IsoTis OrthoBiologics

IsoTis Reports 2007 First Quarter Results

    Irvine, California (ots/PRNewswire) - IsoTis, Inc (NASDAQ: ISOT), an orthobiologics company, today reported results for the first quarter ended March 31, 2007.

    Revenue Analysis

    Revenue was US$10.0 million for the first quarter of 2007, representing a 2% increase over revenue of US$9.8 million for the first quarter of 2006.

    IsoTis' chief distribution channels are its U.S. network of independent distributor agents and its network of international stocking distributors, while the remaining portion of its revenues is derived from private label partners in the United States and internationally.

    In the first quarter of 2007, revenue from the U.S. independent distributor agents grew 7% to US$6.4 million compared to US$6.0 million in the first quarter of 2006; revenue from international stocking distributors decreased 14% to US$2.1 million compared to US$2.5 million in  the first quarter of 2006; and revenue from private label partners grew 22%  to US$1.1 million compared to US$0.9 million in the first quarter of 2006.

    Results Comparison & Cash Position

    The net loss from operations before minority interest for the first quarter of 2007 was US$5.5 million, compared to US$3.8 million for the first quarter of 2006. Net loss for the first quarter of 2007 totaled US$5.0 million or US$0.79 per basic and diluted share as compared with a net loss of US$3.8 million or US$0.54 per basic and diluted share for the first quarter  of 2006. The first quarter results were negatively impacted by several non-recurring items, including approximately US$1.6 million of costs for outside advisors and exchange agents in four jurisdictions associated with the Company's successful transformation to a US-based NASDAQ listed company, and a restructuring charge of US$0.6 million for the Dutch facility which  is no longer in use by the Company.

    At March 31, 2007, IsoTis had cash and cash equivalents and restricted cash of US$10.5 million. The net decrease in cash and cash equivalents in the first quarter of 2007 amounted to US$ 5.5 million compared to US$ 2.3 million in the first quarter of 2006. The first quarter cash flow was negatively impacted by several non-recurring items, including payments of approximately US$1.0 million to outside advisors and exchange agents related  to the transformation to a US-based NASDAQ listed company, as well as a  build-up in inventory of US$ 0.9 million. The Company needs and intends to  raise additional funds for operations and is actively considering various financing alternatives.

    Regulatory update

    Further to the Company's disclosure on February 14, 2007, the Company continues to communicate with the U.S. Food and Drug Administration (FDA) on the regulatory status of our Accell products. Based on these constructive communications, the Company continues to believe the Accell family of products are Class II medical devices that are subject to the 510(k) clearance process, although the Company can make no assurances in this regard. This belief is consistent with the treatment of other competing products, the Company's prior discussions with the FDA and the 510(k) clearance previously received for Accell Connexus.

    Highlights Q1 2007 & Year to Date

    - Patent for Reverse Phase Medium platform technology (May)

    - Sale of PolyActive IP Estate for US$1.7 million up-front (April)

    - Appointment of James P. Abraham as SVP Sales (April)

    - NASDAQ listing on January 26 after successful completion of exchange offer

    Pieter Wolters, President and CEO of IsoTis said, "We are happy to report that the sales of our Accell products showed growth of 13% compared with the same quarter of last year. During the first quarter we faced the uncertainty about the regulatory status of our Accell products, which limited our ability to raise capital from the public market. Given these circumstances, I commend the IsoTis team and our distributors who remained focused on executing our plan."

    Conference Call

    IsoTis has scheduled a conference call to discuss these results today May 15, 2007 at 5 p.m. EST (2 p.m. PST, 11 p.m. CET). US Dial In: toll free 1-800-798-2864; toll 1-617-614-6206; UK Dial In 44-20-7365- 8426; Continental Europe Dial In: 41-1-800-9569; password: IsoTis. Digital playback is available from May 15 at 8:00 p.m. for 24 hours. US Dial In:  1-617801-6888; European Dial In 44-20-7365-8427; playback ID: 94317272. To listen to the conference call live via the internet, visit the Investors section of the IsoTis website at www.isotis.com. Please go to the website 15 minutes prior to the call to register, download and install the necessary audio software.

    About IsoTis

    IsoTis is an orthobiologics company that develops, manufactures and markets proprietary products for the treatment of musculoskeletal diseases and disorders. IsoTis' current orthobiologics products are bone graft substitutes that promote the regeneration of bone and are used to repair natural, trauma-related and surgically-created defects common in orthopedic procedures, including spinal fusions. IsoTis' current commercial business is highlighted by its Accell line of products, which the company believes represents the next generation in bone graft substitution.

    Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including those that refer to management's plans and expectations for future operations, prospects and financial condition. Words such as "strategy," "expects," "plans," "anticipates," "believes," "will," "continues," "estimates," "intends," "projects," "goals," "targets" and other words of similar meaning are intended to identify such forward-looking statements. One can also identify them by the fact that they do not relate strictly to historical or current facts. Such statements are based on the current expectations of the management of IsoTis only. Undue reliance should not be placed on these statements because, by their nature, they are subject to known and unknown risks and can be affected by factors that are beyond the control of IsoTis. Actual results could differ materially from current expectations due to a number of factors and uncertainties affecting IsoTis' business, including, but not limited to, the Company's need to raise additional capital to continue operations, a competitive sales and marketing environment, the timely commencement and success of IsoTis' clinical trials and research endeavors, delays in receiving U.S. Food and Drug Administration or other regulatory approvals (i.e.,. EMEA, CE), including the risk that the FDA determines that our Accell Putty and Accell TBM products are not human tissue or class II medical devices, that the Company is unable to obtain 510(k) clearance for its Accell products, that the FDA requires the Company to obtain premarket approval of its Accell products prior to continuing their marketing, that the FDA requires the Company to produce additional clinical data to support approval or clearance of its products, that the FDA imposes compliance measures against the Company for the marketing of its Accell products, including imposing fines and injunctions or causing the Company to recall its Accell products, market acceptance of IsoTis' products, effectiveness of IsoTis' distribution channels, development of competing therapies and/or technologies, the terms of any future strategic alliances, the need for additional capital, the inability to obtain, or meet, conditions imposed for required governmental and regulatory approvals and consents. IsoTis expressly disclaims any intent or obligation to update these forward-looking statements except as required by law. For a more detailed description of the risk factors and uncertainties affecting IsoTis, refer to the Annual Report on Form 20-F for the fiscal year ended December 31, 2006 of IsoTis S.A. (the predecessor to IsoTis, Inc.), and its other reports filed with the SEC, IsoTis S.A.'s reports filed from time to time with the Swiss Stock Exchange (SWX), Euronext Amsterdam N.V., SEDAR at www.sedar.com and the Toronto Stock Exchange (TSX) and the quarterly report on Form 10-Q for the quarter ended March 31, 2007 and other reports filed with the SEC from time to time by IsoTis, Inc.

@@start.t1@@      IsoTis Inc.
      Consolidated Statements of Operations
      US Dollars
                                                                                  Three Months Ended
                                                                         March 31, 2007 March 31, 2006
                                                                            (Unaudited)      (Unaudited)
      Revenue
      Product sales                                              $ 9,974,489      $ 9,778,365
      Other revenue                                                              -              35,816
      Total revenue                                                 9,974,489         9,814,181
      Operating expenses
      Costs of sales                                                4,004,696         3,693,828
      Sales and marketing                                        4,604,682         4,313,790
      General and administrative                            5,371,081         2,607,195
      Research and development                                1,561,021         1,713,821
      Impairment of intangible assets
      Total operating expenses                              15,541,480        12,328,634
      Loss from operations                                    (5,566,991)      (2,514,453)
      Interest income                                                 106,213            140,835
      Interest expense                                              (128,057)          (27,860)
      Foreign exchange gain (loss)                                7,034        (1,402,787)
      Other income                                                        38,405                      -
      Net loss before taxes and
      minority interest                                         (5,543,396)      (3,804,265)
      Minority interest                                              498,520                      -
      Provision for income taxes                                 (5,000)                    -
      Net loss                                                    $ (5,049,876)  $ (3,804,265)
      Basic and diluted net loss per share                $ (0.79)          $ (0.54)
      Weighted average common shares outstanding
      Basic                                                              6,373,735         7,087,316
      Diluted                                                          6,373,735         7,087,316
                                                                    March 31, 2007         December 31,
                                                                                                                2006
                                                                         (Unaudited)
      Assets
      Current assets:
      Cash and cash equivalents                         $ 7,872,232         $ 13,362,915
      Restricted cash                                            1,599,123              1,659,787
      Trade receivables, net                                 7,686,038              7,463,194
      Other receivables                                            213,234                 374,061
      Inventories                                                 15,111,769            14,211,189
      Prepaid expenses and other current assets      957,641                 923,746
      Total current assets                                  33,440,037            37,994,892
      Non-current assets:
      Restricted cash                                            1,000,000              1,250,000
      Property, plant and equipment, net              4,217,118              3,907,175
      Goodwill                                                      16,383,069            16,383,069
      Intangible assets, net                                10,381,626            11,026,656
      Total non-current assets                            31,981,813            32,566,900
      Total assets                                            $ 65,421,850         $ 70,561,792
      Liabilities and shareholders' equity
      Current liabilities:
      Trade payables                                          $ 5,581,137          $ 6,707,212
      Accrued liabilities                                      7,529,353              6,560,894
      Deferred revenue                                          1,396,702              1,342,797
      Current portion of interest-bearing loans  4,462,235              3,751,201
      and borrowings
      Total current liabilities                          18,969,427            18,362,104
      Non-current liabilities:
      Interest-bearing loans and borrowings         1,375,808              1,696,963
      Deferred revenue                                          4,456,939              4,792,638
      Other long term liabilities                            258,315                 279,025
      Total non-current liabilities                      6,091,062              6,768,626
      Minority interest                                         3,862,907                          -
                                                                                    581                        709
                                                                        142,966,585          157,595,924
                                                                         18,318,985            20,141,408
                                                                      (124,787,697)        (132,306,984)
      Total shareholders' equity                         36,498,454            45,431,062
      Total liabilities and
      shareholders' equity                                $ 65,421,850         $ 70,561,792
                                                                                  Three Months Ended
                                                                         March 31, 2007  March 31, 2006
                                                                              (Unaudited)      (Unaudited)
      Cash flows from operating activities
      Net loss from continuing operations              $ (5,049,876)  $ (3,804,265)
      Adjustments to reconcile net loss
      to net cash used in operating
      activities:
      Depreciation and amortization                                844,727            831,187
      Bad debt expense                                                        8,210            (15,557)
      Loss on sale of assets                                                    -                 (642)
      Stock-based compensation expense                          378,131              89,669
      Foreign currency transaction (gain) loss                (7,034)        1,402,787
      Minority interest                                                 (498,520)                    -
      Change in operating assets and
      liabilities:
      Inventories                                                            (889,775)          21,965
      Trade receivables                                                  (201,174)        (216,208)
      Other current assets                                                137,454         (462,626)
      Deferred revenue                                                    (281,794)        (207,830)
      Trade and other payables                                        (143,396)         300,971
      Other long term liabilities                                    (20,710)                  -
      Net cash flows used in operating                        (5,723,757)    (2,029,435)
      activities
      Cash flows from investing activities
      Purchase of propert, plant and equipment              (503,428)        (421,138)
      Change in restricted cash                                        318,143          250,000
      Net cash flows used in investing                          (185,285)        (171,138)
      activities
      Cash flow from financing activities
      Proceeds from issuance of common shares                          -            97,561
      Proceeds from interest-bearing loans and                389,313                    -
      borrowings
      Repayment of interest-bearing loans and                          -         (253,827)
      borrowings
      Net cash flows provided by (used in)                        389,313         (156,266)
      financing activities
      Gain on cash held in foreign currency                        29,046            12,134
      Net decrease in cash and cash                              (5,490,683)    (2,344,705)
      equivalents
      Cash and cash equivalents at the                         13,362,915      15,714,442
      beginning of the period
      Cash and cash equivalents at the end of            $ 7,872,232  $ 13,369,737
      the period@@end@@

ots Originaltext: Isotis Inc
Im Internet recherchierbar: http://www.presseportal.ch

Contact:
For information contact: Rob Morocco, CFO, +1-949-855-7155,
robert.morocco@isotis.com Hans Herklots, Director IR, +1-949-855-7195
or +41-21-620-6011, hans.herklots@isotis.com



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