AdvanSource Biomaterials Corporation (NYSE Amex: ASB), a leading developer of advanced polymer materials for a broad range of medical devices, today announced financial results for its fiscal 2010 third quarter ended December 31, 2009.
Total revenues for the three months ended December 31, 2009 were $668,000 as compared with $688,000 for the comparable prior year period, a decrease of $20,000, or 2.9%. Total revenues for the nine months ended December 31, 2009 were $1,636,000 as compared with $2,551,000 for the comparable prior year period, a decrease of $915,000, or 35.9%.
Product sales of our biomaterials for the three months ended December 31, 2009 were $455,000 as compared with $131,000 for the comparable prior year period, an increase of $324,000, or 247.3%. Product sales of our biomaterials for the nine months ended December 31, 2009 were $1,010,000 as compared with $853,000 for the comparable prior year period, an increase of $157,000, or 18.4%. The increase in product sales for the three and nine month periods ended December 31, 2009 was primarily due to an increase in the demand for biomaterials from our existing customer base and the addition of new customers.
License, royalty and development fees for the three months ended December 31, 2009 were $213,000 as compared with $557,000 for the comparable prior year period, a decrease of $344,000 or 61.8%. License, royalty and development fees for the nine months ended December 31, 2009 were $626,000 as compared with $1,698,000 for the comparable prior year period, a decrease of $1,072,000 or 63.1%. The decrease in license, royalty and development fees during the three and nine month periods ended December 31, 2009 is primarily a result of an amendment to an agreement with a major customer from whom we derive a majority of our license, royalty and development fee revenue. The amendment to this agreement resulted in the reduction of royalty fees paid to us per unit of sale of our customer’s product.
Gross profit on total revenues for the three months ended December 31, 2009 was $291,000, or 43.6% of total revenues, compared with $344,000, or 50.0% of total revenues, for the comparable prior year period. Gross profit on total revenues for the nine months ended December 31, 2009 was $629,000, or 38.5% of total revenues, compared with $1,480,000, or 58.0% of total revenues, for the comparable prior year period. The decrease in gross profit dollars and gross profit as a percentage of total revenues is primarily due to the decrease of license, royalty and development fees.
Gross profit on product sales for the three months ended December 31, 2009 was $78,000, or 17.1% of product sales, compared with a loss of ($213,000), or (162.6%) of product sales, for the comparable prior year period. Gross profit on product sales for the nine months ended December 31, 2009 was $3,000, or less than 1.0% of product sales, compared with a loss of $218,000, or 25.6% of product sales, for the comparable prior year period. The improvement in gross profit dollars on product sales and gross profit as a percentage of product revenues is attributable to improved efficiencies in the production process and the increased absorption of fixed overhead costs by the increased product sales.
Research and development expenses for the three months ended December 31, 2009 were $158,000 as compared with $153,000 for the comparable prior year period, an increase of $5,000 or 3.3%. Research and development expenses for the nine months ended December 31, 2009 were $499,000 as compared with $567,000 for the comparable prior year period, a decrease of $68,000 or 12.0%. During the three and nine month periods ended December 31, 2009, we increased our research and development expenditures in the development of new biomaterials and related applications while expenditures related to the CardioPass clinical trials decreased.
Selling, general and administrative expenses for the three months ended December 31, 2009 were $676,000 as compared with $712,000 for the comparable prior year period, a decrease of $36,000 or 5.1%. Selling, general and administrative expenses for the nine months ended December 31, 2009 were $2,072,000 as compared with $2,358,000 for the comparable prior year period, a decrease of $286,000 or 12.1%. The decrease is primarily attributable to our cost containment measures which included reductions in outside consultants and insurance costs; offset in part by an increase in non-cash stock-based compensation expenses.
As of December 31, 2009, we had cash and cash equivalents of $3,413,000 as compared to $3,873,000 as of March 31, 2009.
Michael F. Adams, President and CEO of AdvanSource, stated, “We continue to be pleased with our progress in growing product sales, both year over year and sequential quarterly product sales growth. We attribute the growth in product sales to our continuing efforts to market our custom polymer synthesis capabilities and the acquisition of customers that recognize the benefits of using our biomaterials as an integral component of their medical devices. We are also pleased with the marked improvement in our gross margins on product sales. This is a testament to our attention to maximizing our production efficiencies. Although the general economic environment continues to be difficult and uncertain, we are optimistic that the general trend of growing product sales and improving margins should continue for the foreseeable future.”
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