   $    46,054   $   191,951      $190,816
    Royalty revenue         13,533        15,676        62,171        91,546
    License fees                53           352        25,556           910
    -------------------------------------------------------------------------
                            63,561        62,082       279,678       283,272
    -------------------------------------------------------------------------

    EXPENSES
    Cost of products
     sold                   29,010        23,622       104,616       101,052
    License and royalty
     fees                    2,494         2,774        10,431        14,258
    Research and
     development             6,175         7,723        23,701        53,192
    Selling, general
     and administration     22,402        21,381        81,504        98,483
    Depreciation and
     amortization            8,406         8,421        33,251        33,998
    In-process research
     and development             -             -             -         2,500
    Write-down of
     assets held for
     sale                    3,090         1,283         3,090         1,283
    Write-down of
     goodwill                    -        50,285             -       649,685
    -------------------------------------------------------------------------
                            71,577       115,489       256,593       954,451

    -------------------------------------------------------------------------
    Operating income
     (loss)                 (8,016)      (53,407)       23,085      (671,179)
    -------------------------------------------------------------------------

    Other income
     (expenses):
    Foreign exchange
     (loss) gain              (385)       (1,032)       (1,612)          540
    Investment and other
     income (expense)          304          (498)          378         1,192
    Interest expense on
     long-term debt         (9,068)      (10,639)      (38,039)      (44,490)
    Write-down and
     other deferred
     financing charges           -        (3,000)         (643)      (16,544)
    Write-down / loss on
     redemption of
     investments                 -       (10,964)            -       (23,587)

    -------------------------------------------------------------------------
    Total other expenses    (9,149)      (26,133)      (39,916)      (82,889)

    -------------------------------------------------------------------------
    (Loss) / income
     before income
     taxes                 (17,165)      (79,540)      (16,831)     (754,068)
    Income tax expense
     (recovery)             (1,532)       (2,577)        6,037       (12,892)
    -------------------------------------------------------------------------
    Net loss           $   (15,633)  $   (76,963)  $   (22,868)  $  (741,176)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     net loss per
     common share      $     (0.18)  $     (0.90)  $  (0.27)     $     (8.71)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted
     weighted average
     number of common
     shares outstanding
     (in thousands)         85,130        85,118      85,130          85,118
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                       ANGIOTECH PHARMACEUTICALS INC.
                         CONSOLIDATED BALANCE SHEETS
                                  (Audited)

                                                   December 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    ASSETS
    Current assets
    Cash and cash equivalents                      $    49,542   $    38,952
    Short-term investments                               7,780           848
    Accounts receivable                                 28,167        25,524
    Income tax receivable                                1,090
    Inventories                                         35,541        38,594
    Deferred income taxes, current portion               4,284         3,820
    Prepaid expenses and other current assets            3,294         5,234
    -------------------------------------------------------------------------
    Total current assets                               129,698       112,972
    -------------------------------------------------------------------------

    Assets held for sale                                 5,300         8,422
    Property, plant and equipment                       46,879        49,108
    Intangible assets                                  173,019       195,477
    Deferred financing costs                            11,409        11,363
    Other assets                                         3,754         7,855
    -------------------------------------------------------------------------
    Total assets                                   $   370,059   $   385,197
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' DEFICIT

    Current liabilities
    Accounts payable and accrued liabilities       $    46,324   $    46,620
    Income taxes payable                                10,858         8,071
    Interest payable on long-term debt                   6,004         6,514
    -------------------------------------------------------------------------
    Total current liabilities                           63,186        61,205
    -------------------------------------------------------------------------

    Deferred leasehold inducement                        2,888         2,780
    Deferred income taxes                               36,778        40,577
    Other tax liabilities                                3,898         3,145
    Long-term debt                                     575,000       575,000
    Other liabilities                                    1,596         2,363
    -------------------------------------------------------------------------
    Total non-current liabilities                      620,160       623,865
    -------------------------------------------------------------------------

    Shareholders' deficit
    Share capital
      Authorized:
      200,000,000 Common shares, without par value
      50,000,000 Class I Preference shares, without
       par value
      Common shares issued and outstanding:
      December 31, 2009 - 85,138,081
      December 31, 2008 - 85,121,983                   472,742       472,739
    Additional paid-in capital                          33,687        32,107
    Accumulated deficit                               (866,541)     (843,673)
    Accumulated other comprehensive income              46,825        38,954
    -------------------------------------------------------------------------
    Total shareholders' deficit                       (313,287)     (299,873)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total liabilities and shareholders' deficit    $   370,059   $   385,197
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Forward Looking Statements
    --------------------------

Statements contained in this press release that are not based on historical fact, including without limitation statements containing the words "believes," "may," "plans," "will," "estimates," "continues," "anticipates," "intends," "expects" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and constitute "forward-looking information" within the meaning of applicable Canadian securities laws. All such statements are made pursuant to the "safe harbor" provisions of applicable securities legislation. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives and priorities for the remainder of 2010 and beyond, our strategies or future actions, our targets, expectations for our financial condition and the results of, or outlook for, our operations, research and development and product and drug development. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Many such known risks, uncertainties and other factors are taken into account as part of our assumptions underlying these forward-looking statements and include, among others, the following: general economic and business conditions in the United States, Canada and the other regions in which we operate; market demand; technological changes that could impact our existing products or our ability to develop and commercialize future products; competition; existing governmental legislation and regulations and changes in, or the failure to comply with, governmental legislation and regulations; availability of financial reimbursement coverage from governmental and third-party payers for products and related treatments; adverse results or unexpected delays in pre-clinical and clinical product development processes; adverse findings related to the safety and/or efficacy of our products or products sold by our partners; decisions, and the timing of decisions, made by health regulatory agencies regarding approval of our technology and products; the requirement for substantial funding to conduct research and development, to expand manufacturing and commercialization activities; and any other factors that may affect our performance. In addition, our business is subject to certain operating risks that may cause any results expressed or implied by the forward-looking statements in this press release to differ materially from our actual results. These operating risks include: our ability to attract and retain qualified personnel; our ability to successfully complete pre-clinical and clinical development of our products; changes in our business strategy or development plans; our failure to obtain patent protection for discoveries; loss of patent protection resulting from third-party challenges to our patents; commercialization limitations imposed by patents owned or controlled by third parties; our ability to obtain rights to technology from licensors; liability for patent claims and other claims asserted against us; our ability to obtain and enforce timely patent and other intellectual property protection for our technology and products; the ability to enter into, and to maintain, corporate alliances relating to the development and commercialization of our technology and products; market acceptance of our technology and products; our ability to successfully manufacture, market and sell our products; the availability of capital to finance our activities; our ability to restructure and to service our debt obligations; and any other factors referenced in our other filings with the applicable Canadian securities regulatory authorities or the SEC. For a more thorough discussion of the risks associated with our business, see the "Risk Factors" section in our annual report for the year ended December 31, 2008 filed with the SEC on Form 10-K, and our quarterly reports for the first, second and third quarters of 2009 filed with the SEC on Form 10-Q.

Given these uncertainties, assumptions and risk factors, investors are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained in this press release to reflect future results, events or developments.

(C)2010 Angiotech Pharmaceuticals, Inc. All Rights Reserved.

About Angiotech Pharmaceuticals

Angiotech Pharmaceuticals, Inc. is a global specialty pharmaceutical and medical device company. Angiotech discovers, develops and markets innovative treatment solutions for diseases or complications associated with medical device implants, surgical interventions and acute injury. To find out more about Angiotech ( ANPI, TSX: ANP), please visit our website at www.angiotech.com.

     Appendix A: Presentation of Certain Non-GAAP Financial Information
         and Reconciliations to Corresponding GAAP Financial Measures

The financial results presented in this press release include the following non-GAAP, or adjusted, financial measures, which we believe provide important supplemental information to management and investors about the Company's financial condition and results of operations: (1) adjusted earnings before interest expense, taxes, depreciation and amortization ("Adjusted EBITDA"), (2) adjusted net income (loss), (3) adjusted net income (loss) per share, (4) adjusted revenue, (5) adjusted cost of goods sold ("Adjusted COGS"), (6) adjusted research and development expense ("Adjusted R&D expense"), and (7) adjusted selling, general and administrative expense ("Adjusted SG&A expense").

    Economic Substance of Non-GAAP Financial Measures
    -------------------------------------------------

Our non-GAAP adjusted financial measures exclude certain non-cash, non-recurring and non-operating items, which may be unpredictable, volatile and not directly correlated to our operating performance. We believe exclusion of these items from our GAAP financial measures may provide the following advantages: (i) improved understanding of trends underlying our business and performance; (ii) improved consistency across periods when measuring and assessing our operating performance; (iii) improved understanding of the cash flow and cash earnings generated by our business in a given period and as compared to prior periods; and (iv) improved comparability of our operating results to those of similar companies in our industry.

Examples of these certain non-cash, non-recurring and non-operating items include: financing charges, asset write-downs, impairment charges, foreign exchange fluctuations, stock-based compensation expense, acquisition related amortization charges, integration and restructuring expenses, in-process research and development costs, retrospective adjustments driven by accounting policy changes, and certain extraordinary litigation expenses. A detailed discussion of the excluded items is provided below (see "Description of Adjustments" below).

Investors are cautioned that Adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per share, adjusted revenue, Adjusted COGS, Adjusted R&D expense and Adjusted SG&A expense do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other issuers. Our non-GAAP financial measures are supplemental metrics and should not be viewed as a substitute for, or superior to, financial reporting measures prepared in accordance with GAAP. We have prepared a reconciliation of our non-GAAP adjusted financial measures to the comparable GAAP-based financial measures in the tables included in this Appendix. Management compensates for certain material limitations that may be relevant to our use of certain non-GAAP financial measures by reviewing our operating performance in accordance with GAAP concurrent with our review of our operating performance relative to certain adjusted financial measures during each relevant disclosure period.

    Use of Non-GAAP Financial Measures
    ----------------------------------

Management uses Adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per share, adjusted revenue, Adjusted COGS, Adjusted R&D expense and Adjusted SG&A expense when setting corporate and operational goals, and evaluating operating performance in connection with:

    -   Presenting, comparing and assessing the financial results and
        forecasts reported to the Company's Board of Directors.
    -   Evaluating, managing and benchmarking the operating performance of
        the Company.
    -   Analyzing underlying trends in the Company's business.
    -   Evaluating market position and performance relative to our
        competitors, many of which use the same or similar performance
        measures.
    -   Establishing internal operating budgets.
    -   Determining compensation under bonus or other incentive programs.
    -   Enhancing comparability from period to period.
    -   Assessing compliance with credit facility covenants.
    -   Providing vital information in assessing cash flows to service our
        significant debt obligations.
    -   Comparing performance with internal forecasts and targeted business
        models.
    -   Evaluating and valuing potential acquisition candidates.

The adjustments used to compute our non-GAAP financial measures are consistent with those excluded from segmented operating results used by the Company's chief operating decision makers to make operating decisions and assess performance. We have provided this information to enable investors to analyze our operating results in the same way that management uses this information to assess our business relative to other periods, our business objectives and similar companies in our industry.

                       ANGIOTECH PHARMACEUTICALS, INC.
                       CALCULATION OF ADJUSTED EBITDA
                                 (Unaudited)

                              Three months ended                  Year ended
    (in thousands                    December 31,                December 31,
     U.S.$)                   2009          2008          2009          2008
    -------------------------------------------------------------------------

    GAAP net loss      $   (15,633)  $   (76,963)  $   (22,868)  $  (741,176)
    Interest expense
     on long-term debt       9,068        10,639        38,039        44,490
    Income tax expense
     (recovery)             (1,532)       (2,577)        6,037       (12,892)
    Depreciation and
     Amortization            9,460         9,327        37,026        38,174
    -------------------------------------------------------------------------
    EBITDA                   1,363       (59,574)       58,234      (671,404)
    Adjustments:
    Non-recurring
     revenue, net of
     license fees(a)           (53)         (352)      (25,556)         (910)
    Restructuring
     related
     charges(b)               (309)        1,583         3,820        10,407
    In-process and
     non-recurring
     research and
     development
     charges(c)                500           313         1,866         3,438
    Non-recurring
     supply/distribution
     agreement termination
     costs(b)                    -             -             -           500
    Stock-based
     compensation(d)           408           458         1,579         2,439
    Litigation expenses(g)     684           177         3,297         2,670
    Foreign exchange
     loss (gain)(h)            385         1,032         1,612          (540)
    Investment and other
     income                    196           498           122        (1,255)
    Write-downs of
     investments and
     other long-lived
     assets(i)               3,090        12,247         3,090        24,870
    Write-down of
     goodwill(i)                 -        50,285             -       649,685
    Write-downs and
     other non-recurring
     deferred financing
     costs(f)                    -         3,665           643        17,209
    Non-recurring
     charges related to
     product recall(k)        604              -           604             -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted EBITDA    $    6,868    $    10,332   $    49,311   $    37,109
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



        RECONCILIATION OF GAAP NET LOSS TO NON-GAAP ADJUSTED NET LOSS
                                 (Unaudited)

                              Three months ended                  Year ended
    (in thousands                    December 31,                December 31,
     U.S.$)                   2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    GAAP - net loss        (15,633)      (76,963)      (22,868)     (741,176)
      Non recurring
       revenue(a)              (53)         (352)      (25,556)         (910)
      Technology
       acquisition
       related charge(c)       500           313         1,866         3,438
      Non-recurring
       supply/distribution
       agreement termination
       costs(b)                  -             -             -           500
      Non-recurring
       restructuring related
       charges(b)             (309)        1,583         3,820        10,407
      Stock based
       compensation
       expense(d)              408           458         1,579         2,436
      Litigation related
       charges(g)              684           177         3,297         2,670
      Write-down of
       investments,
       goodwill & other
       long-lived
       assets(i)             3,090        62,532         3,090       674,555
      Write-down and other
       deferred financing
       charges(f)              712         4,224         3,431        19,445
      Foreign exchange
       (loss) gain(h)          385         1,032         1,612          (540)
      Acquisition related
       intangible asset
       amortization
       expense(e)            7,612         7,460        29,956        30,219
      Losses on asset
       disposals(j)            288           544           360          668
      Non-recurring charges
       related to product
       recall(k)               604             -           604             -
      Estimated tax impact
       of non-GAAP
      adjustments(l)        (3,016)       (3,629)       (6,724)      (19,919)
                      ------------- ------------- ------------- -------------
    Adjusted net loss       (4,728)       (2,621)       (5,533)      (18,207)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------



            RECONCILIATION OF GAAP NET LOSS PER SHARE TO NON-GAAP
                         ADJUSTED NET LOSS PER SHARE
                                 (Unaudited)

                              Three months ended                  Year ended
                                     December 31,                December 31,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------
    GAAP - net loss
     per share         $     (0.18)  $     (0.90)  $     (0.27)  $     (8.71)
      Non recurring
       revenue(a)            (0.00)        (0.00)        (0.30)        (0.01)
      Technology
       acquisition
       related
       charge(c)              0.01          0.00          0.02          0.04
      Non-recurring
       supply/
       distribution
       agreement
       termination
       costs(b)               0.00          0.00          0.00          0.01
      Non-recurring
       restructuring
       related
       charges(b)            (0.00)         0.02          0.04          0.12
      Stock based
       compensation
       expense(d)             0.00          0.01          0.02          0.03
      Litigation
       related
       charges(g)             0.01          0.00          0.04          0.03
      Write-down
       of investments,
       goodwill &
       other
       long-lived
       assets(i)              0.04          0.73          0.04          7.92
      Write-down and
       other deferred
       financing
       charges(f)             0.01          0.05          0.04          0.23
      Foreign exchange
       (loss) gain(h)         0.00          0.01          0.02         (0.01)
      Acquisition
       related
       intangible
       asset
       amortization
       expense(e)             0.09          0.09          0.35          0.36
      Losses on asset
       disposals(j)           0.00          0.01          0.00          0.01
      Non-recurring
       charges related
       to product
       recall(k)              0.01          0.00          0.01          0.00
      Estimated tax
       impact of
       non-GAAP
       adjustments(l)        (0.04)        (0.04)        (0.08)        (0.23)
                      ------------- ------------- ------------- -------------
    Adjusted net loss
     per share         $     (0.06)  $     (0.03)  $     (0.06)  $     (0.21)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------



         RECONCILIATION OF GAAP REVENUE TO NON-GAAP ADJUSTED REVENUE
                                 (Unaudited)

                              Three months ended                  Year ended
    (in thousands US $)              December 31,                December 31,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    GAAP - revenue          63,561        62,082       279,678       283,272
      Non-recurring
       revenue(a)              (53)         (352)      (25,556)         (910)
                      ------------- ------------- ------------- -------------
    Adjusted revenue   $    63,508   $    61,730   $   254,122   $   282,362
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------



            RECONCILIATION OF GAAP COGS TO NON-GAAP ADJUSTED COGS
                                 (Unaudited)

                              Three months ended                  Year ended
    (in thousands US $)              December 31,                December 31,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    GAAP - COGS             29,010        23,622       104,616       101,052
      Non-recurring
       manufacturing
       variances(b)              -             -        (1,661)         (122)
      Non-recurring
       charges related
       to product
       recall(k)              (604)            -          (604)            -
                      ------------- ------------- ------------- -------------
    Adjusted COGS      $    28,406   $    23,622   $   102,351   $   100,930
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------



          RECONCILIATION OF GAAP RESEARCH & DEVELOPMENT EXPENSE TO
              NON-GAAP ADJUSTED RESEARCH & DEVELOPMENT EXPENSE
                                 (Unaudited)

                              Three months ended                  Year ended
    (in thousands US $)              December 31,                December 31,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    GAAP - research
     and development
     expense                 6,175         7,723        23,701        53,192
      Non-recurring
       restructuring
       related
       charges(b)                -          (338)            -        (3,302)
      Technology
       acquisition
       related
       charges(c)             (500)         (313)       (1,866)         (938)
      Non-recurring
       supply/
       distribution
       agreement
       termination
       costs(b)                  -             -             -          (500)
      Stock based
       compensation
       expense(d)             (105)         (125)         (424)         (795)
                      ------------- ------------- ------------- -------------
    Adjusted research
     and development
     expense                 5,570         6,947        21,411        47,657
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------



     RECONCILIATION OF GAAP SELLING, GENERAL & ADMINISTRATION EXPENSE TO
         NON-GAAP ADJUSTED SELLING, GENERAL & ADMINISTRATIVE EXPENSE
                                 (Unaudited)

                              Three months ended                  Year ended
    (in thousands US $)              December 31,                December 31,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    GAAP - selling,
     general and
     administration
     expense                22,402        21,381        81,504        98,483
      Non-recurring
       restructuring
       related
       charges(b)             (191)       (1,245)       (2,659)       (6,983)
      Stock based
       compensation
       expense(d)             (303)         (333)       (1,155)       (1,641)
      Litigation
       related
       charges(g)             (684)         (177)       (3,297)       (2,670)
      Non-recurring
       financing
       charges(f)                -          (665)            -          (665)
                      ------------- ------------- ------------- -------------
    Adjusted selling,
     general and
     adminstration
     expense                21,224        18,961        74,393        86,524
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

For an explanation of the adjustments used to derive our non-GAAP financial measures, please refer to the corresponding discussion in the "Description of Adjustments" section below.

We also report certain product sales revenue growth rate figures excluding the impact of foreign exchange rate fluctuations on current period revenues. Significant foreign exchange rate fluctuations can distort revenue growth, depending upon the strength of the U.S. dollar relative to the foreign currencies in which we generate revenues. We generate significant revenues in several foreign jurisdictions in multiple foreign currencies including Euros, British pounds, Swiss francs, Danish krone, Norwegian krone and Swedish krone. We believe this measure provides useful information to measure the success of our international sales offices in increasing product sales in their local currencies without regard to exchange rate fluctuations over which we have no control. The tables below provide additional information on the reported product sales figure including a reconciliation of the estimated impact of foreign currency on net sales.

                       ANGIOTECH PHARMACEUTICALS, INC.
                               WORLDWIDE SALES
                                 (Unaudited)

                                                              Change
                                                    -------------------------
                                 Three Months Ended                  Constant
                               --------------------    As Reported   Currency
    (in thousands of U.S.$)     31-Dec-09 31-Dec-08       Basis       Basis
    -------------------------------------------------------------------------
    Proprietary Medical Products   18,275    11,908        53%         49%
    Base Medical Products          31,682    34,248        -7%         -9%
                                  -------------------------------------------
    Total Medical Products         49,957    46,156         8%          6%
                                  -------------------------------------------
                                  -------------------------------------------


                                                             Change
                                                    -------------------------
                                 Three Months Ended                  Constant
                               --------------------    As Reported   Currency
    (in thousands of U.S.$)     31-Dec-09 31-Dec-08       Basis       Basis
    -------------------------------------------------------------------------
    Proprietary Medical Products   18,275    14,854        23%         22%
    Base Medical Products          31,682    33,812        -6%         -7%
                                  -------------------------------------------
    Total Medical Products         49,957    48,666         3%          2%
                                  -------------------------------------------
                                  -------------------------------------------


                       ANGIOTECH PHARMACEUTICALS, INC.
             NON-GAAP CONSTANT CURRENCY NET SALES RECONCILIATIONS
                                 (Unaudited)

                                  Q4 2009 Net Sales as compared to Q4 2008
                            -------------------------------------------------
                                         Change
                            ------------------------------     Estimated
                             As Reported       Constant        Impact of
    (in thousands of U.S.$) Currency Basis  Currency Basis  Foreign Currency
    -------------------------------------------------------------------------
    Proprietary Medical Products     6,367           5,900               467
    Base Medical Products           (2,566)         (2,979)              413
                            -------------------------------------------------
    Total Medical Products           3,801           2,921               880
                            -------------------------------------------------
                            -------------------------------------------------


                                  Q4 2009 Net Sales as compared to Q3 2009
                            -------------------------------------------------
                                         Change
                            ------------------------------     Estimated
                             As Reported       Constant        Impact of
    (in thousands of U.S.$) Currency Basis  Currency Basis  Foreign Currency
    -------------------------------------------------------------------------
    Proprietary Medical Products     3,421           3,239               182
    Base Medical Products           (2,130)         (2,243)              113
                            -------------------------------------------------
    Total Medical Products           1,291             996               295
                            -------------------------------------------------
                            -------------------------------------------------

    For a consolidated reconciliation of all GAAP financial measures
identified above to corresponding non-GAAP financial measures, refer to the
following tables.


                       ANGIOTECH PHARMACEUTICALS, INC.
         RECONCILIATION OF GAAP FINANCIAL MEASURES TO CORRESPONDING
                         NON-GAAP FINANCIAL MEASURES
                                 (Unaudited)


    (in thousands
     of U.S.$, except
     share and per    Three Months Ended              Three Months Ended
     share data)       December 31, 2009               December 31, 2008
    -------------------------------------------------------------------------
              Reported Adjustments  Adjusted  Reported Adjustments  Adjusted
    REVENUE
    Product
     sales,
     net     $  49,975 $       -   $  49,975 $  46,054 $       -   $  46,054
    Royalty
     revenue    13,533         -      13,533    15,676         -      15,676
    License
     fees           53       (53)a         -       352      (352)a         -
    -------------------------------------------------------------------------
                63,561       (53)     63,508    62,082      (352)     61,730
    -------------------------------------------------------------------------
    EXPENSES
    Cost of
     products
     sold       29,010      (604)k    28,406    23,622         -      23,622
    License and
     royalty
     fees        2,494         -       2,494     2,774         -       2,774
    Research
     and
     development 6,175      (500)c     5,570     7,723      (313)c     6,947
                            (105)d                          (125)d
                               -                            (338)b
    Selling,
     general
     and admin-
     istrative  22,402      (191)b    21,224    21,381    (1,245)b    18,961
                            (303)d                          (333)d
                            (684)g                          (177)g
                               -                            (665)f
    Depreciation
     and
     amortiz-
     ation       8,406    (7,612)e       794     8,421    (7,460)e       961
    Write-down
     of assets
     held for
     sale        3,090    (3,090)i         -     1,283    (1,283)i         -
    Write-down
     of goodwill     -         -           -    50,285   (50,285)i         -
    -------------------------------------------------------------------------
                71,577   (13,089)     58,488   115,489   (62,224)     53,265
    -------------------------------------------------------------------------
    Operating
     income
     (loss)     (8,016)   13,036       5,020   (53,407)   61,872       8,465
    -------------------------------------------------------------------------
    Other
     income
     (expenses):
    Foreign
     exchange
     (loss) gain  (385)      385 h         -    (1,032)    1,032 h         -
    Investment
     and other
     income (loss) 304       288 j        92      (498)      544 j        46
                            (500)c
    Interest
     expense on
     long-term
     debt       (9,068)      712 f    (8,356)  (10,639)      559 f   (10,080)
    Write-down/
     loss on
     investments     -         -           -   (10,964)   10,964 i         -
    Write-down
     and other
     deferred
     financing
     charges         -         -           -    (3,000)    3,000 f         -
    -------------------------------------------------------------------------
                (9,149)      885      (8,264)  (26,133)   16,099     (10,034)
    -------------------------------------------------------------------------
    (Loss) income
     before
     income
     taxes     (17,165)   13,921      (3,244)  (79,540)   77,971      (1,569)
    Income tax
     expense
     (recovery) (1,532)    3,016 l     1,484    (2,577)    3,629 l     1,052
    -------------------------------------------------------------------------
    Net (loss)
     income
     for the
     period   $(15,633) $ 10,905    $ (4,728) $(76,963) $ 74,342    $ (2,621)
    -------------------------------------------------------------------------
    Basic and
     diluted
     net (loss)
     income per
     common
     share    $  (0.18)             $  (0.06) $  (0.90)             $  (0.03)
    -------------------------------------------------------------------------
    Weighted
     average
     shares
     outstanding
     (000's) -
     basic &
     diluted    85,130                85,130    85,118                85,118
    -------------------------------------------------------------------------



                       ANGIOTECH PHARMACEUTICALS, INC.
         RECONCILIATION OF GAAP FINANCIAL MEASURES TO CORRESPONDING
                         NON-GAAP FINANCIAL MEASURES
                                 (Unaudited)

    (in thousands
     of U.S.$, except
     share and per        Year Ended                      Year Ended
     share data)       December 31, 2009               December 31, 2008
    -------------------------------------------------------------------------
              Reported Adjustments  Adjusted  Reported Adjustments  Adjusted

    REVENUE
    Product
     sales,
     net     $ 191,951 $       -   $ 191,951 $ 190,816 $       -   $ 190,816
    Royalty
     revenue    62,171         -      62,171    91,546         -      91,546
    License
     fees       25,556   (25,556)a         -       910      (910)a         -
    -------------------------------------------------------------------------
               279,678   (25,556)    254,122   283,272      (910)    282,362
    -------------------------------------------------------------------------
    EXPENSES
    Cost of
     products
     sold      104,616    (1,661)b   102,351   101,052      (122)b   100,930
                            (604)k
    License
     and
     royalty
     fees       10,431         -      10,431    14,258         -      14,258
    Research
     and devel-
     opment     23,701    (1,866)c    21,411    53,192      (938)c    47,657
                            (424)d                          (795)d
                               -                          (3,802)b
    Selling,
     general
     and admin-
     istrative  81,504    (2,659)b    74,393    98,483    (6,983)b    86,524
                          (1,155)d                        (1,641)d
                          (3,297)g                        (2,670)g
                               -                            (665)f
    Depreciation
     and amortiz-
     ation      33,251   (29,956)e     3,295    33,998   (30,219)e     3,779
    In-process
     research
     and
     development     -         -           -     2,500    (2,500)c         -
    Write-down
     of assets
     held for
     sale        3,090    (3,090)i         -     1,283    (1,283)i         -
    Write-down
     of goodwill     -         -           -   649,685  (649,685)i         -
    -------------------------------------------------------------------------
               256,593   (44,712)    211,881   954,451  (701,303)    253,148
    -------------------------------------------------------------------------
    Operating
     income
     (loss)     23,085    19,156      42,241  (671,179)  700,393      29,214
    -------------------------------------------------------------------------
    Ot
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SOURCE Angiotech Pharmaceuticals, Inc.
Copyright©2010 PR Newswire.
All rights reserved


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