Angiotech Pharmaceuticals, Inc. announces 2013 financial results and provides update on recent developments

Angiotech Pharmaceuticals, Inc. announces 2013 financial results and provides 
update on recent developments 
VANCOUVER, March 21, 2014 /CNW/ - Angiotech Pharmaceuticals, Inc. ("ANPI") 
today announced its financial results for the quarter and year ended December 
31, 2013 as well as number of recent developments. 
"We are pleased to have concluded 2013 by recording yet another year of 
improved business results as compared to the past several years," said Tammy 
Neske, Chief Business Officer of Angiotech. "2013 was a year of exceptional 
achievement, beginning with the successful sale of our interventional products 
business and a significant return of capital to our shareholders, followed by 
a new financing and an additional return of capital to our shareholders, the 
development of a new sales distribution and product development strategy, and 
the re-branding of our operating company to Surgical Specialties Corporation." 
Recent developments: 
Amendment of Senior Secured Credit Facility: To enhance our operational 
flexibility and to support future growth, on March 18 2014, we completed an 
amendment to the Senior Secured Credit Facility of our subsidiary, Surgical 
Specialties Corporation (US), Inc. ("SSC"). The amendment provides for, among 
other things: (i) an increase in our incremental borrowing capacity from $25 
million to $60 million; (ii) an increase in the amount of restricted payments 
that SSC can make to its parent company, Angiotech; (iii) a reduction from 50% 
to 25% in the amount of excess cash flow that must be used to repay debt; and 
(iv) an increase in call protection from 101 for 12 months to 102 for 6 months 
and 101 for 6 months. 
New Member of the Board of Directors: Earlier this year, Richard Packer joined 
our Board of Directors. Mr. Packer is currently the CEO at Zoll Medical 
Corporation, a leader in medical products for defibrillation and monitoring, 
circulation and CPR feedback, data management, fluid resuscitation, and 
therapeutic temperature management. Mr. Packer joined Zoll in 1992 as the Vice 
President of Operations and has since held a number of senior executive 
positions at Zoll. Prior to 1992, he was Vice President of various functions 
at Whistler Corporation, a consumer electronics company. 
Certainty on Cook Royalty Obligation on Sales of the Zilver PTX Drug Eluting 
Peripheral Stent: On December 12, 2013 we entered into an agreement with Cook 
Incorporated, licensor of certain patents that brings certainty to the term of 
Cook's royalty obligation to Angiotech irrespective of patent life. The 
agreement obligates Cook to pay 10% on US sales through the end of 2017, 4.5% 
on US sales 2018 through 2020, and 8% on EU sales through the end of 2017. 
Expansion of Product Portfolio: Through the fall of 2013 we completed 
significant needle development and suture line extension projects, resulting 
in the launch of new SSC Surgical Suture and SSC Animal Health Suture 
products, a Quill Animal Health product line, additional new Quill product 
codes for human use (making our barbed wound closure device portfolio the most 
robust barbed device portfolio on the market), and new "300 series" needles 
(demonstrating improved strength, flexibility and tissue penetration 
characteristics) for sale to our OEM customers. Testing conducted to date 
indicates that the new SSC needles perform comparable to or better than, 
competitive needle offerings. 
Transfer of US Manufacturing to Low Cost Environment: In February 2014, we 
announced our decision to transition manufacturing from our Reading, PA and 
Aguadilla, PR manufacturing plants to a new manufacturing facility in Tijuana, 
Mexico. The closure of these facilities is estimated to be complete by the end 
of 2015. The move to Tijuana is expected to allow us to operate more 
efficiently and cost effectively in one consolidated manufacturing site, 
position the company more competitively in the markets it serves, and improve 
our opportunities to grow and expand. 
Financial Highlights: 


        --  Product revenue for the year ended December 31, 2013 was $128.8
            million, an increase of 5% from $123.1 million recorded in
            2012. The year-over-year improvement in sales was primarily
            driven by strong demand for our core suture lines and our
            microsurgical knives in the US and Asia and continued growth in
            the overall sales of our various knotless suture product lines.
        --  Product revenue for Q4 2013 was $30.2 million, down 6% from
            $32.1 million in Q4 2012. Quarter-over-quarter results were
            impacted primarily by buying patterns of certain of our OEM and
            private label customers, including Ethicon, our sole private
            label customer for our knotless suture product lines, and
            competitive pressure in the U.S. for direct sales of Quill.
        --  While our direct sales of Quill in the U.S. declined during the
            year, coincident with Ethicon's product launch, they have
            subsequently stabilized and have begun to again show growth. In
            addition, our Quill sales in Asia continue to grow and almost
            doubled year-over-year.
        --  Importantly, even with the lower average selling price we
            receive on our private label sales of knotless suture products
            to our partner Ethicon, when combined with our own direct sales
            of Quill, our total revenues from knotless suture technology
            continued to exhibit growth consistent with previous years, up
            9% in 2013 as compared to 2012.
        --  In addition, our sales force reorganization activities began to
            yield benefits for our overall wound closure product lines in
            2013. Specifically, our 2013 sales of our non-Quill suture
            product lines for both Q4 and the full year grew 6% as compared
            to the same periods of 2012. In the hands of our direct sales
            team, micro suture product revenues grew 13%
            quarter-over-quarter and 10% year-over-year.
        --  Royalty revenue for 2013 was $5.5 million, down 64% from $15.1
            million recorded in 2012. Royalty revenue for Q4 2013 was $1.6
            million, down 47% from $3.0 million in Q4 2012. The vast
            majority of the decline was due to lower royalties revenues on
            sales by Boston Scientific Corporation of TAXUS® drug-eluting
            stents. Compared to 2013, royalties were also down in both Q4
            and the year in 2013 compared to last year due to a reversal of
            royalties earned in prior periods from Cook associated with
            their voluntary recall of Zilver PTX drug-eluting stents in
            April 2013. Since the recall, royalty revenues from Cook in the
            most recent quarter were up 17%.
        --  Adjusted EBITDA for the year ended December 31, 2013 was $36.7
            million, a reduction of 19% from $45.1 million (pro forma for
            the sale of our interventional products business) recorded in
            2012, consisting of an increase of $2.3 million from Adjusted
            EBITDA of $31.4 million for SSC in 2012, offset by a decline of
            $10.7 million from Adjusted EBITDA of $13.7 million for our
            Royalty business in 2012.
        --  Adjusted EBITDA for Q4 2013 was $6.9 million, down 41% from
            $11.7 million in Q4 2012. Compared to the same quarter last
            year, Q4 2013 Adjusted EBITDA for SSC of $7.3 million declined
            by $1.0 million and Q4 2013 Adjusted EBITDA for our Royalty
            business of ($0.4) million declined by $3.8 million.
        --  Lower royalty revenues negatively impacted Adjusted EBITDA for
            both the full year and Q4 of 2013, and for the year more than
            offset the strong performance of our SSC business. The lower
            margins we receive on private label sales of knotless suture
            products to Ethicon also impacted SSC's 2013 annual and Q4
            Adjusted EBITDA.
        --  As of December 31, 2013, ANPI held $17.3 million of
            unrestricted cash & cash equivalents, of which $13.4 million
            was held by SSC, and $107.3 million of its floating rate notes
            were outstanding.

Financial Information:

Certain financial measures in this press release are prepared in accordance 
with U.S. Generally Accepted Accounting Principles ("GAAP"). In addition, we 
have presented adjusted earnings before interest, taxes, depreciation and 
amortization ("Adjusted EBITDA"), which is a non-GAAP financial metric that 
excludes certain non-cash and non-recurring items. Management uses Adjusted 
EBITDA to establish operational goals, and believes that this metric may 
assist investors in evaluating the results of our business and analyzing the 
underlying trends over time. In addition, our creditors may monitor this 
metric to measure compliance with certain financial covenants in our lending 
agreements, or assess the operating and cash flow performance of our business. 
Investors should consider our non-GAAP Adjusted EBITDA in addition to, and not 
as a substitute for, or as superior to, financial metrics prepared in 
accordance with GAAP.

Amounts, unless specified otherwise, are expressed in U.S. dollars. Financial 
results are reported in accordance with U.S. GAAP unless otherwise noted.

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 in 2014 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 
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; competition; technological changes that could impact our existing 
products or our ability to develop and commercialize future products; 
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 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 successfully manufacture, market 
and sell our products; changes in our business strategy or development plans; 
our ability to attract and retain qualified personnel; our ability to 
successfully complete pre-clinical and clinical development of our products; 
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; the 
availability of capital to finance our activities; our ability to service our 
debt obligations; and any other factors referenced in our other filings with 
the SEC.

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.

(©)2013 Angiotech Pharmaceuticals, Inc. All Rights Reserved.

About Angiotech
Angiotech is a medical device business operating in the United States, the 
United Kingdom and Puerto Rico that develops, manufactures and markets medical 
device products and technologies, primarily in the areas of suture, surgical 
needle technologies and micro-surgical blades, through its subsidiary, 
Surgical Specialties Corporation (US), Inc. Key product lines include wound 
closure products such as the Quill™ knotless tissue closure device, Surgical 
Specialties Surgical Suture, and Look™ brand sutures, Sharpoint and Surgical 
Specialties Microsurgical Knives brand of microsurgical knives. Angiotech also 
manufactures components and private label suture and microsurgical knives for 
other third party medical device manufacturers. For additional information 
about Angiotech, please visit our website at www.surgicalspecialties.com.



SOURCE  Angiotech Pharmaceuticals, Inc. 
Investor Relations and Corporate Communications contact us at (604)  221-7933 
orir@surgicalspecialties.com. 
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-0- Mar/21/2014 17:00 GMT
 
 
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