Tutogen Considers Zimmer's Buyout Inadequate, Quarterly Revenues Highest In Tutogen's History
BY ARIELLA P. GOLOMB, MD, AUGUST 15, 2006
Late last week, Tutogen Medical Inc. rejected a bid from Zimmer Holdings, Inc. for $5-$6 per share. (Current 52 week range for the stock is between $2.50 - $6.29). Zimmer currently owns 33.2% of Tutogen's common stock, and back in March, Zimmer began exploring a buyout. Last Wednesday Zimmer telephoned Tutogen with the acquisition price which would have valued Tutogen at $80.4 to $96.5 million.
Just three days after announcing that they rejected Zimmer's buyout offer, Tutogen announced the highest quarterly revenues ($10 million, up 8% from 2Q:05) in company history. However, Spine and Surgical Specialties revenues were down in the US when compared to 3Q:06. Below is a breakdown of revenues by segment and region.
For the quarter, the company reported a net loss of $1.1 million, or $0.07 per fully diluted share compared to the same quarter last year. The Company would have experienced breakeven results without ~$1.1 million in unusual charges for the quarter (including $210,000 related to strategic discussions with Zimmer Holdings) and foreign currency exchange losses. In addition, the company recognized stock-based compensation expense of $303,000 for the nine-month period ended June 30, 2006.
Management expects 4Q:06 will benefit from increase sales of their cervical spacer, initial sales from their distribution partner in the hernia repair market, growth in their dental segment, and momentum international markets.
During Monday's conference call Q&A session management discussed Tutogen's plans to produce xenograft for the US market in 3Q:07, and already has a xenograft facility designed. Currently xenograft represents 60% of sales in Europe, and Tutogen has 5-10 years of experience with animal bone and soft tissue in Germany utilizing the Tutoplast® process. Because processing xenograft tissue is different from processing allograft, the company feels their experience manufacturing xenograft utilizing the Tutoplast® process will be an advantage in the US market. In the US, Tutogen has 510(k) approval for the use of its bovine tissues in general surgery. There is more information on the benefits of allograft vs. xenograft on an earlier HealthpointCapital blog.
The future is looking brighter for Tutogen. The 3Q:06 financials and management's confidence in future corporate performance is good news compared to the issues which surfaced last quarter including: restatement of financials, potential delisting on the American Stock Exchange (AMEX), being named as one of the defendants in the Biomedical Tissues Services (BTS) series of lawsuits and management change.
Today, Tutogen's stock closed today at $4.85 per share.
