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.  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/March2014/21/c6500.html  CO: Angiotech Pharmaceuticals, Inc. ST: British Columbia NI: MTC BTC ERN 2575 WNEWS