Angiotech needs more liquidity to ensure survival beyond 2010

By Angela McDaniels

Tacoma, Wash., Nov. 9 - Angiotech Pharmaceuticals, Inc. may not have enough liquidity and capital resources to satisfy its financial obligations beyond 2010, according to its 10-Q report for the third quarter filed with the Securities and Exchange Commission on Monday.

The company said revenue in its pharmaceutical technologies segment has declined significantly over the last two-and-a-half years, primarily due to lower royalties derived from sales by Boston Scientific Corp. of Taxus coronary stent systems.

As a result of this and other factors impacting Angiotech's business and the capital markets, the company's management and board of directors believe a transaction of significant size and scope may be needed to address Angiotech's liquidity concerns and working capital needs.

The company is exploring financial and strategic alternatives.

Absent an improvement, the company said it may be forced to further reduce its expenditures on research and development or on new product and sales and marketing initiatives in order to continue to service its debt obligations.

Such a reduction could negatively affect Angiotech's new product development and sales growth initiatives, thereby reducing its ability to achieve revenue growth targets, and is not guaranteed to be adequate to provide enough cash flow to continue to service debt obligations, the company noted.

In particular, Angiotech said that if royalties received from Boston Scientific decline more significantly than expected, the company's liquidity may continue to be adversely affected and it may be forced to explore alternative funding sources through debt, equity or other public or private securities offerings or to pursue reorganization, restructuring or other strategic or financial alternatives.

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

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