CryoCath Announces Fiscal 2008 Third Quarter Results

www.cryocath.com
Toronto Stock Exchange Symbol: CYT

MONTREAL, Aug. 5 /PRNewswire-FirstCall/ - CryoCath(R) Technologies Inc., the
global leader in cryotherapy products to treat cardiac arrhythmias, today
announced financial results for the third quarter, ended June 30, 2008.

Selected Third Quarter Financial and Operational Highlights:
- Grew revenue in Q3 2008 to $9.2 million or a 12.0% increase over
comparable electrophysiology (EP) revenue in Q3 2007.
- Continued expansion of active Arctic Front(R) user sites outside the
United States - from 45 at the end of Q2 2008 to 57 at the end of
Q3 2008. Cumulatively, an estimated 3,100 procedures have been
performed with Arctic Front.
- Increased the number of installed consoles worldwide by 28 in Q3 2008
to a total of 547 consoles (net of IDE consoles).
- Achieved significant growth of the Company's flagship AFib products,
led by Arctic Front with sales 76.3% over the same quarter last year.
- Reached a gross profit of 56.2% in Q3 2008, which represents the
third consecutive quarter of gross profit improvement.
- Achieved key milestone of full enrollment and treatment of all
required patients in its pivotal STOP AF IDE Trial in the United
States.
- Introduced Arctic Front in four new jurisdictions: Italy, Belgium,
Spain and Hong Kong, and in Hungary, subsequent to the end of the
quarter.
- Secured gross proceeds of $18.0 million from an equity financing.
- Strengthened operational leadership with the appointments of
Mrs. Ginette Gagne as the Company's Chief Financial Officer during
the third quarter and Mr. Frank Vandeputte as Vice President, Europe,
subsequent to the end of the quarter.

"We have established a clear strategy to focus on commercial progress in
Europe and obtain PMA approval for Arctic Front in the U.S.," said Jan
Keltjens, President and CEO of CryoCath. "In Europe, our business continues to
grow rapidly with both an increased presence and increased unit sales. We
entered three new markets during the third quarter launching Arctic Front in
Italy, Belgium and Spain and we activated new sites at a record pace of nearly
one new user every week, with 12 new sites now using Arctic Front. We also
recruited seasoned and senior leadership with the addition of Mr. Vandeputte
to oversee and accelerate our growth in Europe. Sales of Arctic Front had a
strong finish to the quarter despite a vendor supply constraint for our
FlexCath(R) Steerable guiding catheter. This supply constraint has since been
fully resolved, but impacted sales in the first two months of the quarter. In
the U.S., now that the STOP AF IDE pivotal trial is fully enrolled and all
patients have received treatment, we are in the countdown period towards final
data. We expect the 12-month follow-up data to be available in the second
quarter of calendar 2009, which would enable a product approval in the U.S. by
the end of 2009. Access to the large U.S market will allow us to significantly
accelerate growth."

Financial Results

Total revenue for the third quarter of fiscal 2008 was $9.2 million compared
with $11.6 million for the third quarter of fiscal 2007, which included sales
from the divested surgical business of $3.4 million. For the nine-month period
ended June 30, 2008, total revenue was $28.0 million compared with $32.9
million for the corresponding period last year, which included sales from the
divested surgical business of $10.8 million.
EP disposable revenues for the third quarter of fiscal 2008 were $6.3 million,
or a growth of 14.5%, as compared to $5.5 million for the third quarter of
fiscal 2007. U.S. sales of these products were $3.0 million, a 2.8% decrease
from the corresponding period last year completely driven by foreign exchange
impact. Sales outside the U.S. (OUS) of these products were $3.3 million as
compared to $2.4 million, or an increase of 36.4%.
Other EP revenues, which consist of console sales and rentals, as well as
various accessories and services, for the third quarter of 2008 were
$2.9 million as compared to $2.8 million for the third quarter of fiscal 2007.
U.S. sales of these products were $2.0 million as compared to $1.6 million in
the third quarter of fiscal 2007. OUS sales of these products were
$0.9 million, as compared to $1.2 million in the third quarter of fiscal 2007.
Gross profits for the third quarter of fiscal 2008 were $5.1 million or 56.2%
of sales compared to $6.8 million or 58.2% of sales in the third quarter of
fiscal 2007. For the nine-month period ended June 30, 2008, gross profits were
$15.1 million or 54.0% of sales, compared to $20.0 million or 60.8% of sales
from the corresponding period last year. The difference is primarily due to
volume loss on the surgical portfolio divestiture. Gross margins grew for the
third consecutive quarter and the Company anticipates that gross profit will
continue to fluctuate modestly as the sales mix of consoles and higher margin
consumables fluctuate. However, the Company remains confident that gross
margins will grow to at least 70% once Arctic Front is launched in the U.S.
Net research and development expenses for the third quarter of fiscal 2008
were $4.6 million compared to $3.2 million for the third quarter of fiscal
2007. For the nine-month period ended June 30, 2008, research and development
expenses were $10.2 million compared to $8.2 million for the corresponding
period in 2007. The difference is directly related to the STOP AF IDE pivotal
trial in the United States and Canada and legal fees.
Sales and marketing expenses for the third quarter of fiscal 2008 were $5.4
million compared to $6.6 million for the third quarter of fiscal 2007. For the
nine-month period ended June 30, 2008, sales and marketing expenses were $15.1
million compared to $18.6 million for the corresponding period in 2007. The
change is a result of the surgical portfolio divestiture with the elimination
of commissions and fees combined with increasing efficiencies in the sales and
marketing process which was partially offset by an increase in certain
investments made in Europe to increase the Company's presence in the region to
support Arctic Front.
Administrative expenses for the third quarter of fiscal 2008 were $2.7 million
compared to $2.0 million for the third quarter of fiscal 2007. For the
nine-month period ended June 30, 2008, administrative expenses were $8.0
million compared to $5.9 million for the corresponding period in 2007. The
change is primarily related to investments in resources to build a robust
infrastructure required to support rapid, sustainable growth while continuing
the required programs on controls and compliance.
CryoCath's net loss for the third quarter of fiscal 2008 was $7.9 million or
($0.20) per share compared to a gain of $2.4 million or $0.06 per share in the
third quarter of fiscal 2007. Excluding the $10.1 million from the sale of the
surgical portfolio, net loss for the third quarter of fiscal 2007 was
$7.8 million or ($0.20) per share.
Operating burn for the third quarter of fiscal 2008 was $6.4 million compared
to $4.7 million in the third quarter of fiscal 2007. For the nine-month period
ended June 30, 2008, the operating burn was $16.1 million compared to $10.0
million for the corresponding period in 2007. Variations are mainly due to the
divested surgical business combined with the impact of interests on long-term
debt no longer capitalized and unrealized foreign exchange variations.
EBITDA for the third quarter of fiscal 2008 was at ($6.3) million, compared to
$3.7 million for the third quarter of fiscal 2007. EBITDA for the
corresponding period for 2007 was ($6.4) million, excluding the $10.1 million
from the sale of the surgical business. For the nine-month period ended
June 30, 2008, EBITDA was ($15.6) million as compared to ($3.4) million for
the corresponding period last year. Excluding the sale of the surgical
business, EBITDA was ($13.5) million for the nine-month period ended June 30,
2007.
As of June 30, 2008, the Company had access to approximately $28.6 million in
cash and borrowing facilities as compared to $15.9 million at the end of
March, 2008.

Notice of Conference Call

CryoCath will host a conference call to discuss the third quarter results and
provide an update on its business today, on Tuesday, August 5, 2008, at 9:00
a.m. (ET) hosted by Mr. Jan Keltjens, President and Chief Executive Officer
and Mrs. Ginette Gagne, Chief Financial Officer. To access the conference call
by telephone, dial 416-644-3427 or 1-866-250-4892. The call will be audiocast
live from CryoCath's website and archived for 90 days.

Complete financials will be filed at www.sedar.com.

About CryoCath

CryoCath - www.cryocath.com - is a medical technology company that leads the
world in cryotherapy products to treat cardiac arrhythmias. With annual sales
in excess of $40 million, its products are routinely used in more than 500
centers around the world. The Company's flagship product, Arctic Front, is a
minimally invasive cryo-balloon catheter designed specifically to treat Atrial
Fibrillation, an emerging $2 billion market opportunity. Marketed in Europe
and the subject of a pivotal study in the United States, Arctic Front has been
used to treat 3,100 patients.

This press release includes "forward-looking statements" that are subject to
risks and uncertainties, including with respect to the timing of regulatory
trials and their outcome. For information identifying legislative or
regulatory, economic, climatic, currency, technological, competitive and other
important factors that could cause actual results to differ materially from
those anticipated in the forward looking statements, see CryoCath's annual
report available at www.sedar.com under the heading Risks and Uncertainties in
the Management's Discussion and Analysis section.

Consolidated Balance Sheets (unaudited)

As at June 30 September 30
2008 2007
$ $

ASSETS

Current Assets
Cash and cash equivalents 5,729,278 9,139,844
Cash subject to restrictions - 612,500
Short-term investments held-to-maturity 12,947,802 14,894,481
Accounts receivable 9,414,247 7,027,518
Investment tax credits receivable 866,120 296,840
Inventories 7,301,097 7,701,067
Prepaid expenses 834,100 1,143,381
-------------------------------------------------------------------------
Total current assets 37,092,644 40,815,631
Cash subject to restrictions - 700,000
Balance of sale receivable 1,771,480 1,563,195
Consoles at customers' premises 1,580,688 1,475,631
Property, plant, and equipment 2,237,784 2,881,313
Intellectual property 2,853,921 2,876,325
-------------------------------------------------------------------------
45,536,517 50,312,095
-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Bank indebtedness 1,112,908 6,476,288
Accounts payable and accrued liabilities 14,917,692 14,410,438
Fair value of derivative financial instruments - 41,175
Current portion of long-term debt 1,126,518 1,236,032
Current portion of deferred revenue 864,313 615,546
-------------------------------------------------------------------------
Total current liabilities 18,021,431 22,779,479
Long-term debt 24,494,857 22,927,229
Deferred revenue 300,823 294,169
-------------------------------------------------------------------------
Total liabilities 42,817,111 46,000,877
-------------------------------------------------------------------------
Shareholders' Equity
Capital stock 198,109,081 181,041,609
Contributed surplus 10,671,104 9,215,635
Deficit (206,060,779) (185,946,026)
-------------------------------------------------------------------------
Total shareholders' equity 2,719,406 4,311,218
-------------------------------------------------------------------------
45,536,517 50,312,095
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consolidated Statement of Operations and Comprehensive Loss and Deficit
(unaudited)

Three months Three months Nine months Nine months
ended ended ended ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
$ $ $ $
REVENUES

Sales (including
rental income of
$237,080 and
$765,976; 2007 -
$224,989 and
$609,974) 9,160,954 11,604,616 28,044,289 32,897,067

Cost of sales
(including
amortization and
console write-offs
of $505,123 and
$1,192,807; 2007 -
$264,289 and
$742,601) 4,016,290 4,851,075 12,900,799 12,902,411
-------------------------------------------------------------------------

Gross Profit 5,144,664 6,753,541 15,143,490 19,994,656
-------------------------------------------------------------------------

EXPENSES

Research and
development 4,658,260 3,361,027 10,763,591 8,557,714
Investment tax
credits (99,999) (136,140) (568,769) (491,115)
-------------------------------------------------------------------------
Net research and
development 4,558,261 3,224,887 10,194,822 8,066,599
Administrative 2,672,355 1,999,565 8,042,524 5,856,858
Sales and marketing 5,364,133 6,620,213 15,107,474 18,553,536
Amortization of
intellectual
property 118,855 58,625 240,517 173,459
Amortization of
property, plant,
and equipment 250,253 239,070 802,177 670,064
Amortization of
deferred financing
charges 176,722 84,424 382,610 343,122
Interest on long-term
debt 637,277 645,399 1,876,231 1,858,447
Loss (gain) on
foreign exchange
embedded derivatives - 62,882 (41,175) 48,860
Foreign exchange
(gain) loss 148,830 1,381,492 (535,436) 655,332
Stock-based
compensation
expense 511,443 300,100 1,548,400 1,069,856
Interest income (170,802) (107,810) (566,960) (280,838)
Other expenses 315,384 - 456,384 299,274
-------------------------------------------------------------------------
14,582,711 14,508,847 37,507,568 37,314,569
-------------------------------------------------------------------------
Net loss and other
comprehensive loss
before undernoted
items (9,438,047) (7,755,306) (22,364,078) (17,319,913)
Income from
manufacturing
agreement 1,485,671 - 2,242,651 -
Gain on sale of
surgical portfolio - 10,118,581 - 10,118,581
-------------------------------------------------------------------------
Net loss and other
comprehensive loss
before income
taxes (7,952,376) 2,363,275 (20,121,427) (7,201,332)
Income taxes (16,890) - (6,674) -
-------------------------------------------------------------------------
Net loss and other
comprehensive
loss (7,935,486) 2,363,275 (20,114,753) (7,201,332)
Deficit, beginning
of period (198,125,293) (176,535,334) (185,946,026) (166,970,727)
-------------------------------------------------------------------------
Deficit, end
of period (206,060,779) (174,172,059) (206,060,779) (174,172,059)
-------------------------------------------------------------------------
Weighted average
number of common
shares 40,636,741 38,016,719 39,064,455 37,985,809
-------------------------------------------------------------------------
Basic income (loss)
per share (0.20) 0.06 (0.51) (0.19)
-------------------------------------------------------------------------
Diluted income (loss)
per share (0.20) 0.05 (0.51) (0.19)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Consolidated Statement of Cash Flows (unaudited)

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
$ $ $ $
OPERATING ACTIVITIES

Net income (loss)
and other
comprehensive loss
for the period (7,935,486) 2,363,275 (20,114,753) (7,201,332)
Items not affecting
cash
Gain on sale of
surgical portfolio - (10,118,581) - (10,118,581)
Stock-based
compensation
expense 511,443 300,100 1,548,400 1,069,856
Interest capitalized
on long-term debt - 591,769 - 1,732,124
Amortization of
intellectual
property 114,110 552,085 241,612 1,526,502
Amortization of
consoles at
customers'
premises 211,464 264,289 651,934 742,601
Amortization of
property, plant,
and equipment 383,358 349,499 1,176,836 995,906
Amortization of
deferred financing
charges 176,722 84,424 382,610 343,122
Unrealized (gain)
loss on foreign
exchange embedded
derivatives - 62,882 (41,175) 48,860
Unrealized foreign
exchange loss 198,352 813,397 198,352 871,489
Accretion in balance
of sale receivable (57,132) - (169,157) -
-------------------------------------------------------------------------
(6,397,169) (4,736,861) (16,125,341) (9,989,453)
Net change in
non-cash working
capital balances
relating to
operations 1,516,600 4,277,372 (1,471,695) 1,276,530
Decrease in net
investments in
leases - - - 5,967
(Decrease) increase
in deferred
revenue 225,086 (60,505) 255,421 117,804
-------------------------------------------------------------------------
Cash flows related
to operating
activities (4,655,483) (519,994) (17,341,615) (8,589,152)
-------------------------------------------------------------------------
INVESTING ACTIVITIES

Net proceeds from
sale of surgical
portfolio - 20,222,586 - 20,222,586
Proceeds from
maturities of
short-term
investments 1,990,731 - 14,882,979 5,616,907
Acquisition of
short term
investments (12,936,300) (12,936,300)
Decrease (increase)
in cash subject
to restrictions 2,000,000 109,375 1,312,500 (1,421,875)
Acquisition of
intellectual
property (63,260) (106,897) (219,208) (330,089)
Acquisition of
property, plant,
and equipment (200,042) (755,296) (325,794) (1,329,252)
Placement of consoles
at customers' (500,372) (481,950) (1,240,928) (1,407,958)
-------------------------------------------------------------------------
Cash flows related
to investing
activities (9,709,243) 18,987,818 1,473,249 21,350,319
-------------------------------------------------------------------------
FINANCING ACTIVITIES

Share issuance
costs (1,467,185) - (1,467,185) -
Issuance of common
shares 18,005,922 - 18,441,725 120,105
Repayment of
employee share
purchase loans - - - 2,550
Increase in deferred
financing charges (12,851) - (82,851) (167)
Increase in
long-term debt 42,750 - 4,042,750 3,534,000
Repayment of
long-term debt (249,395) (221,284) (2,884,395) (663,407)
Increase (decrease)
in bank
indebtedness (4,484,980) 4,700,000 (5,363,380) 7,700,000
-------------------------------------------------------------------------
Cash flows related
to financing
activities 11,834,261 4,478,716 12,686,664 10,693,081
-------------------------------------------------------------------------
Effect of exchange
rate change on
cash and cash
equivalents (228,864) (610,776) (228,864) (652,624)
-------------------------------------------------------------------------
Net change in cash
and cash
equivalents (2,759,329) 22,335,764 (3,410,566) 22,801,624
Cash and cash
equivalents,
beginning of
period 8,488,607 9,643,983 9,139,844 9,178,123
-------------------------------------------------------------------------
Cash and cash
equivalents, end
of period 5,729,278 31,979,747 5,729,278 31,979,747
-------------------------------------------------------------------------
Cash and cash
equivalents
consist of:
Cash 2,610,478 29,840,947 2,610,478 29,840,947
Cash equivalents -
commercial paper
and other
investments with
maturities less
than 90 days 3,118,800 2,138,800 3,118,800 2,138,800
-------------------------------------------------------------------------
5,729,278 31,979,747 5,729,278 31,979,747
-------------------------------------------------------------------------
Supplemental cash
flow information
Cash paid during
the period for
Interest 720,954 217,612 2,223,294 376,948
-------------------------------------------------------------------------
-------------------------------------------------------------------------

SOURCE CryoCath Technologies Inc.

visit our website at www.cryocath.com, or contact: Ross Marshall, Investor
Relations, Phone: (416) 815-0700 ext. 238, Fax: (416) 815-0080, E-mail:
rmarshall@equicomgroup.com