Osteotech reports overall sequential revenue growth of 117% for first-quarter 2010

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May 10 2010

Osteotech, Inc. (Nasdaq: OSTE), a leader in the emerging field of biologic products for regenerative healing, today reported financial results for the first quarter ended March 31, 2010.

“During the first quarter our focus on building on the initial, strong interest in our newly launched Plexur M® Innovative Grafting and MagniFuse™ Bone Graft products resulted in overall sequential revenue growth of 117% compared with the fourth quarter,” said Sam Owusu-Akyaw, President and Chief Executive Officer of Osteotech. “We have been preparing for the national launches of both product families, which will each be fully executed during the second quarter of this year. In addition, we have recently released an expanded instrument set for our FacetLinx™ Fusion Technology. We believe that the national launches and increased functionality of FacetLinx will continue to drive our new product growth trajectory throughout 2010 as well as begin to provide new sales opportunities for our other core bone grafting family of products. Throughout 2010, we will continue to focus on creating opportunities to capitalize on our innovative technology and procedure-specific biologics, which should result in meaningful improvements to our financial results. As a result, we remain on track to achieve our guidance for 2010.”

Recent and Upcoming Corporate Developments

Osteotech showcased its new proprietary biologic product portfolio at its booth during the Annual Meeting of the American Academy of Orthopaedic Surgeons (AAOS), in New Orleans, Louisiana from March 10 to 12, 2010. A number of surgeons presented clinical results stemming from their use of MagniFuse and Plexur M at the Osteotech booth during the meeting.
During the first quarter of 2010, the MagniFuse customer base grew nearly 90% to a total of 84 accounts, with a re-order rate of 73%. MagniFuse revenue was $1.1 million in the first quarter of 2010 after only its second quarter on the market.
75 new accounts were added to the Plexur M customer base, bringing the total number of accounts to 111 at the end of the first quarter of 2010. Plexur M revenue grew 72% sequentially to $.6 million in the first quarter of 2010.
Sales of new products, including MagniFuse, Plexur M and FacetLinx, were $1.8 million during the first quarter of 2010, up 88% compared with the fourth quarter of 2009. The Company is currently executing national launches for both MagniFuse and Plexur M.

Financial Results

Revenue for the three months ended March 31, 2010 was $22.5 million, including $1.8 million from new products, compared with $23.9 million for the three months ended March 31, 2009. Revenue from client services and private label DBM declined, as expected, by $1.8 million year-over-year. Excluding client services and private label DBM revenue, first quarter 2010 revenue was $21.6 million compared with $21.1 million in the first quarter of 2009 with the increase in revenue reflecting sales of new products during the first quarter of 2010.

Net loss for the first quarter ended March 31, 2010 was $1.6 million, or $0.09 per diluted share, compared with a net loss of $1.8 million, or $0.10 per share, for the first quarter of 2009.

“Looking ahead, we remain excited about the opportunities for our new products,” continued Mr. Owusu-Akyaw. “We were pleased with the interest our innovative biologics generated at AAOS and the encouraging clinical results surgeons presented based upon their use of both MagniFuse and Plexur M. Our national launches for both products are well underway and we look forward to gaining market share as the year progresses. Our results this quarter are in line with our expectations and place us squarely on track to achieve our 2010 guidance. Based upon our anticipated sales trajectory, we expect the second half of 2010 to be stronger than the first half of 2010.”

Guidance

Osteotech is reiterating the financial guidance it previously established for 2010: