PRINCETON, NJ, Feb. 17 /PRNewswire-FirstCall/ -- NUCRYST
Pharmaceuticals Corp., a developer and manufacturer of medical
products that fight infection and inflammation, today announced its
financial results for the fourth quarter and full year ended
December 31, 2008. For the quarter ended December 31, 2008, NUCRYST
reported net income of $1.0 million, or $0.05 cents per share, on
revenues of $5.8 million. This compares to net income of $3.2
million, or $0.17 cents per share, on revenues of $11.2 million in
the same period of 2007. The fourth quarter of 2008 included $1.9
million of foreign exchange gains related to the strengthening of
the U.S. dollar against the Canadian dollar. NUCRYST did not earn
any milestone revenue in the fourth quarter of 2008, compared to
$5.0 million of milestone revenue in the fourth quarter of 2007.
For the full year, total revenues for 2008 were $20.9 million,
compared to $30.1 million in 2007. The net loss for 2008 was $3.0
million or $0.16 per share, which represents an improvement of
approximately $1.0 million, or 26%, from the net loss of $4.0
million, or $0.22 per share, in 2007. The 2008 operating loss
increased by $4.8 million to $6.1 million compared to $1.3 million
in 2007. The Company earned $10.0 million in milestone revenue in
2007, compared to zero in 2008. "The consolidation of our research
and development activities into our Canadian operations, along with
our corporate headquarters relocation to Princeton, New Jersey in
the fourth quarter of 2008 will significantly assist us in our cost
containment efforts going forward," said David B. Holtz, Interim
President and Chief Executive Officer, and Chief Financial Officer
of NUCRYST. "We will continue to explore strategic growth
opportunities that leverage our expertise in innovative wound care
and coating technology while at the same time maintaining our focus
on reducing our overall cost structure." At December 31, 2008,
NUCRYST had $23.4 million in cash and cash equivalents, compared to
$17.8 million at December 31, 2007. Last week, NUCRYST announced an
$0.80 per share cash distribution to common stock shareholders. The
distribution will total $14.7 million with a distribution record
date of February 17, 2009 and a distribution payable date of
February 25, 2009. "We are focused on moving the company towards a
sustainable level of profitability with our current business," said
Mr. Holtz. "With the previously announced return of capital to our
shareholders in the first quarter of 2009, we are taking the
necessary steps to reduce our cost structure to an appropriate
level." Fourth Quarter Financial Analysis The total revenue for the
fourth quarter of 2008 decreased to $5.8 million, compared to $11.2
million in the fourth quarter of 2007. The fourth quarter of 2007
included $5.0 million in milestone revenue. Wound care product
revenues less the manufacturing cost rebate for the fourth quarter
of 2008 were $5.8 million, compared to $6.2 million in the fourth
quarter of 2007. The decline was due to lower royalty revenue on
Smith & Nephew's end sales and a decline in products shipped to
Smith & Nephew. Gross margin on product revenues (which
excludes milestone revenue) was 44% in both the fourth quarter of
2008 and 2007 as the decline in revenues from units shipped and
royalties were offset by cost reductions and an increase in the
level of fixed overhead costs reimbursed by Smith & Nephew.
NUCRYST's gross margin percent may vary from period to period due
to differences in timing of product shipments to Smith & Nephew
and when Smith & Nephew sells product to its customers.
Research and development spending in the fourth quarter of 2008
totaled $0.9 million compared to $1.5 million in fourth quarter of
2007. NUCRYST completed the transfer of development programs to its
Fort Saskatchewan, Alberta operations as part of its closure of its
Wakefield, Massachusetts facility. NUCRYST also eliminated spending
on several development programs until commercialization partners
are identified for these programs. General and administrative costs
in the fourth quarter of 2008 totaled $2.4 million as compared to
$2.8 million in the fourth quarter of 2007, as a result of staff
reductions in the U.S. and lower facility-related costs in Canada.
These declines were partially offset by $0.3 million in additional
facility closure costs. NUCRYST also incurred a $0.2 million
write-off of leasehold improvements in the fourth quarter of 2008
related to the Wakefield, Massachusetts facility closure. Other
income and expenses for the fourth quarter of 2008 included foreign
exchange gains of $1.9 million compared to foreign exchange losses
of $0.3 million in the same period in 2007. The changes in the U.S.
dollar and Canadian dollar exchange rate results in unrealized
currency gains and losses on our U.S. dollar working capital
amounts held by our Canadian operations. All of our revenues from
Smith & Nephew are received in U.S. dollars. 2008 Full Year
Financial Analysis Total revenues for 2008 decreased to $20.9
million, compared with $30.1 million in 2007. The 2007 revenues
included $10.0 million in milestone revenue, compared to zero
milestone revenue in 2008. Wound care product revenues for 2008
were $20.9 million, compared to $20.1 million in 2007. An increase
in revenues earned based on the higher fixed level of overhead cost
reimbursement by Smith & Nephew was offset by a 5% decline in
units shipped to Smith & Nephew. Revenues based on Smith &
Nephew's end sales were roughly flat year over year. Gross margin
on product revenues (which excludes milestone revenue) was 39% in
2008 compared to 28% in 2007. The improvement in gross margin is
primarily attributable to an increase in the level of fixed
overhead costs recovered on products shipped and a decrease in
manufacturing costs which offset a substantial portion of the fixed
manufacturing cost rebate provided to Smith & Nephew. Research
and development spending in 2008 totaled $5.0 million, compared to
$6.3 million in 2007. The decrease is the result of reductions in
spending on pharmaceutical research and development programs.
General and administrative costs in 2008 totaled $9.1 million as
compared to $9.5 million in 2007, representing reduced general and
administrative costs at the Fort Saskatchewan facility, lower
contractual consulting costs, and a decline in stock option
compensation expense recognized in the year. The decrease in
general and administrative costs was partially offset by costs
associated with the fourth quarter closure of the Wakefield,
Massachusetts facility. Included in other income and expenses are
foreign exchange gains in 2008 of $2.8 million compared to foreign
exchange losses of $3.3 million for the full year 2007. Certain
information regarding gross margin on product revenues excluding
the impact of milestone payments is presented in this release.
NUCRYST believes that this is a useful financial measure for
investors in evaluating our operating performance for the periods
presented, as when read in conjunction with the changes in revenue
on a U.S. GAAP basis, it presents a useful tool to evaluate our
ongoing operations. In addition, these amounts are some of the
factors used by management to evaluate the overall performance of
the business. This information, however, is not a measure of
financial performance under U.S. GAAP and should not be considered
a substitute for changes in revenue or gross margin as determined
in accordance with U.S. GAAP. About NUCRYST Pharmaceuticals Corp.
NUCRYST Pharmaceuticals Corp. (NASDAQ: NCST; TSX: NCS) develops,
manufactures and commercializes medical products that fight
infection and inflammation using SILCRYST(TM), its patented
atomically disordered nanocrystalline silver technology. NUCRYST
licensed world-wide rights for SILCRYST(TM) wound care coating
products to Smith & Nephew plc, which markets these products in
over 30 countries under their Acticoat(TM) trademark. NUCRYST has
developed its proprietary nanocrystalline silver in a powder form,
referred to as NPI 32101, for use in medical devices and as an
active pharmaceutical ingredient. A conference call regarding our
fourth quarter and full year 2008 results is set for today at 9:00
a.m. EST. To participate, please call the toll-free number
1-800-732-6179. To listen to the call live on the Internet, please
go to http://www.nucryst.com/web_casts.htm. A more detailed
discussion of NUCRYST's 2008 full year results will be available in
the 10-K filing which will be available at http://www.sec.gov/ and
http://www.sedar.com/ when filed. NUCRYST filings are also
available at http://www.nucryst.com/Regulatory_Filings.htm. All
amounts in U.S. dollars SILCRYST(TM) is a trademark of NUCRYST
Pharmaceuticals Corp. Acticoat(TM) is a trademark of Smith &
Nephew plc The financial results in this news release are
unaudited, and are not a complete disclosure of our quarterly or
annual financial results. This news release contains
forward-looking statements within the meaning of securities
legislation in the United States and Canada (collectively
"forward-looking statements"). Forward-looking statements in this
news release include, but are not limited to, statements about: our
strategy, future operations, prospects and plans of management and
our ability to achieve operating efficiencies and cost reductions.
With respect to the forward-looking statements contained in this
news release, readers are cautioned that numerous risks,
uncertainties and other factors could cause our actual results to
differ materially from those indicated in these statements
including, but not limited to: the effect of the distribution of
capital on our liquidity and ability to operate the business;
future shareholder actions with respect to our capitalization and
strategic direction; the performance of stock markets generally;
our ability to satisfy regulatory and stock exchange standards and
requirements to maintain our exchange listing; the uncertainty of
our future operating results, which are likely to fluctuate; our
ability to maintain our collaboration with Smith & Nephew; our
reliance on sales of Acticoat(TM) products with our SILCRYST(TM)
coatings by Smith & Nephew; the future financial performance
and operating performance of Smith & Nephew; our ability to
achieve cost reductions from office, facility and program
consolidations; our ability to establish successful
commercialization programs, through new corporate collaborations or
otherwise for any future products; the availability of regulatory
approval for new products, and our ability to maintain regulatory
compliance with respect to our existing products, the impact of
competition from other pharmaceutical or medical device companies;
changes in currency exchange rates; our ability to protect our
intellectual property rights and to not infringe on the
intellectual property rights of others; our ability to comply with
governmental regulations and standards; our ability to retain
skilled and experienced personnel; changes in general economic and
capital market conditions; and management's response to these
factors. Although we have attempted to identify the important
risks, uncertainties and other factors that could cause actual
results or events to differ materially from those expressed or
implied in the forward-looking statements in this release, there
may be other factors that cause actual results or events to differ
from those expressed or implied in forward looking statements. For
a more thorough discussion of the risks associated with our
business, see the "Risk Factors" section in our Annual Report on
Form 10-K for the year ended December 31, 2007 and in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2008, filed
with the U.S. Securities and Exchange Commission on EDGAR at
http://www.sec.gov/ and with securities authorities in Canada on
SEDAR at http://www.sedar.com/. All forward-looking statements are
expressly qualified in their entirety by this cautionary statement
and NUCRYST disclaims any intention or obligation to revise or
update any forward-looking statements whether as a result of new
information, future developments or otherwise after the date
hereof. (Financial Table to Follow) NUCRYST PHARMACEUTICALS CORP.
Financial Highlights (unaudited) (thousands of U.S. dollars except
share and per share data) Three Months Ended Twelve Months Ended
December 31 December 31 Condensed Consolidated Statements of
Operations 2008 2007 2008 2007 ------------ ------------
------------ ------------ Revenue $ 5,757 $ 11,235 $ 20,907 $
30,092 ------------ ------------ ------------ ------------
Operating expenses: Cost of goods sold 3,217 3,502 12,842 14,477
Research and development 932 1,454 4,955 6,303 General and
administrative 2,392 2,803 9,062 9,481 Write down of capital assets
174 - 174 1,173 ------------ ------------ ------------ ------------
Total operating expenses 6,715 7,759 27,033 31,434 ------------
------------ ------------ ------------ Loss from operations (958)
3,476 (6,126) (1,342) Other income/ (expenses) 1,948 (148) 3,166
(2,539) ------------ ------------ ------------ ------------ Net
pre-tax income/(loss) 990 3,328 (2,960) (3,881) Income tax expense
- 140 11 140 ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ Net
income/(loss) $ 990 $ 3,188 $ (2,971) $ (4,021) ------------
------------ ------------ ------------ ------------ ------------
------------ ------------ Basic and diluted net loss per common
share $ 0.05 $ 0.17 $ (0.16) $ (0.22) ------------ ------------
------------ ------------ ------------ ------------ ------------
------------ Dilutive weighted average common shares outstanding
18,367,239 18,413,248 18,365,053 18,333,810 ------------
------------ ------------ ------------ ------------ ------------
------------ ------------ Three Months Ended Twelve Months Ended
December 31 December 31 -------------------------
------------------------- Additional Revenue and Gross Margin
Details 2008 2007 2008 2007
-------------------------------------------------------------------------
Revenue Wound care product revenue $ 6,882 $ 7,360 $ 25,407 $
24,592 Manufacturing cost rebate (1,125) (1,125) (4,500) (4,500)
Milestone revenue - 5,000 - 10,000 ------------ ------------
------------ ------------ Total revenue $ 5,757 $ 11,235 $ 20,907 $
30,092 Cost of goods sold 3,217 3,502 12,842 14,477 Gross margin
excluding milestone revenue $ 2,540 $ 2,733 $ 8,065 $ 5,615
----------------------------------------------- December 31
------------------------- Selected Consolidated Balance Sheet Data
2008 2007 ----------------------------------------------- Cash and
cash equivalents $ 23,388 $ 17,841 Current assets 31,751 37,618
Total assets 41,800 51,299 Current liabilities 2,949 3,828
Non-current liabilities 495 726 Shareholders' equity 38,356 46,745
DATASOURCE: NUCRYST Pharmaceuticals Corp. CONTACT: David B. Holtz,
Interim President and Chief Executive Officer, Chief Financial
Officer, NUCRYST Pharmaceuticals Corp., (609) 228-8220; David
Wills, Gillian McArdle, Investor Relations, (416) 504-8464,
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