Orthopedic News Roundup 27-Jul-06
BY HUYEN NGUYEN, JULY 27, 2006
Earnings Results:
Biologics: Anika Therapeutics announced 2Q:06 net sales increased 11% to $7.1 million. Product revenues grew 74% while licensing, milestone and contract revenue was down 77%. The large product sales growth was partially driven by higher demand for OrthoVisc®; this division grew 98% compared to 2Q:05. On a GAAP basis, the Company's $0.12 diluted earnings per share (EPS) beat analysts' estimates by $0.02. Earlier this month, the Company signed an exclusive development and commercialization agreement with Galderma Pharma S.A. for Anika's hyaluronic acid (HA) products.
LifeCell Corp. reported 2Q:06 product revenues were $35.7 million for the quarter, up 60% from the $22.3 million reported in 2Q:05. Growth in product revenues can be attributed to the continued success of LifeCell's flagship reconstructive surgical product, AlloDerm Regenerative Tissue Matrix, which earned $30.3 million, up 73% from the $17.6 million in the second quarter of 2005. Orthopedic product revenues, which include Graft Jacket and AlloCraft‚Ñ¢DBM, grew less strongly, increasing to $2.3 million from the $2.0 million reported in 2Q:05. Operating income for 2Q:06 was $8.6 million, an increase of 66% from $5.2 million in 2Q:05. Net income was $5.1 million, or $0.15 diluted EPS, up from $3.6 million, or $0.11 diluted EPS, in 2Q:05. The results were $0.02 better than Wall Street expectations of $0.13 diluted EPS.
Bracing: Orthofix International N.V. reported 2Q:06 revenues of $84.7 million and net income of $12.7 million, representing an increase of 7% and 35% over 2Q:05, respectively. Net income included a charge of $1.6 million resulting from the adoption of a new accounting method. Excluding a one-time tax benefit of $0.18 diluted EPS, the Company beat analysts' estimates by $0.04 and reported $0.61 diluted EPS. Orthofix's product sales were driven by its spinal division, which had a 17% increase over 2Q:05. Its reconstruction business grew 3%, while the trauma sector decreased 1% from the prior year, affected primarily by its external fixation business line.
Large Joints: Stryker Corp. reported its 2Q:06 sales increased 9% to $1.33 billion. The Company's diluted earnings per shares of $0.52 for the quarter beat analysts' estimates by $0.01. Leading the group was MedSurg division; it had a 14.4% (constant currency) sales increase year-over-year. The orthopedics division was up 7.3% (constant currency). Leading this division was spine with 13% growth; hip sales lagged behind and were basically flat for the quarter. Stryker provided a DOJ investigation update, commenting that the investigation only pertained to certain products or geographies.
Wright Medical Group reported 2Q:06 net sales of $87.5 million, a 6% increase over 2Q:05 (foreign currency had no material impact on sales). Net income for the quarter was $2.8 million, or a diluted EPS of $0.08, beating analysts' estimates by $0.04. Excluding non-GAAP related expenses, Wright's net income would have been $0.15 diluted EPS. Sales growth was driven by the hip and extremity division, which grew 14.0% and 8%, respectively. The Company plans to continue broadening its extremity portfolio with investments in both foot and ankle and the upper extremity markets.
Smith & Nephew PLC 2Q:06 revenues were up 6% to $686 million (including effects of currency), and higher than analysts' estimates of $667 million. Earnings per share before amortization of acquisition intangibles were $0.11 ($0.54 per Amerian Depository Share), 1% higher than prior year. During the quarter, Orthopedic Reconstruction revenue had a moderate increase of 7% while the Orthopedic Trauma operation had a higher year-over-year sales growth of 13%. Management confirmed earnings guidance for the full year with low double digits predicted for Reconstruction and Trauma.
Zimmer Holdings, Inc. announced 2Q:06 net sales of $882 million, an increase of 4% reported and 5% constant currency, below analysts' expectations of $889 million. Diluted earnings per share for the quarter were $0.81 reported and $0.83 adjusted, exceeding analysts' estimates of $0.82 adjusted. Constant currency net sales were up 5% and 3% for knees and hips respectively, up 15% for both extremities and dental, and up 12% for trauma and spine. In the press relase Zimmer provided additional information in regards to the pending DOJ antitrust investigation.
Spine: Kyphon reported a strong 2nd Quarter this week. Quarterly revenue broke the $100 million mark, and at $101 million, handily beat analysts' estimates of $98.6 million. Overall, revenue was up 35% compared to the year ago period, with domestic revenue up 28% and international revenue up 71%. Guidance was also positive. The company's outlook is strong enough that they were able to maintain previously issued revenue guidance of $398 milion for the year despite the hiccup that striking German physicians will cause in the 3rd quarter.
After recently completing its IPO, Alphatec Holdings, Inc. reported 2Q:06 revenues of $19.4 million, an increase of 133% compared to 2Q:05. Gross margins were 66.2%, compared to 54.3% in the same quarter last year. Net loss for the quarter was $4.7 million, or a loss of $0.20 diluted EPS. Included in net income was a one-time charge of ~$1.3 million which primarily related to stock-based compensation expense. Its cash balance as of June 30, 2006 was $25 million, which includes proceeds from the company's IPO. Total EBITDA for 2Q:06 was $122 thousand, compared to a loss of $935 thousand in the same period last year. Over the past year, Alphatec's sales force has grown from 30 to 188 representatives.
NuVasive reported $22.7 million in total revenues for 2Q:06, a year-on-year increase of 49.5%. On a non-GAAP basis, net loss was $3.7 million, or $0.11 per share, which beat analysts' expectation of $0.13 per share. During 2Q:06, the company achieved sales force exclusivity, trained 151 surgeons on the MAS(TM) Platform, received an IDE to begin clinical trial enrollment on its NeoDisc™ technology, and acquired a 100,000 square foot distribution facility in Memphis, Tennessee.
Clinical Update:
co.don® AG announced that for the first time its co.don autologous 3-dimensional cultured chondrocytes - co.don chondrosphere®'s product (ACT-3D) - were successfully implanted in a patient with a hip cartilage defect. The proprietary spheroid technology of co.don® allows the highly simplified surgical application of autologous 3-dimensional cultured chondrocytes without an foreign scaffold- eather membrane or matrix of animal or synthetic origin.
Distribution Agreement:
Zimmer Holdings, Inc. and Brasseler USA entered into a five-year distribution agreement allowing Zimmer to sell and distribute Brasseler's manufactured powered surgical instruments (large and small bone) and consumables in the United States.
Financing:
Anulex Technologies, Inc. raised $20 million in a Series C financing led by MB Venture Partners and Affinity Capital, who are new investors to the Company. Funding will be used to commercialize Anulex's Inclose™ Surgical Mesh and other future therapies to treat related spinal diseases.
Product Introduction:
Smith & Nephew's Endoscopy division announced the launch of its high definition 660HD Image Management System. This system can digitally capture, edit, export and print endoscopic surgical images and patient information. Stryker Orthopaedics has married two of its most recent implant innovations, Stryker's X3®, a highly crosslinked polyethylene, and the Triathlon® Knee System, into a new knee system that yields significantly lower wear rates than other knee implants. This new knee implant showed a 96% wear reduction over leading competitors in laboratory testing on wear simulators.
Regulatory Update:
TissueGene, Inc. announced that it has received acceptance of its Investigational New Drug application (IND) for the initiation of its Phase I clinical trial evaluating a single dose of TG-C for the treatment of degenerative joint diseases in patients who have opted for total knee arthroplasty.
