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Osteotech Reports First Quarter 2009 Financial Results

Company Reiterates 2009 Guidance and Remains on Track for Four Product Launches and Unveilings in 2009

Call on May 1, 2009 at 9:00 a.m. EDT

EATONTOWN, N.J., April 30 /PRNewswire-FirstCall/ -- Osteotech, Inc. (Nasdaq: OSTE), a leader in the emerging field of biologic products for regenerative healing, today reported financial results for the quarter ended March 31, 2009.

"During the first quarter, we continued to make MEANINGFUL progress executing our corporate strategy to position Osteotech as the leading provider of procedure-specific biologics for the orthopedic industry," said Sam Owusu-Akyaw, President and Chief Executive Officer of Osteotech. "Three years ago, we began to make long-term investments based upon the premise that biologics would become key components of effective bone healing and the restoration of normal body function. With those investments, we believed that Osteotech, with its proprietary technology platforms, would begin to introduce best-in-class therapeutic solutions. We have begun to see tangible and anecdotal evidence that our assumptions were correct. To capitalize on this growing interest and opportunity, we have several upcoming product launches and unveilings from our technology platforms and have introduced a variety of innovative sales tools and educational forums to drive sales growth. We remain encouraged by our progress and believe that we are well on our way to achieving our 2009 goals that should position us for profitable revenue growth in 2010."

Recent 2009 Corporate Developments

  • At the Annual Meeting of the American Academy of Orthopedic Surgeons in February 2009, Osteotech hosted a technology suite to disseminate the results of its clinical research supporting the versatility of Plexur P(R) and the biologic's effectiveness in promoting patient healing. More than 200 surgeons attended the technology suite to learn about how Plexur P can be utilized in specific foot and ankle, trauma and joint revision procedures.

  • Osteotech has continued to recruit patients for a pivotal clinical trial for its DuraTech(TM) BioRegeneration Matrix. To date, 55 of the 60 patients needed have been enrolled in the trial. Based upon this, the Company remains on track to file a 510(k) with the U.S. Food and Drug Administration to secure marketing clearance for DuraTech in the third quarter of this year. DuraTech is the first of several products under development based upon Osteotech's proprietary human collagen technology platform.

  • During the first quarter, the Company started the production of new procedure-specific instrumentation sets for spinal facet fusion and foot and ankle surgical procedures. The creation of these instrumentation sets supports the Company's strategy to introduce biologics that can meet the needs of specific procedures and lead to better clinical outcomes. Osteotech plans to introduce several instrumentation sets to support its upcoming product launches and unveilings as the year progresses.

  • Osteotech has continued to work closely with a French Regulatory Agency to resolve the perceived irregularities in the documentation associated with certain donated tissue from its Bulgarian subsidiary. While this review did not question the safety or performance of any of Osteotech's products, the Company temporarily suspended the distribution of products processed from tissue recovered in Bulgaria. In late April, the French Regulatory Agency completed its follow-up audit of Osteotech's Bulgarian operations and did not have any audit findings in its final closing discussions. The Company is currently waiting on a final decision from the French Regulatory Agency before lifting its temporary suspension.

  • Osteotech continued to strengthen its distribution network and during the first quarter the Company introduced a variety of new sales tools and educational programs focused on procedure specific applications for Plexur P and Grafton(R) DBM.

  • Shortly after the end of the first quarter, the Company completed its 6-month posterolateral fusion study of its proprietary MagniFuse(TM) Bone Graft in primates. The initial analysis of the data indicates that the quality and quantity of bone growth formed is superior to autograft and is competitive with the performance seen with growth factors (BMP) that were tested within the same challenging animal model. The study investigators will be submitting the results of this study for a podium talk and abstract to be presented in early 2010 and these results will be made available to support the market introduction of MagniFuse at the North American Spine Society (NASS) meeting in November 2009. This study supports the Company's strategy to introduce application-specific products with documented scientific and technical support.

Financial Results

Revenue for the three months ended March 31, 2009 was $23.9 million compared with $27.6 million for the three months ended March 31, 2008. The decline in first quarter 2009 revenue compared with 2008 was primarily driven by the expected reduction in revenue from client services and private label demineralized bone matrix, the anticipated decline in revenue stemming from the Company's international activities as a result of the temporary suspension of Bulgarian tissue and lower domestic unit sales volume.

Net loss for the first quarter ended March 31, 2009 was $1.8 million, or $0.10 per diluted share, compared with net income of $808,000, or $0.05 per diluted share, for the first quarter of 2008.

"Looking ahead, we are well positioned to launch or unveil MagniFuse, Plexur M, DuraTech and Facetlinx(TM) Facet Fusion Graft, our procedure-specific spine product, and we believe we are taking the steps necessary, particularly within our sales distribution network, to encourage demand," continued Mr. Owusu-Akyaw. "Based upon the investments we have made in our business and the emerging trends in orthopedics, we believe we are well positioned to emerge as a leader in the industry. We believe our proprietary technology platforms and research and development capabilities provide us with a technology lead that will be difficult to penetrate. We remain focused on increasing shareholder value and believe that the potential for sustainable, profitable revenue growth will allow us to reach our goal of providing significant returns to all of our stakeholders."


Based upon the results achieved to date, Osteotech is reiterating the financial guidance it has previously established for 2009:

  • Overall revenue is expected to range between $96 million and $100 million;
  • Net loss for 2009 is expected to be between $0.05 and $0.07 per share; the Company remains on track to generate free cash flow from operations in 2009; and
  • The Company expects to exit 2009 with approximately $15 million in cash.

Conference Call Tomorrow, May 1, 2009

The Osteotech management team will host a conference call on May 1, 2009 at 9:00 a.m. (EDT) to discuss first quarter 2009 financial results, recent corporate developments and guidance for 2009. The conference call may be accessed by dialing 1-866-783-2141 (domestic) or 1-857-350-1600 (international) and indicating access code 44055156. The conference will also be simultaneously webcast at A replay of the conference call will be available approximately two hours after completion of the live call, through midnight, on May 15, 2009, by dialing 1-888-286-8010 and using access code 91138337.

About Osteotech

Osteotech, Inc., headquartered in Eatontown, New Jersey, is a global leader in providing biologic solutions for regenerative medicine to support surgeons and their patients in the repair of the musculoskeletal system through the development of innovative therapy-driven products that alleviate pain, promote biologic healing and restore function. For further information regarding Osteotech, this press release or the conference call, please go to Osteotech's website at

Certain statements made throughout this press release that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) regarding the Company's future plans, objectives and expected performance. Any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks and uncertainties and, therefore, there can be no assurance that actual results may not differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the Company's ability to develop and introduce new products, differences in anticipated and actual product and service introduction dates, the ultimate success of those products in the marketplace, the continued acceptance and growth of current products and services, the impact of competitive products and services, the availability of sufficient quantities of suitable donated tissue and the success of cost control and margin improvement efforts. Certain of these factors are detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. All information in this press release is as of April 30, 2009 and the Company does not intend to update this information.

                           OSTEOTECH, INC. and SUBSIDIARIES

                   (dollars in thousands, except per share data)

                                                       Three Months
                                                      Ended March 31,
                                                   2009              2008
    Revenue                                      $23,931           $27,631

    Cost of revenue                               11,964            13,389

    Gross profit                                  11,967            14,242

    Marketing, selling and general and
     administrative                               11,618            11,680
    Research and development                       1,653             1,760
                                                  13,271            13,440

    Operating income (loss)                       (1,304)              802

    Interest expense, net                           (354)             (212)
    Other                                            (83)              278

    Income (loss) before income taxes             (1,741)              868
    Income tax provision                              55                60
    Net Income (loss)                            $(1,796)             $808
    Earnings (loss) per share:
      Basic                                        $(.10)             $.05
      Diluted                                      $(.10)             $.05
    Shares used in computing earnings (loss)
     per share:
      Basic                                   17,874,236        17,716,902
      Diluted                                 17,874,236        17,906,646

                               (dollars in thousands)

                                                       Three Months
                                                      Ended March 31,
                                                   2009              2008

    DBM                                          $14,026           $16,966
    Hybrid/Synthetic                                 748               644
    Traditional Tissue                             5,277             5,110
    Spinal Allografts                              1,880             2,250
    Client Services                                1,633             2,424
    Other Product Lines                              367               237

    Revenue                                      $23,931           $27,631

                              (dollars in thousands)

                                                 March 31,      December 31,
                                                   2009              2008
    Cash and cash equivalents                    $13,697           $18,823
    Accounts receivable, net                      20,815            17,968
    Deferred processing costs                     42,689            38,715
    Inventories                                    1,970             1,467
    Other current assets                           2,051             3,115
      Total current assets                        81,222            80,088
    Property, plant and equipment, net            33,128            34,005
    Other assets                                  11,710            13,022
                                                $126,060          $127,115

         Liabilities and Stockholders' Equity
    Accounts payable and accrued expense         $24,192           $23,569
    Current maturities of capital lease
     obligation                                      919               895
      Total current liabilities                   25,111            24,464
    Capital lease obligation                      12,936            13,175
    Other liabilities                              6,708             6,626
      Total liabilities                           44,755            44,265
    Stockholders' equity                          81,305            82,850
                                                $126,060          $127,115

SOURCE Osteotech, Inc.
Copyright©2009 PR Newswire.
All rights reserved

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