UPDATE 2-Angiotech loss widens as royalties slow

Fri Jul 30, 2010 4:26pm EDT

* $0.17/shr loss vs $0.02/shr loss

* Revenue of $61.9 million vs $64.2 million

* Shares fall over 4 percent on the Nasdaq (Adds details, conference call, share price. In U.S. dollars unless noted)

By Solarina Ho

TORONTO, July 30 (Reuters) - Angiotech Pharmaceuticals Inc ANP.TO ANPI.O reported a bigger quarterly loss on Friday as royalty payments from one of its marketing partners slowed, sending shares down more than 4 percent on the Nasdaq.

The company said sales of Boston Scientific Corp's (BSX.N) TAXUS coronary stent systems, its main source of royalty revenue, fell by 51 percent.

"The challenges continue to be the same as they have been the last several quarters," said Chief Financial Officer Tom Bailey during a conference call with analysts.

"Taxus continues to be frustrating and challenging and our balance sheet continues to be so."

Royalty revenue was expected to decline in the next quarter as well following quarterly TAXUS sales announced by Boston Scientific last week, Bailey added.

Angiotech developed the technology for the drug-eluting stent using the drug paclitaxel to reduce the narrowing of a blood vessel. Boston Scientific manufactures the stent, a tube inserted into diseased arteries.

The Vancouver-based company said it was working towards being less dependent on single customers and single products and was optimistic about the success of its patented suture product, Quill SRS. It is currently focused on the commercialization of the product.

"Eventually competition is going to come and we have a finite period of time to go and exploit the market and become Tom's favorite analogy -- to become the Apple in the marketplace and establish ourselves as a technology leader before a bigger, more fortified company comes in behind us," said chief executive Dr. William Hunter.

"If we can establish that ... then their ability to cannibalize us will be reduced."

SMALL MARGIN FOR ERROR

Angiotech's net loss for the quarter came in at $14.1 million, or 17 cents a share, compared with a loss of $11.9 million, or 14 cents, for the same period a year earlier.

Adjusted to exclude one-time items, Angiotech said the second-quarter loss was $7.6 million, or 9 cents a share.

Revenues dropped to $61.9 million from $64.5 million.

Cash and short-term investments were $35.1 million and net debt was $539.9 million.

"The dollar amount of cash in aggregate that I, we, the company feel comfortable operating with on a day-to-day bases is what you see posted now in the balance sheet for the quarter and so our margin for error is quite small," said Bailey.

"I would provide assurances to anyone listening that this management team and board has and will evaluate any and all options in order to get the best options available for the company ... There will be, and has been no stone unturned."

Angiotech shares closed down 4.2 percent at 57 cents on the Nasdaq, and down 1.6 percent at 60 Canadian cents on the Toronto Stock Exchange.

The company said earlier this month that it risks being delisted from NASDAQ by Jan. 3 because its shares have been below $1 for more than 30 trading days. ($1=$1.03 Canadian) (Reporting by Solarina Ho; editing by Janet Guttsman)

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