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CryoCath announces 2007 fourth quarter and fiscal year end financial results
Date:12/17/2007 Toronto Stock Exchange Symbol: CYT

MONTREAL, Dec. 17 /PRNewswire-FirstCall/ - CryoCath(R) Technologies Inc., the global leader in cryotherapy products to treat cardiovascular disease, today announced financial results for the fourth quarter and year ended September 30, 2007.

Selected FY 2007 Financial and Operating Highlights:

- Following the sale of the surgical portfolio to ATS Medical, we

successfully transitioned our organization in Q4 towards a high

growth, pure play EP/AFib company, with relentless focus on the

blockbuster potential of Arctic Front(R). As part of this transition

we did incur a number of one-time charges in fiscal Q4 '07.

- Revenue of $39.7 million, a growth of 3.4% over prior year. This

growth is composed of 14.2% growth of our electrophysiology (EP)

business to $29M, offset by the impact of selling the surgical

business at the end of Q3 2007.

- Q4 2007 sales were $6.6 million, a growth of 1.1% over our EP

business revenue in Q4 2006. In what is traditionally our weakest

quarter, sales growth was further slowed down by unfavorable exchange

rate impact, a one-time revenue accrual and abandoning quarter-end

volume discount sales practices.

- Global growth is fueled by the strong performance of our flagship

Arctic Front product in European markets. The number of active Arctic

Front users has grown in Q4 from 20 to 23 and is accelerating. At the

end of Q4 a total of approximately 1,600 Arctic Front procedures have

been performed in Europe. Our Atrial Fibrillation (AFib) business

grew by 52.1% in FY2007 and 61.7% in Q4. Excluding a one time revenue

accrual, our AFib revenue growth accelerated to 60.1% for the year

and a strong 97nd write-off of

intellectual property 239,539 324,745

Amortization and write-off of property,

plant, and equipment 1,578,966 1,444,155

Amortization of deferred financing charges 382,877 261,830

Interest on long-term debt 2,532,679 1,291,654

Foreign exchange loss 1,998,222 159,700

Loss on foreign exchange embedded derivatives 41,175 -

Stock-based compensation expense 1,411,608 1,746,169

Other expenses 1,130,796 1,775,401


53,458,837 51,283,026



Net loss and other comprehensive loss

before undernoted items (29,242,269) (29,966,462)

Income from manufacturing agreement 258,557 -


Gain on sale of surgical portfolio 10,028,913 -


Net loss and other comprehensive loss

before income taxes (18,954,799) (29,966,462)

Income taxes (20,500) -


Net loss and other comprehensive loss (18,975,299) (29,966,462)

Deficit, beginning of year (166,970,727) (137,004,265)


Deficit, end of year (185,946,026) (166,970,727)



Weighted average number of common shares 38,017,065 37,787,825



Basic loss per share (0.50) (0.79)



Diluted loss per share (0.50) (0.79)



Statements of Cash Flows (unaudited)

Years Ended September 30 2007 2006

$ $


Net loss and other comprehensive loss

for the year (18,975,299) (29,966,462)

Items not affecting cash

Gain on sale of surgical portfolio (10,028,913) -

Stock-based compensation expense 1,411,608 2,303,723

Interest capitalized on long-term debt 1,732,124 1,291,654

Amortization and write-off of consoles

at customers' premises 1,004,442 2,281,775

Amortization and write-off of property,

plant, and equipment 2,717,030 1,913,292

Amortization and write-off of

intellectual property 1,586,742 1,819,389

Amortization of deferred financing charges 382,877 261,830

Forgiveness of employee share purchase loan - 233,069

Accretion in balance of sale (58,955) -

Unrealized loss on foreign exchange

embedded derivatives 41,175 -

Unrealized foreign exchange loss 617,868 36,321


(20,269,301) (19,825,409)

Net change in non-cash working capital

balances relating to operations (note 20) 5,368,087 1,603,942

Decrease in net investments in leases 5,967 61,311

Increase in deferred revenue 193,697 309,049


Cash flows related to operating activities (14,701,550) (17,851,107)



Net proceeds from sale of surgical portfolio 19,755,918 -

Proceeds upon maturity of short-term

investments 6,616,907 45,709,482

Acquisition of short-term investments (16,258,558) (25,980,051)

Increase in cash subject to restrictions (1,312,500) -

Acquisition of intellectual property (379,282) (509,442)

Acquisition of property, plant, and equipment (1,248,394) (1,674,827)

Increase in consoles at customers' premises (1,905,872) (1,362,761)


Cash flows related to investing activities 5,268,219 16,182,401



Issuance of common shares 369,544 473,608

Decrease in employee share purchase loans 13,054 48,232

Increase in deferred financing charges (25,167) (409,817)

Increase in long-term debt 3,534,000 10,100,000

Repayment of long-term debt (884,752) -

Increase in bank indebtedness 6,476,288 -



Cash flows related to financing activities 9,482,967 10,212,023



Effect of exchange rate change on cash and

cash equivalents (87,915) (17,355)



Net change in cash and cash equivalents (38,279) 8,525,962

Cash and cash equivalents, beginning

of the year 9,178,123 652,161



Cash and cash equivalents, end of the year 9,139,844 9,178,123



Cash and cash equivalents consist of:

Cash 1,652,794 4,739,592

Cash equivalents 7,487,050 4,438,531



9,139,844 9,178,123



Supplemental cash flow information

Cash paid during the year for:

Interest 1,111,077 124,083

Income taxes 20,500 -


.8% for Q4.

- Gross margins increased significantly to 59.2% from 53.6% in fiscal


- Excluding the impact of the sale of the surgical portfolio, the net

loss for 2007 was $29.2 million or a drop of 2.4% as compared to

$30.0 for 2006. Including the gain from selling the surgical

portfolio the net loss ended at $19.0 million.

- Overall operating burn increased marginally from $19.8 million in

2006 to $20.3 million in 2007.

- A total of 162 patients have been enrolled to date in our STOP AF IDE

pivotal trial. This study continues to be the fastest enrolling AFib

trial in the US. At the current enrollment rate per center we will

reach full enrollment by April 2008. This keeps this key program on

track for late 2009 approval by the FDA.

- There is a growing body of strong clinical evidence around our Arctic

Front system. In various studies in US and Europe, the system lives

up to its expectations and provides solid 12-month outcomes and no

permanent side effects in Paroxysmal AFib patients in a relatively

simple procedure.

"The past year has been packed with positive changes for CryoCath. More than ever, we are now focused on commercialization and growth," said Jan Keltjens, President & CEO of CryoCath. "Undoubtedly, the sale of the surgical products division at the end of Q3 was the pivotal initiative in this respect, enabling us to concentrate fully on the huge potential offered by the electrophysiology market and atrial fibrillation, in particular. Our focus is on obtaining US approval for our revolutionary Arctic Front system and rapid, profitable growth in Europe. In both areas, we made solid progress in 2007. In the last couple of months of 2007 we were able to resolve supply constraints for Arctic Front and embarked on a solid commercial roll-out plan in Europe. As a result, Arctic Front has started to show its explosive growth potential and has become the largest driver of our growth.

We are also confident with the progress in our pivotal trial in the US. STOP AF continues to be the fastest enrolling trial in this space and is on track to support a late 2009 US Arctic Front approval. Our confidence in the blockbuster potential of Arctic Front is strengthened continuously based on the solid clinical performance and enthusiastic feedback from both our European customers as well as our US investigators. We feel that in 2007 we created the foundation needed to allow us to bring our Arctic Front breakthrough therapy to millions of Paroxysmal AFib patients and create a significant and profitable business."

FY 2007

For the 12-month period ending September 30, 2007, sales increased 3.4% to reach $39.7 million compared to $38.4 million in fiscal 2006. US disposable EP product sales grew by 2.6% to $12.3 million, whereas outside US disposable revenue, driven by the success of Arctic Front, grew by 17.6% to 8.0 million. Total EP growth in the US was 11.1% to $18.3 million and outside US growth was 20.1% to $10.7 million.

Gross margins in fiscal 2007 were $23.5 million or 59.2% of sales, versus $20.6 million or 53.6% of sales in 2006. This increase in margins is a result of improved focus on the product supply process and the corresponding increase in output and yields, and the increase in sales of our higher margin new generation of products. Excluding the impact of the revenue accrual for returned goods included in the Q4 FY2007 results, but not in FY2006, gross margin for the year would have increased by 0.3% to 59.5%.

Total expenses in fiscal 2007 were $53.5 million, up 4.2% from $51.3 million in fiscal 2006.

Sales and marketing expenses in fiscal 2007 totaled $24.7 million versus $27.4 million for the same period a year ago. This decrease is based on a reduced head count and reduced commissions and other variable expenses as a result of the sale of the surgical portfolio to ATS Medical.

On a 12-month basis, net research and development expenses were $11.9 million versus $10.9 million in fiscal 2006. The increased expenses in research and development are related to additional clinical expenses associated with the enrollment in our STOP AF IDE pivotal trial.

Total administrative expenses in fiscal 2007 were $7.6 million versus $6.0 million for the same period a year ago as the company continued to invest in the resources to build a robust infrastructure required for rapid and sustainable growth.

Other expenses were $1.1 million in fiscal 2007 and $1.8 million in the prior year and are associated with realignment initiatives. The costs in fiscal 2007 are the result of the sale of the surgical business and the Company's strategy to transition itself into a lean, focused and fast growing electrophysiology cryoablation company.

Interest expense for the year increased as a result of higher debt levels and totaled $2.8 million, an increase of $1.4 million over 2006.

Most of the Company's sales revenues are denominated in either US dollars or Euros as are a significant amount of our assets. Foreign denominated expenses and liabilities only provide a partial natural hedge against currency fluctuations, which were significant in 2007. As a result the Company incurred a foreign exchange loss in 2007 of $2 million versus $0.2 million last year.

Net loss in fiscal 2007 was $19.0 million or $0.50 per share versus $30.0 million or $0.79 per share in the same period a year ago. This decrease in net loss was aided by the one time gain from the sale of the surgical portfolio to ATS Medical which netted $10.0 million.

On a 12-month basis, the operating burn was $20.3 million versus $19.8 million in 2006. Excluding one time costs related to the sale of the surgical business and the FY07 restructurings, the operating burn in FY2007 would have been $15.3 million.

Q4 2007

The Company's revenues were $6.6 million in the fourth quarter, a decrease of 30.8% from sales of $9.5 million in the fourth quarter of fiscal 2006. This decline reflects the absence of revenues from the surgical portfolio (sold at the end of the third quarter) offset by a 1.1% increase in EP revenues as compared to the same period last year. US disposable EP product sales declined by 21.4% to $2.7 million, whereas outside US disposable revenue driven by the success of Arctic Front, grew by 10.0% to $1.8 million. Total EP sales in the US declined by 5.4% to $4.4 million while outside US revenue was 16.9% to $2.3 million.

Gross margins in the fourth quarter of fiscal 2007 were $3.4 million, or 51.5% of sales, an increase from 41.1% or $3.9 million from Q4 of fiscal 2006. As with the year, the decrease in gross margin dollars was directly attributable to lower revenues in the quarter, but offset in part by the higher gross margin percentages. Excluding the impact of the revenue accrual for returned goods included in the Q4 FY 07 results, but not in FY06, gross margin for Q4 would have increased by 2.2% to 53.7%.

Total expenses in the fourth quarter of 2007 were $15.7 million, up 8.9% from the fourth quarter of 2006.

The Company's sales and marketing expenses for the fourth quarter of fiscal 2007 were $5.6 million compared to $7.5 million for the fourth quarter of fiscal 2006, and were associated with lower headcount, reduced commissions and lower variable spending.

Net research and development expenses for the fourth quarter were $3.3 million, compared to $1.6 million for the fourth quarter of fiscal 2006, and were related to higher clinical costs incurred in the STOP AF Trial.

Administrative expenses for the fourth quarter of 2007 were $2.7 million compared to $1.9 million for the fourth quarter ended September 30, 2006, and were related to investment in internal infrastructure to support growth.

The appreciation of the Canadian dollar against the US dollar led to a foreign exchange loss in the fourth quarter of $1.3 million versus nil in the same quarter last year.

CryoCath's net loss for the fourth quarter ended September 30, 2007 totaled $11.8 million or $0.31 per share compared to a loss of $10.5 million or $0.27 per share in the fourth quarter of fiscal 2006.

Operating burn for the quarter was $10.2 million versus $6.5 million for the fourth quarter of 2006. Excluding one time costs related to the sale of the surgical business and the FY07 restructurings, the operating burn in Q4 2007 would have been $5.9 million.

Working capital was $18 million at September 30, 2007, as compared to $20.9 million on September 30, 2006. At quarter end, CryoCath could access $28.5 million in cash and credit lines comprised of $24.0 million in cash, cash equivalents and short-term investments in addition to $4.5 in unused borrowing facilities.

The Company will host a conference call to discuss the fourth quarter and year-end results on December 17, 2007 at 4:30 p.m. EST. The call will be audio-cast live and archived for 90 days at

About CryoCath

CryoCath - - is a medical technology company that leads the world in cryotherapy products to treat cardiovascular disease. With a priority focus on providing physicians with a complete solution of catheter products to treat cardiac arrhythmias, CryoCath has multiple products approved in the U.S., across Europe and several ROW countries. The Company is developing additional products to expand its pipeline of products to treat cardiac arrhythmias.

This press release includes "forward-looking statements" that are subject to risks and uncertainties, including with respect to the timing of regulatory trials and their outcome. For information identifying legislative or regulatory, economic, climatic, currency, technological, competitive and other important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, see CryoCath's annual report available at under the heading Risks and Uncertainties in the Management's Discussion and Analysis section. The financial results referred to in the press release and accompanying statements are unaudited and may differ from the final audited numbers.

Balance Sheets (unaudited)

As at September 30 2007 2006

$ $


Current assets

Cash and cash equivalents 9,139,844 9,178,123

Cash subject to restrictions 612,500 -

Short-term investments held-to-maturity 14,894,481 5,616,907

Accounts receivable 7,027,518 8,119,660

Investment tax credits receivable 296,840 502,033

Inventories 7,701,067 7,105,974

Prepaid expenses 1,143,381 1,044,039


Total current assets 40,815,631 31,566,736

Cash subject to restrictions 700,000 -

Balance of sale receivable 1,563,195 -

Net investments in leases - 5,967

Deferred financing charges - 2,636,636

Consoles at customers' premises 1,475,631 1,858,465

Property, plant, and equipment 2,881,313 3,212,551

Intellectual property 2,876,325 15,194,606


50,312,095 54,474,961




Current liabilities

Bank indebtedness 6,476,288 -

Accounts payable and accrued liabilities 14,410,438 10,201,378

Fair value of derivative financial instruments 41,175 -

Current portion of long-term debt 1,236,032 -

Current portion of deferred revenue 615,546 491,683


Total current liabilities 22,779,479 10,693,061

Long-term debt 22,927,229 22,399,317

Deferred revenue 294,169 228,774


Total liabilities 46,000,877 33,321,152


Commitments and contingencies

Shareholders' equity

Capital stock 181,041,609 180,655,193

Contributed surplus 9,215,635 7,469,343

Deficit (185,946,026) (166,970,727)


Total shareholders' equity 4,311,218 21,153,809


50,312,095 54,474,961



Statements of Operations and Comprehensive Loss and Deficit (unaudited)

Years ended September 30 2007 2006

$ $


Sales (including rental income of

$839,460; 2006 - $320,862) 39,692,191 38,375,896

Cost of sales (including amortization and

console write-downs of $2,789,709; 2006

- $4,245,556) 16,202,821 17,824,668


Gross Profit 23,489,370 20,551,228

Surgical distribution rights - 233,358

Interest income 23,489,370 20,784,586

727,198 531,978


24,216,568 21,316,564




Research and development 12,591,208 11,829,618

Investment tax credits (717,195) (944,172)


Net research and development 11,874,013 10,885,446

Administrative 7,574,336 5,963,916

Sales and marketing 24,694,626 27,430,009

Amortization a

SOURCE CryoCath Technologies Inc.
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