ART Advanced Research Technologies Announces Second Quarter 2009 Financial Results
MONTREAL, CANADA--(Marketwire - Aug. 13, 2009) - ART Advanced Research Technologies Inc. (ART) (TSX:ARA), a Canadian medical device company and a leader in optical molecular imaging products for the healthcare and pharmaceutical industries, announced its financial results for the second quarter ended June 30, 2009. ART reported revenues of $1,016,308 for the three-month period ended June 30, 2009, compared to $1,212,860 for the same quarter a year ago. For the six-month period ended June 30, 2009, revenues were $1,112,222, compared to $2,454,781, for the six-month period ended June 30, 2008. For the 2009 second quarter, the operating loss decreased by $158,128, or 14%, to $932,835, from $1,090,963 for the same period a year ago. For the six-month period ended June 30, 2009, the operating loss was $2,412,387, compared to $2,425,284, for the six-month period ended June 30, 2008. ART incurred a net loss for the three-month period ended June 30, 2009, of $1,092,308 or $0.01 per share, compared to $1,101,220 or $0.01 per share for the three-month period ended June 30, 2008. For the six-month period ended June 30, 2009, the net loss was $2,483,721 or $0.03 per share, compared to $2,380,676 or $0.02 per share, for the six-month period ended June 30, 2008. All dollar amounts referenced herein are in U.S. dollars, unless otherwise stated.
2009 Second Quarter Highlights
- ART conducted the pre-commercial launch of its new Optix(R) MX3 system at the European Society for Molecular Imaging meeting in Barcelona, Spain.
- ART secured the sale of SoftScan(R) breast imaging device to Gottingen University in Germany, where the device will be used to measure treatment response for breast cancer.
- Gottingen has also committed to purchase a second SoftScan system, fully upgraded for use in screening with molecular probes, subject to grant funding.
- ART participated in the American Association of Cancer Research (AACR) conference in Denver, Colorado, which was well attended and generated a number of important leads for ART, further consolidating the sales funnel.
- ART has further solidified its sales team with the hiring of two sales representatives for the western half of North America, which regroups a significant cluster of major pharmaceutical and academic research labs, and with the hiring of a European agent to drive business growth in the European Life Science market.
- ART strengthened its cash position by closing $2.1 million in long-term debt financings.
Post Quarter Events
- ART received a C$500,000 contribution in repayable funding from the Government of Canada to pursue commercialization activities in North America.
Revenues
For the three-month period ended June 30, 2009, revenues were $1,016,308, compared to $1,212,860 for the same period ended June 30, 2008. Sales resulting from products amounted to $982,033 in the quarter ended June 30, 2009, compared to $37,177 for the same quarter of last year. Revenues resulting from sales of products for the six-month period ended June 30, 2009, amounted to $1,052,729, compared to $1,243,389 for the same period of last year. During the quarter ended June 30, 2009, product sales mainly resulted from the sale of one Optix and one SoftScan unit whereas for the same quarter ended June 30, 2008, product sales were mainly from Fenestra products. In both the six-month periods ended June 30, 2009 and 2008, ART sold one Optix unit and one SoftScan unit. The decrease in products sales during the six-month period ended June 30, 2009, compared to the same period in 2008, mainly resulted from the sales of add-ons that resulted in the conversion of two Optix systems to the MX2 version in the six-month period ended June 30, 2008. During the second quarter of 2009, the Company sold two new service contracts, and recognized a total of $34,275 in services and other revenues. In the second quarter of 2008, the Company had recognized revenue from service contracts in the amount of $1,175,683, of which an amount of $1,075,517 resulted from services rendered on behalf of GE, as ART was completing the transition out of the Optix distribution agreement with GE.
Gross Margin
During the three and six-month periods ended June 30, 2009, ART generated a gross margin of $833,619 or 85% and $901,817 or 86% respectively from the sales of its products compared to $32,775 or 88% and $991,194 or 80% for the same periods in the previous year. The gross margin ratio generated on the sales of services and other revenues was 70% for both the three-month and the six-month periods ended June 30, 2009, compared to 97% and 95% for the same periods in 2008. The increase in the product gross margin ratio during the six-month period ended June 30, 2009, resulted from a different sales product mix compared to the six-month period ended June 30, 2008. In both semesters, the Company sold one Optix unit and one SoftScan prototype unit having approximately equivalent gross margin ratio. The gross margin ratio on the SoftScan prototype sales in 2008 and 2009 represent almost 100% of the sale, given that these units had been expensed as incurred in the previous years. Furthermore, the Company sold more of its Fenestra line of molecular imaging agents in 2009.
Operating Expenses
The Company's research and development ("R&D") expenditures for the three-month period ended June 30, 2009, net of investment tax credits, amounted to $509,967, compared to $618,279 for the same period ended June 30, 2008. For the six-month period ended June 30, 2009, R&D expenditures, net of investment tax credits, were $1,145,877, compared to $1,472,929 for the six-month period ended June 30, 2008. The R&D expenditures during the three-month and the six-month periods ended June 30, 2009, decreased by 18% and 22% compared to the same periods in 2008. The decrease of the R&D expenses during the three-month and the six-month periods ended June 30, 2009, compared to the same periods of last year mainly resulted from the cost reduction plan which was put in place during the first days of 2009. As a result, the R&D headcount decreased by approximately 15% compared to the R&D headcount at the end of the second quarter of 2008. During the second quarter of 2009, the R&D team pursued the development of the next generation of the Optix system and continued to support Optix users, while collaborating with clients for the development of applications to demonstrate the utility of the system in research areas such as oncology, cardiology and neurology.
Selling, general, and administrative ("SG&A") expenses for the three-month period ended June 30, 2009, totaled $1,109,578, compared to $1,468,810 for the same period ended June 30, 2008. For the six-month period ended June 30, 2009, SG&A expenses were $1,978,524, compared to $2,752,064 for the six-month period ended June 30, 2008. The decrease of the SG&A expenses during both the three-month and six-month periods ended June 30, 2009, compared to the same periods in 2008, mainly resulted from the cost reduction plan which took effect during the first days of 2009. In fact, the Company reduced its workforce and implemented a four-day shared workweek schedule for about 20 percent of the workforce. Senior management has taken at least a 10 percent salary cut.
Net Loss
The net loss for the three-month period ended June 30, 2009 was $1,092,308 or $0.01 per share, compared to $1,101,220 or $0.01 per share for the three-month period ended June 30, 2008. For the six-month period ended June 30, 2009, the net loss was $2,483,721 or $0.03 per share, compared to $2,380,676 or $0.02 per share, for the six-month period ended June 30, 2008.
Financial Outlook
As at June 30, 2009, the Company has $1,753,509 in cash and cash equivalents, and a working capital of $3,744,937. During the second quarter, the Company strengthened its cash position by closing $2.1 million in long-term debt financings, maturing in three years. The long-term debt bears interest at a rate of 9% payable annually and is secured by movable hypothecs on the intellectual property rights of the Company.
Following the close of the second quarter of 2009, the Government of Canada granted C$500,000 in repayable funding to ART for commercialization activities, through Canada Economic Development's Business and Regional Growth program. ART is also considering other financing options, such as assistance programs for businesses offered by the different levels of government, to strengthen the Company's financial situation. Further, sales growth prospects for Optix are favourable as the Obama administration has increased the funding to the National Institutes of Health ("NIH") by as much as $10.4 billion under the stimulus package recently passed by the U.S. congress, for a total NIH allocation expected to reach $40.7 billion, compared to $29.3 billion last year. Moreover, the Canadian government's recent budget allocated C$250 million for the modernization of federal labs throughout the country and another C$750 million in research infrastructure through the Canadian Foundation for Innovation, which are anticipated to be directly relevant to the sector as well. These factors combined are expected to benefit the industry starting in the third quarter of this year, coinciding with the launch of the new Optix MX3 system.
The financial statements, accompanying notes to the financial statements, and Management's Discussion and Analysis for the three-month period ended June 30, 2009, will be available online at www.sedar.com, or at www.art.ca, in the "Investors" section. Summary financial tables are provided below. A detailed list of the risks and uncertainties affecting the Company can be found in the Management's Discussion and Analysis for the year ended December 31, 2008, and in the Company's most recent Annual Information Form, available on SEDAR at www.sedar.com.
Conference Call
ART will host a conference call today at 5:00 PM (EDT). The telephone number to access the conference call is (514) 861-1531 when dialing within the Montreal area, or (877) 667-7766 for the rest of North America. Outside of North America, please dial (514) 861-1531. A replay of the call will be available until August 27, 2009. To listen to the replay from the Montreal area, please dial (514) 861-2272, or, (800) 408-3053 for the rest of North America. From outside of North America, please dial (514) 861-2272. The access code for the replay is 1806385#.
About ART
ART Advanced Research Technologies Inc. is a leader in molecular imaging products for the healthcare and pharmaceutical industries. ART has developed products in medical imaging, medical diagnostics, disease research, and drug discovery with the goal of bringing new and better treatments to patients faster. The Optix(R) optical molecular imaging system, designed for monitoring physiological changes in living systems at the preclinical study phases of new drugs, is used by industry and academic leaders worldwide. The SoftScan(R) optical medical imaging device is designed to improve the diagnosis and treatment of breast cancer. Finally, the Fenestra(R) line of molecular imaging contrast products provides image enhancement for a wide range of preclinical Micro CT applications allowing scientists to see greater detail in their imaging studies, with potential extension into other major imaging modalities. ART is commercializing some of these products in a global strategic alliance with GE Healthcare, a world leader in mammography and imaging. ART's shares are listed on the TSX under the ticker symbol ARA. For more information on ART, visit our website at www.art.ca.
This press release may contain forward-looking statements subject to risks and uncertainties that would cause actual events to differ materially from expectations. These risks and uncertainties are described in the most recent Annual Information Form and the financial statements for the year ended December 31, 2008, available on SEDAR (www.sedar.com).
Financial Statements (in U.S. dollars)
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ART Advanced Research Technologies Inc.
Balance Sheets
(In U.S. dollars)
June 30, 2009 December 31,
(unaudited) 2008
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ASSETS
Current assets
Cash $1,753,509 $1,446,086
Term deposits (2008 - 0.67% and 0.90%
matured in January 2009) - 1,700,000
Accounts receivable 1,564,573 1,700,365
Investment tax credits receivable 443,363 779,682
Inventories 1,192,348 1,168,702
Prepaid expenses 1,316,301 547,127
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6,270,094 7,341,962
Property, equipment and assets under
capital leases 381,332 415,932
Patents 1,531,843 1,462,918
Deferred development costs 2,978,159 2,383,180
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$11,161,428 $11,603,992
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LIABILITIES
Current liabilities
Bank loan 516,129 489,956
Accounts payable and accrued liabilities 1,861,062 2,224,509
Deferred revenues 109,526 112,926
Current portion of obligations under
capital leases 38,440 35,267
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2,525,157 2,862,658
Obligations under capital leases 21,821 39,271
Long-term debt 1,989,258 -
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4,536,236 2,901,929
SHAREHOLDERS' EQUITY
Share capital and share purchase warrants 39,057,319 39,142,553
Contributed surplus 4,974,091 4,845,266
Deficit (38,894,412) (36,410,691)
Accumulated other comprehensive income 1,488,194 1,124,935
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(37,406,218) (35,285,756)
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6,625,192 8,702,063
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$11,161,428 $11,603,992
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ART Advanced Research Technologies Inc.
Shareholders' Equity
As at June 30, 2009
(In U.S. dollars)
Common Shares Preferred Shares
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Number Amount Number Amount
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Balance as at
January 1, 2008 94,540,592 $23,030,023 8,341,982 $7,907,043
Net loss
Translation
adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
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Issue of shares
for cash 53,101,296 7,100,000
Share issue expenses
Stock-based
compensation
Deferred share units
Expired warrants
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Balance as at
December 31, 2008 94,540,592 23,030,023 61,443,278 15,007,043
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(unaudited)
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Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
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Stock-based
compensation
Deferred share units
Expired warrants
-------------------------------------------------------------------------
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Balance as at
June 30,2009 94,540,592 $23,030,023 61,443,278 $15,007,043
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Share
Capital and
Share Purchase
Warrants Warrants
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Number Amount Total
-------------------------------------------------------------------------
Balance as at January 1, 2008 4,855,791 $1,280,876 $32,217,942
Net loss
Translation adjustment
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Comprehensive loss
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Issue of shares for cash 7,100,000
Share issue expenses
Stock-based compensation
Deferred share units
Expired warrants (594,907) (175,389) (175,389)
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Balance as at December 31, 2008 4,260,884 1,105,487 39,142,553
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(unaudited)
Net loss
Translation adjustment
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Comprehensive loss
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Stock-based compensation
Deferred share units
Expired warrants (305,555) (85,234) (85,234)
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Balance as at June 30, 2009 3,955,329 $1,020,253 $39,057,319
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Accumulated
Other
Contributed Comprehensive
Surplus Deficit Income Total
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Balance as at
January 1, 2008 $4,537,336 $(31,007,264) $3,326,739 $9,074,753
Net loss (4,819,230) (4,819,230)
Translation
adjustment (2,201,804) (2,201,804)
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Comprehensive loss (4,819,230) (2,201,804) (7,021,034)
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Issue of shares
for cash 7,100,000
Share issue expenses (584,197) (584,197)
Stock-based
compensation 84,065 84,065
Deferred share units 48,476 48,476
Expired warrants 175,389
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Balance as at
December 31, 2008 4,845,266 (36,410,691) 1,124,935 8,702,063
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(unaudited)
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Net loss (2,483,721) (2,483,721)
Translation adjustment 363,259 363,259
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Comprehensive loss (2,483,721) 363,259 (2,120,462)
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Stock-based
compensation 31,291 31,291
Deferred share units 12,300 12,300
Expired warrants 85,234
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Balance as at
June 30, 2009 $4,974,091 $(38,894,412) $1,488,194 $6,625,192
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ART Advanced Research Technologies Inc.
Operations
(In U.S. dollars)
(Unaudited)
Three-month Periods Six-month Periods
ended June 30 ended June 30
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2009 2008 2009 2008
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Sales
Products $982,033 $37,177 $1,052,729 $1,243,389
Services and other
revenues 34,275 1,175,683 59,493 1,211,392
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1,016,308 1,212,860 1,112,222 2,454,781
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Cost of sales
Products 148,414 4,402 150,912 252,195
Services and other
revenues 10,437 38,995 18,142 57,100
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158,851 43,397 169,054 309,295
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Gross margin 857,457 1,169,463 943,168 2,145,486
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Operating expenses
Research and
development,
net of investment
tax credits 509,967 618,279 1,145,877 1,472,929
Selling, general
and administrative 1,109,578 1,468,810 1,978,524 2,752,064
Amortization 170,747 173,337 231,154 345,777
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1,790,292 2,260,426 3,355,555 4,570,770
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Operating loss 932,835 1,090,963 2,412,387 2,425,284
Other expenses
(revenues) 159,473 10,257 71,334 (44,608)
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Net loss $1,092,308 $1,101,220 $2,483,721 $2,380,676
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Basic and diluted
net loss per share $0.01 $0.01 $0.03 $0.02
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Basic and diluted
weighted average
number of common
shares outstanding 94,540,592 94,540,592 94,540,592 94,540,592
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ART Advanced Research Technologies Inc.
Notes to Financial Statements
(In U.S. dollars)
(Unaudited)
Three-month Periods Six-month Periods
ended June 30 ended June 30
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2009 2008 2009 2008
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OPERATING ACTIVITIES
Net loss $(1,092,308) $(1,101,220) $(2,483,721) $(2,380,676)
Items not affecting
cash
Amortization 170,747 173,337 231,154 345,777
Stock-based
compensation 18,834 37,080 31,291 74,160
Gain on disposal
of fixed assets - (26,707) - (26,707)
Deferred share units 12,300 - 12,300 -
Net changes in working
capital items
Accounts receivable 67,163 (731,199) 215,774 (335,270)
Investment tax
credits receivable (84,265) (236,413) 347,547 903,656
Inventories 85,999 (254,966) 41,607 (199,477)
Prepaid expenses (766,433) 282,647 (738,877) (559,589)
Accounts payable and
accrued liabilities 140,083 (666,239) (441,415) (426,700)
Deferred revenues (30,793) 83,236 (10,739) 47,527
Deferred grant - - - 5,821
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Cash flows from
operating activities (1,478,673) (2,440,444) (2,795,079) (2,551,478)
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INVESTING ACTIVITIES
Acquisition of property
and equipment - (9,745) (6,301) (9,745)
Proceed on disposal of
property and equipment - 33,481 - 59,172
Patents (23,685) (42,668) (54,772) (131,843)
Deferred development
costs (289,810) (468,375) (553,972) (763,546)
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Cash flows from
investing activities (313,495) (487,307) (615,045) (845,962)
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FINANCING ACTIVITIES
Repayment of
obligations under
capital leases (9,171) (12,456) (17,620) (17,995)
Long-term debt 1,981,417 - 1,981,417 -
Issue of convertible
preferred shares - 1,100,000 - 1,100,000
Share issue expenses - (82,193) - (82,193)
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Cash flows from
financing activities 1,972,246 1,005,351 1,963,797 999,812
Effect of foreign
currency translation
adjustments on cash
and cash equivalents 123,394 53,047 53,750 (63,691)
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2,095,640 1,058,398 2,017,547 936,121
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Net increase
(decrease)
in cash and cash
equivalents 303,472 (1,869,353) (1,392,577) (2,461,319)
Cash and cash
equivalents,
beginning
of period 1,450,037 2,995,688 3,146,086 3,587,654
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Cash and cash
equivalents, end
of period $1,753,509 $1,126,335 $1,753,509 $1,126,335
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CASH AND CASH
EQUIVALENTS
Cash $1,753,509 $537,291 $1,753,509 $537,291
Term deposits - 589,044 - 589,044
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$1,753,509 $1,126,335 $1,753,509 $1,126,335
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Supplemental
disclosure
of cash flow
information
Interest paid $7,703 $24,382 $15,765 $33,016
Interest received - 9,720 1,403 30,109
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