European RPP Program on Target for 2008 Profitability; FDA Trial
Launch Positions EDAP for Direct USA Control; EDAP, China Medical
Alliance Unites HIFU Leaders LYON, France, May 10
/PRNewswire-FirstCall/ -- EDAP TMS S.A. (NASDAQ:EDAP), the global
leader in High Intensity Focused Ultrasound (HIFU) treatment of
prostate cancer and the international leader in the development,
production, and distribution of a wide portfolio of minimally
invasive medical devices primarily for the treatment of urological
diseases today reported financial results for the first quarter
2007 and updated its HIFU growth expectations. Key highlights
include: * First quarter RPP Revenues increased 45 percent year
over year early in the company's marketing and growth strategy
designed to achieve European profitability by the end of 2008 on
significant treatment growth. * Ablatherm-HIFU is now available at
more than 150 centers worldwide with accelerating center launches
and treatment growth, including 11 new sites in the first quarter
and an additional seven in the first five weeks of the second
quarter. * The company reports clear progress on the US trial with
the resumption of active therapy sessions under EDAP sponsorship,
the only treating HIFU for localized prostate cancer trial as
primary care in the United States. * Gross margins continue to
increase as RPP treatment grows and the company achieves greater
efficiency. * EDAP continued to add to its clinical lead as the
HIFU therapy of choice among doctors based on proven repeatable
success and low side effects. EDAP, as the gold standard in HIFU,
reported 10 year experience results including statistical success
at 8 years affirming Ablatherm-HIFU is competitive to all
nonsurgical therapies -- its primary patient audience. * The
company signed a four-year exclusive agreement with China Medical
Technologies to distribute its products through the European Union
and Russia following CE approval, uniting the top HIFU companies in
Europe and Asia. EXECUTIVE COMMENTS Marc Oczachowski, EDAP TMS
Chief Executive Officer commented: "EDAP continues its role as the
dominant HIFU company in Europe. Recent clinical data at the
European Association of Urology affirmed EDAP and the Ablatherm-
HIFU as the only HIFU solution in localized prostate cancer able to
clearly demonstrate long term success and low side effects on a
consistent therapeutic platform. Moreover, the user experience
shows Ablatherm to be the most adapted and viable HIFU solution
offering effective, efficient and accessible HIFU care to any
center wanting to make this new standard of care available to
patients. "We engaged in a new marketing strategy late last year
with full launch in 2007. These initiatives are bringing HIFU to
the broad European medical community with a strong and positive
early response. We are seeing solid participation and interest in
marketing events such as our HIFU tours in Germany and Italy, our
users meeting in France and several workshops in key hospitals.
This is a long term process with a typical center evolving over
several months before offering its first treatment, so we clearly
expect the pace of new center launches and, ultimately, Ablatherm
treatments, to accelerate as we progress in 2007 and 2008, in line
with our RPP business plan expectations. Current increases stem
from our efforts late last summer and fall, the earliest portions
of our marketing efforts. We are pleased with the early signs of
success in every major European market, with EDAP being the clear
and indisputable preference among the medical community. "We are
also very excited and enthusiastic to again start USA clinical
sessions toward a future FDA approval of the Ablatherm-HIFU. This
is the only current HIFU trial in the US with excellent response
from the clinical sites affirming the ease of treatment, patient
comfort, low side effects and expected efficacy. We look forward to
reporting additional success as more sites resume treatment, and we
add more leading clinical centers now asking us to join the trial."
FINANCIAL RESULTS First Quarter 2007 results showed strong
increases in RPP revenue while machine sales in the HIFU division
were deferred to later periods. As anticipated, the company's
business plan expects a number of machine sales in the calendar
year, but does not require they be evenly distributed through the
quarters as the company's focus has shifted to the sale of
recurring treatments under its highly successful and growing RPP
program. First quarter revenue was Euro 4.7 million, down 10.3
percent from the same period in 2006 due to this change in revenue
mix. The primary difference was a 702,000 decrease in HIFU
equipment sales as compared to the prior year quarter, while RPP
revenues increased 45 percent to Euro 1.0 million. The company has
already booked one Ablatherm sale in the second quarter and has a
strong pipeline of expected and potential sales in its most active
markets to meet its goal for the full year. The company's movement
away from dependence on equipment sales continues as RPP revenues
increase, but EDAP expects to continue selling Ablatherm , although
not necessarily in equivalent quarterly increments. Group gross
margins continued to improve to 43 percent as compared to 36.5
percent in the last quarter 2006 and 41 percent for the full year
2006. HIFU gross margins increased still further to 57 percent
compared to 53 percent for the year 2006 as RPP revenue comprises a
larger portion of margin and the accompanying scale efficiency
becomes evident. The Lithotripsy business remains strong with nine
units sold as opposed to 10 in the prior year and a backlog of 7
units already at the start of the second quarter. The pace of
lithotripsy sales increased from the fourth quarter 2006 and the
company sees steady demand in the quarters ahead. Cash remains
strong at Euro 9.3 million, down from Euro 10.9 million at year
end. Uses of cash include approximately 800,000 in corporate
spending for marketing and growth initiatives ahead of returns on
these efforts, including 300,000 for marketing increases, 200,000
on product development for launch, 200,000 on FDA costs, and
100,000 in leasing activities for the RPP business. The remaining
800,000 is tied to Ablatherm and lithotripsy device inventory ahead
of sales later in the year. EDAP has historically generated
positive cash flows during each calendar year as early year
investments were recouped in sales. The company remains on plan for
cash balances suitable for its marketing needs for the next two
years. Total 2007 cash use is estimated at less than Euro 4
million. Eric Soyer, EDAP TMS Chief Financial Officer, commented:
"The first quarter shows a higher than usual cash use due to
spending ahead of events that will recapture these balances. Our
company spending remains on track for our targeted programs for
both investing and recouping cash as the HIFU business accelerates
from our marketing spending. Further, the cash balance does not
reflect the at least $600,000 in cash due to EDAP from
HealthTronics. The investment in our future is showing good returns
on gross margins, which are improving from higher RPP contributions
along with solid increase in recurring revenues for a more
predictable business ahead. We anticipate further margin
improvement from scale, efficiency and revenue mix as the growth
programs continue to advance the HIFU business." HIFU DIVISION:
CLEAR GROWTH FOLLOWING MARKETING LAUNCH The HIFU division continued
to accelerate its growth programs with strong early indications of
success in the multi-quarter process of educating, recruiting,
training and launching new Ablatherm sites. The current growth rate
at 45 percent on the RPP business affirms the company's program
methods with clear upside as the scale of the program has steadily
increased since early test phases last winter. The company's recent
German HIFU tour, EAU Congress participation, Italian HIFU tour
recently started and activities at local and regional urology
events continues to forward the interest of a growing list of
centers at various stages of participation. "We are seeing nice
growth in the RPP programs already from our early efforts, but have
even higher expectations of growth in the periods ahead as the full
programs roll into major European markets," said Oczachowski.
"Doctors who were initially introduced in the German HIFU tour
visited EDAP at the EAU. Many are now taking the next steps to
secure approval at their local centers and enroll in training
sessions on Ablatherm-HIFU. This is a process that unfolds over a
few months, but is certainly succeeding. We will add equipment, on
both a mobile and fixed RPP basis, as the demand for therapy
continues to accelerate in the quarters ahead. "The company's RPP
program is accelerating in markets where marketing efforts have
been deployed in concert with strong clinical support for
Ablatherm-HIFU's established long-term standards. By way of
example, EDAP is the only established provider in the German
market, the most advanced prostate cancer HIFU market globally. The
company conducted 222 mobile RPP sessions in the first four months,
with 60 sessions in April alone and clear growth ahead. On an
annual run rate this puts EDAP's three mobile units near projected
capacity, the last of which was launched last fall in light of
rapidly growing demand." 2007 RPP Ablatherm-HIFU: Numbers and
Revenues: Q1 2007 April 2007 4 Months --------- -------- --------
-------- Number of RPP treatments 325 112 437 RPP revenue % vs year
ago +45% +64% +49% Close to 900 treatments have been performed in
Q1, bringing to approximately 12,500 cumulative treatments
performed as of end of March 2007. As of March 31, 2007, we
accounted for 143 total trained Ablatherm-HIFU sites, with 11 new
sites trained over Q1, and 7 additional centers in the month of
April alone, bringing the total to 150 trained sites as of today.
US PROGRAMS: EDAP IN FULL CONTROL, TRIAL DRIVING AHEAD WITH SUCCESS
EDAP restarted US clinical sessions in pursuit of future FDA
approval for Ablatherm-HIFU, the only active US trial treating
patients for localized prostate cancer. EDAP has full rights to all
revenue and profit earned in the future and is presently self
sponsoring the trials in order to accommodate immediate and ongoing
treatment demand from centers participating in the EDAP study. The
company intends to retain control of this important program and is
in the final stages of positioning its US strategy. Response to the
trial is growing as knowledge of its activity spreads based on the
existing clinical base for Ablatherm-HIFU. The company reported
recently the results of treatments at two centers, with additional
centers recruiting and scheduling patients. Both patients and
doctors report early success with the Ablatherm- HIFU activities
under EDAP's direction with high expectations for the trial. CHINA
MEDICAL AGREEMENT MAKES EDAP LEADER FOR INTERNAL AND EXTERNAL HIFU
The company reported an exclusive marketing and sales agreement
with China Medical Technologies to take full marketing rights in
Europe and Russia for this global leading extracorporeal HIFU
device. This agreement unites the leading HIFU companies from
Europe and Asia as well as provides EDAP the top global
technologies presently available for both internal and external
applications of HIFU therapy. Clinical efforts are expected to
require several months for full European approval, followed by four
years of exclusive distribution rights. "We are pleased and excited
to begin this relationship with China Medical, and see many added
opportunities for both companies in the future," said Oczachowski.
"Certainly there was careful evaluation by both sides, but this
agreement made the most sense for both companies by joining
together the two dominant HIFU technologies and companies for
mutual success. This opens the door to EDAP for rapid HIFU growth
in other pathologies on a known platform broadly used already. In
addition to our leading role in prostate cancer, EDAP will now have
the opportunity to lead Europe ahead using HIFU for many other
pathologies where patients can have the benefit of effective
therapy with minimal recovery and side effects. EDAP's role as a
clear clinical leader played a significant part in this agreement,
as this is the only way to assure success in the medical community.
Clear, consistent and scrutinized studies will continue to play a
significant role in making HIFU a new standard of care in not just
prostate cancer, but now in multiple other pathologies."
Participation in Congresses EDAP will participate strongly in the
upcoming American Urology Association (AUA) meeting to be held in
Anaheim, California, May 19 - 22, 2007. Dr. S. Thuroff from
Harlaching Hospital, Munich, Germany, will comment in an
Ablatherm-HIFU video session and Dr. F. Murat, from Edouard Herriot
Hospital, Lyon, France, will present long term results with 8 years
follow-up. On May 21, 2007, an Investigator meeting will gather all
US physicians participating in the FDA trials. It's a unique
opportunity for EDAP to have all US investigators all together to
share views and details about this promising study. Conference Call
and Webcast The company will host a conference call to discuss the
results and answer questions from investors on Friday, May 11,
2007, at noon Eastern Time, 6:00 p.m. Paris Time. Representing the
Company on the call will be Philippe Chauveau, Chairman of the
Board, Marc Oczachowski, Chief Executive Officer and Eric Soyer,
Chief Financial Officer. Interested investors may join the call
live by dialing (866) 463-5401 from the United States or +1 (212)
457-9857 from international locations and entering PIN code
856440#. Investors may also listen to the live call online at
http://www.edap-tms.com/ . Investors unable to join the call can
access a playback of the conference call by telephone or online. To
access the replay, please dial (866) 439-4729 or +1 (212) 457-9846
and using access code 327569# beginning one hour after the end of
the call until May 25, 2007, or visit the company's Web site at
http://www.edap-tms.com/ . About EDAP TMS S.A. EDAP TMS S.A.
develops and markets Ablatherm, the most advanced and clinically
proven choice for High Intensity Focused Ultrasound (HIFU)
treatment of localized prostate cancer. HIFU treatment is shown to
be a minimally invasive and effective treatment option with a low
occurrence of side effects. Ablatherm-HIFU is generally recommended
for patients with localized prostate cancer (stages T1-T2) who are
not candidates for surgery or who prefer an alternative option, or
for patients who failed radiotherapy treatment. The company is also
developing this technology for the potential treatment of certain
other types of tumors. EDAP TMS S.A. also produces and
commercializes medical equipment for treatment of urinary tract
stones using Extra-corporeal Shockwave Lithotripsy (ESWL). For more
information on the Company, contact Magnolia Investor Relations at
(972) 801-4900, the Corporate Investor Relations Dept at +33 (0)4
78 26 40 46 or see the Company's Web sites at
http://www.edap-tms.com/ and http://www.hifu-planet.com/ . To sign
up for alerts please visit:
http://www.b2i.us/irpass.asp?BzID=1053&to=ea&s=0 In
addition to historical information, this press release contains
forward-looking statements that involve risks and uncertainties.
These include statements regarding the Company's growth and
expansion plans. Such statements are based on management's current
expectations and are subject to a number of uncertainties and risks
that could cause actual results to differ materially from those
described in these forward-looking statements. Factors that may
cause such a difference include, but are not limited to, those
described in the Company's filings with the Securities and Exchange
Commission. Ablatherm- HIFU treatment is in clinical trials but not
yet FDA approved or marketed in the United States. CONTACT: EDAP
TMS S.A. Magnolia Investor Relations Blandine Confort Matt Kreps
+33 4 78 26 40 46 972 801 4900 EDAP TMS S.A. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) (Amounts in thousands of Euros
and U.S. Dollars, except per share data) Three Months Ended: Three
Months Ended: March 31, March 31, March 31, March 31, 2007 2006
2007 2006 Euros Euros $US $US Sales of goods 1,902 2,789 2,508
3,367 Net Sales of RPP and Leases 1,308 971 1,725 1,172 Sales of
spare parts and Services 1,420 1,424 1,872 1,719 TOTAL NET SALES
4,630 5,184 6,105 6,259 Other revenues 36 15 47 18 TOTAL REVENUES
4,666 5,199 6,152 6,277 Cost of goods (1,273) (1,667) (1,679)
(2,013) Cost of RPP and Leases (568) (431) (750) (520) Cost of
spare parts & services (831) (815) (1,095) (984) Cost of sales
(2,672) (2,913) (3,524) (3,517) GROSS PROFIT 1,994 2,286 2,629
2,760 Research & development expenses (616) (595) (813) (718)
Marketing & Sales expenses (1,341) (1,091) (1,768) (1,317) G
& A expenses (1,183) (1,084) (1,560) (1,309) Total operating
expenses (3,140) (2,770) (4,141) (3,344) OPERATING PROFIT (LOSS)
(1,147) (484) (1,512) (584) Interest (expense) income, net 3 14 4
17 Currency exchange gains (loss), net (48) (73) (63) (89) Other
income (loss), net 3 (3) 4 (4) INCOME (LOSS) BEFORE TAXES AND
MINORITY INTEREST (1,188) (546) (1,567) (659) Income tax (expense)
credit (21) (77) (27) (93) NET INCOME (LOSS) (1,209) (623) (1,594)
(753) Earning per share - Basic (0.14) (0.08) (0.18) (0.010)
Average number of shares used incomputation of EPS 8,942,007
7,823,331 8,942,007 7,823,331 Earning per share - Diluted (0.14)
(0.08) (0.18) (0.010) Average number of shares used incomputation
of EPS for positive net income 9,606,863 8,608,255 9,606,863
8,608,255 NOTE: Translated for convenience of the reader to U.S.
dollars at the 2007 average three months noon buying rate of 1 Euro
= 1.3186 USD, and 2006 average three months noon buying rate of 1
Euro = 1.3077 USD. EDAP TMS S.A. CONSOLIDATED BALANCE SHEETS
HIGHLIGHTS (UNAUDITED) (Amounts in thousands of Euros and U.S.
Dollars) March 31, Dec. 31, March 31, Dec. 31, 2007 2006 2007 2006
Euros Euros $US $US Cash, cash equivalents and short term
investments 9,291 10,924 12,426 14,417 Total current assets 25,699
26,393 34,370 34,831 Total current liabilities 11,368 10,926 15,204
14,419 Shareholders' Equity 18,247 19,300 24,404 25,471 NOTE:
Translated for convenience of the reader to U.S. dollars at the
noon buying rate of 1 Euro = 1.3374 USD, on March 31, 2007 and at
the noon buying rate of 1 Euro = 1.3197 USD, on December 31, 2006.
EDAP TMS S.A. CONDENSED STATEMENTS OF OPERATIONS BY DIVISION THREE
MONTHS ENDED MARCH 31, 2007 (Amounts in thousands of Euros) EDAP
S.A. TMS S.A. HIFU UDS EDAP TMS EDAP TMS Total After Division
Division FDA Corporate Consolidation Sales of goods 180 1,722 1,902
Sales of RPPs & Leases 1,045 264 1,308 Sales of spare parts
& services 385 1,035 1,420 TOTAL NET SALES 1,609 3,021 4,630
Other revenues 7 29 36 TOTAL REVENUES 1,616 3,050 4,666 GROSS
PROFIT 920 57% 1,074 35% 1,994 43% Research & Development (235)
(288) (92) (616) Total SG&A plus depreciation (1,019) (905)
(105) (495) (2,524) OPERATING PROFIT (LOSS) (335) (120) (197) (495)
(1,147) DATASOURCE: EDAP TMS S.A. CONTACT: Blandine Confort of EDAP
TMS S.A., +33-4-78-26-40-46; or Matt Kreps of Magnolia Investor
Relations, +1-972-801-4900, for EDAP TMS S.A. Web site:
http://www.edap-tms.com/ http://www.hifu-planet.com/
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