Angiotech focused on reinvesting cash to grow business

By Jennifer Lanning Drey

Portland, Ore., Nov. 9 - Angiotech Pharmaceuticals, Inc. is reinvesting "virtually dollar for dollar" back into the business, Dr. William Hunter, chief executive officer of Angiotech, said Monday during the company's third-quarter earnings conference call.

"We aren't accumulating cash, we're basically eating what we kill," Hunter said.

"We're not going to do that forever - at some point, when we reach critical mass, we'll flip over like every other company does in the pharmaceutical and special device space and start to harvest and recoup some of that investment, but right now, every dollar that we can spare is being invested in our growth initiatives."

The comments were made during the question-and answer portion of the call.

Angiotech ended the third quarter with cash of $53.8 million. The figure declined to approximately $44 million after it made a scheduled interest payment on October 1, K. Thomas Bailey, chief financial officer of Angiotech, said during the call.

Net debt was $521.2 million at Sept. 30.

During the third quarter, Angiotech continued to face headwinds related to lower royalties being derived from sales of Taxus coronary stent systems by Boston Scientific Corp. Royalty revenue derived from sales of Taxus decreased by 29% in the third quarter, as compared to the same period in 2008.

However, the company focused on improving and growing the portions of the business that it can control, including lowering its expenses, Bailey said during the call.

Angiotech posted adjusted EBITDA of $15.3 million for the period on revenues of $63.2 million. The figures compared to adjusted EBITDA of $11.5 million for the same period in 2008 on revenues of $68.4 million.

"In spite of difficulties we've encountered with Taxus, our management team has done a really nice job of pulling things together and continuing to invest in this business and driving its performance even with those headwinds," Bailey said.

Within its proprietary business, the company saw record quarterly sales of its Quill SRS product line during the third quarter and is on track to double Quill's yearly sales versus 2008, Hunter said. Angiotech's goal is for Quill to have a number-two market position by the end of 2011.

Angiotech also said it saw solid early results from the recent commercial launch of the Option Inferior Vena Cava Filter.

Angiotech is a Vancouver, B.C.-based specialty pharmaceutical and medical device company.

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