UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended March 31, 1999.
|_| Transition period pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from _____________ to ______________.
0-20727
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(Commission File Number)
Novoste Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Florida 59-2787476
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3890 Steve Reynolds Blvd., Norcross, GA 30093
--------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone, including area code: (770) 717-0904
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days.
(Item 1) Yes |X| No |_|
(Item 2) Yes |X| No |_|
As of April 30, 1999 there were 14,074,462 shares of the Registrant's Common
Stock outstanding.
Exhibit Index on page: 23
Total number of pages: 24
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NOVOSTE CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1999
(unaudited) and December 31, 1998 3
Consolidated Statements of Operations (unaudited)
for the three months ended March 31, 1999 and 1998 4
Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-20
PART II. OTHER INFORMATION
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
EXHIBIT INDEX 23
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NOVOSTE CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1999 1998
------------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 43,335,098 $ 2,352,517
Short-term investments 22,256,214 23,695,451
Accounts receivable 83,910 8,775
Inventory 1,819,084 537,351
Prepaid expenses 245,602 168,142
------------- -------------
Total current assets 67,739,908 26,762,236
------------- -------------
Property and equipment, net 2,815,873 2,327,467
License agreements, net 122,712 126,121
Other assets 265,972 266,408
------------- -------------
$ 70,944,465 $ 29,482,232
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,215,964 $ 1,059,591
Accrued expenses and taxes withheld 3,931,842 3,905,548
------------- -------------
Total current liabilities 6,147,806 4,965,139
------------- -------------
Shareholders' equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock, $.01 par value,
25,000,000 shares authorized;
14,072,217 and 10,704,817 shares
issued, respectively 140,722 107,048
Additional paid-in capital 125,533,928 77,022,813
Accumulated deficit (60,342,948) (52,281,001)
------------- -------------
65,331,702 24,848,860
Less treasury stock, 5,780 shares of common
stock at cost (23,840) (23,840)
Unearned compensation (511,203) (307,927)
------------- -------------
Total shareholders' equity 64,796,659 24,517,093
------------- -------------
$ 70,944,465 $ 29,482,232
============= =============
See accompanying notes.
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NOVOSTE CORPORATION
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three months ended
March 31,
1999 1998
------------------------------
Net revenue $ 80,913 $ --
Cost of sales 175,148 --
------------ ------------
Gross margin (94,235) --
------------ ------------
Operating Expenses:
Research and development 6,162,769 3,928,534
Sales and marketing 1,374,006 365,958
General and administrative 743,532 511,319
------------ ------------
Total operating expenses 8,280,307 4,805,811
------------ ------------
Loss from operations (8,374,542) (4,805,811)
------------ ------------
Interest income 312,597 627,880
------------ ------------
Net loss $ (8,061,945) $ (4,177,931)
============ ============
Net loss per share $ (0.72) $ (0.40)
============ ============
Weighted average shares outstanding 11,250,436 10,383,001
============ ============
See accompanying notes.
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NOVOSTE CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months
ended March 31,
1999 1998
------------ ------------
Cash flows from operating activities
Net loss $ (8,061,945) $ (4,177,931)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 196,625 98,537
Issuance of stock for services
or compensation 102,455 67,500
Amortization of deferred compensation 32,350
Changes in assets and liabilities:
Accounts receivable (75,135) --
Inventory (1,281,733) --
Prepaid expenses (77,460) (74,625)
Accounts payable 1,156,373 (232,271)
Accrued expenses and taxes withheld 26,294 374,439
Other (34,520) 138,709
------------ ------------
Net cash used by operations (8,016,696) (3,805,642)
------------ ------------
Cash flows from investing activities
Maturity (purchase) of short-term
investments 1,439,237 7,859,689
Purchase of property and equipment, net (681,624) (409,856)
------------ ------------
Net cash (used) provided by investing
activities 757,613 7,449,833
------------ ------------
Cash flows from financing activities
Proceeds from issuance of common stock 48,241,664 319,956
------------ ------------
Net cash provided by financing activities 48,241,664 319,956
------------ ------------
Net increase in cash and cash equivalents 40,982,581 3,964,147
Cash and cash equivalents at beginning
of period 2,352,517 35,993,933
------------ ------------
Cash and cash equivalents at end of period $ 43,335,098 $ 39,958,080
============ ============
See accompanying notes.
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NOVOSTE CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with instructions to Article 10 of
Regulation S-X. Accordingly, such consolidated financial statements do not
include all of the information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
The operating results of the interim periods presented are not necessarily
indicative of the results to be achieved for the year ending December 31, 1999.
The accompanying consolidated financial statements should be read in conjunction
with the audited financial statements and notes thereto for the year ended
December 31, 1998 included in the Company's 1998 Annual Report on Form 10-K
filed with the Securities and Exchange Commission ("SEC").
The consolidated financial statements include the accounts of Novoste
Corporation and its wholly-owned subsidiaries incorporated in August 1998 in The
Netherlands, in December 1998 in Belgium and February 1999 in Germany.
Significant intercompany transactions and accounts have been eliminated.
Note 2. Inventories
Inventories are stated at the lower of estimated standard costs or market.
Inventories are comprised of the following at March 31, 1999:
March 31, 1999 December 31, 1998
-------------- -----------------
Finished Goods $1,075,333 $ 382,424
Work in Process 54,470 --
Raw Materials 689,281 154,927
---------- ----------
Total $1,819,084 $ 537,351
========== ==========
Note 3. Net Loss Per Share
The basic and diluted loss per share is computed based on the weighted average
number of common shares outstanding. Common equivalent shares are not included
in the per share calculations where the effect of their inclusion would be
antidilutive.
Note 4. Cash Equivalents and Investments
Cash equivalents are comprised of certain highly liquid investments with
maturities of less than three months at the time of their acquisition. In
addition to cash equivalents, we have investments in commercial paper that are
classified as short-term (mature in more than 90 days but less than one year).
Management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when the Company has the
positive intent and ability to hold the securities to maturity. Investments
held-to-maturity are carried at amortized cost, adjusted for the amortization or
accretion of premiums or discounts without recognition of gains or losses that
are deemed to be temporary. Premiums
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and discounts are amortized or accreted over the life of the related instrument
as an adjustment to yield using the straight-line method, which approximates the
effective interest method. Interest income is recognized when earned.
Marketable equity securities and debt securities not classified as
held-to-maturity are classified as available-for-sale. Available-for-sale
securities are carried at fair value, with the unrealized gains and losses
reported in a separate component of shareholders' equity, if significant. The
amortized cost of debt securities in this category is adjusted for amortization
of premiums and accretion of discounts to maturity. Such amortization is
included in investment income. Realized gains and losses and declines in value
judged to be other-than-temporary on available-for-sale securities are included
in investment income. The cost of securities sold is based on the specific
identification method. Interest and dividends on securities classified as
available-for-sale are included in investment income. At March 31, 1999, fair
value approximated net book value for all short term investments.
Note 5. Revenue Recognition
Revenues from sales of products are recognized at the time of shipment with
allowances provided for estimated returns and warranty costs.
Note 6. Follow-on Equity Offering
On March 19, 1999 the Company completed a follow-on equity offering (the
"Offering") of 2,400,000 newly issued shares of its common stock at a public
offering price of $20 per share. On March 24, 1999 the Company issued an
additional 160,000 shares of common stock pursuant to the exercise of the
underwriters' over-allotment option. Net proceeds to the Company after the
exercise of the underwriters' over-allotment option totaled $47.5 million.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Information
The statements contained in this Form 10-Q that are not historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding the expectations, beliefs, intentions or strategies
regarding the future. The Company intends that all forward-looking statements be
subject to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements reflect the Company's views
as of the date they are made with respect to future events and financial
performance, but are subject to many uncertainties and risks which could cause
the actual results of the Company to differ materially from any future results
expressed or implied by such forward-looking statements. Some of these risks are
discussed below in the section "Certain Factors That May Impact Future
Operations." Additional risk factors are discussed in our prospectus dated March
15, 1999 under the caption "Risk Factors" beginning on page 9 and other reports
filed by the Company from time to time on Forms 10-Q and 8-K. The Company does
not undertake any obligation to update or revise any forward-looking statement,
made by it or on its behalf, whether as a result of new information, future
events, or otherwise.
Overview
Novoste commenced operations as a medical device company in May 1992. Beginning
in 1994, we devoted substantially all of our efforts to developing the
Beta-Cath(TM) System, an intraluminal beta radiation catheter delivery system
designed to reduce the frequency of restenosis subsequent to percutaneous
transluminal coronary angioplasty ("PTCA") as well as other interventional
procedures.
For the period since its capitalization through March 31, 1999 we earned minimal
non-recurring revenues and experienced significant losses in each period. At
March 31, 1999 we had an accumulated deficit of approximately $60.3 million. We
expect to continue to incur significant operating losses through at least 2000
as the we conduct clinical trials, seek regulatory approval or clearance for our
products, continue research and development projects, expand our sales and
marketing efforts in contemplation of product introduction and market
development, and increase our administrative activities to support our growth.
The clinical trials may not demonstrate the safety and efficacy of the Beta-Cath
System. Additionally, we may not obtain necessary approvals for the Beta-Cath
System from the FDA, the State of Georgia Department of Natural Resources or
other state or foreign governmental agencies. Our research and development
efforts may not be successfully completed. We may not successfully introduce the
Beta-Cath System or attract any significant level of market acceptance for the
Beta-Cath System or any other product we develop. We may never achieve
significant revenues from sales of our Beta-Cath System and we may never achieve
or sustain profitability.
Clinical Trials
We are currently conducting two pivotal clinical trials of the Beta-Cath System:
the Beta-Cath System Trial and the START Trial. These trials are intended to
support a pre-market approval application to the FDA to market our device in the
United States to reduce the incidence of coronary restenosis following PTCA,
stent placement and the treatment of "in-stent" restenosis.
The Beta-Cath System Trial. On July 30, 1997 we initiated our Beta-Cath System
Trial, a randomized, triple-masked, placebo-controlled, multicenter human
clinical trial under an investigational device
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exemption granted by the FDA. The Beta-Cath System Trial seeks to determine the
clinical safety and effectiveness of the Beta-Cath System in reducing coronary
restenosis following PTCA or stent placement. We initially targeted enrollment
for approximately 1,100 patients in the trial at up to 55 clinical sites located
in the United States. The protocol contemplates that patients will be divided
into two approximately equal subgroups, one receiving PTCA alone and one
receiving coronary stents in addition to PTCA.
Patients in each subgroup of the trial receive, determined on a random basis,
either vascular brachytherapy through the Beta-Cath System using a 30mm
radiation source train or no vascular brachytherapy through a placebo version of
the Beta-Cath System. In both subgroups, patients who receive the beta radiation
receive dosages of 14 gray for vessels ranging from 2.70 to 3.35mm and 18 gray
for vessels ranging from 3.36 to 4.00mm. The protocol provides for telephone
follow-up with patients 30 days after treatment for PTCA patients and monthly
for newly stented patients up to the eighth month, and a follow-up angiogram
eight months after the initial treatment regardless of the treatment. The
primary endpoint of the trial is the incidence of additional revascularization
procedures in the vessel originally treated within eight months. Other endpoints
of the trial include a determination of the incidence of restenosis, a
measurement of the late loss index and the frequency of major adverse cardiac
events.
As is typical for patients receiving stent placement, the patients in the stent
placement subgroup of the Beta-Cath System Trial receive anti-platelet therapy
to prevent stent thrombosis, a condition which can lead to acute closure of the
treated artery. Stent thrombosis typically occurs within 30 days of treatment in
a small percentage of patients receiving stent placement. There have been
reported incidences of stent thrombosis in the Beta-Cath System Trial. These
patients developed the condition later following their treatment than is
normally observed. As a result, in November 1998, we modified the Trial protocol
for the stent placement subgroup to extend the anti-platelet therapy from two
weeks to 60 days following stent placement and to provide for additional
follow-up contact with these patients in the second, third and fourth months
after treatment. On April 27, 1999 we announced approval of our intention to
increase patient enrollment in the stent placement subgroup of the Trial and to
extend the anti-platelet therapy to a minimum of 90 days following stent
placement. These changes were made based upon a recommendation made by the Data
Safety and Monitoring Board (DSMB) at its March 1999 meeting. The DSMB is an
independent committee of clinicians and statisticians that has responsibility
for review of the study protocol and clinical events at regular intervals during
patient enrollment into the Trial. Based on its review of the available data
set, including the incidence of major adverse cardiac events, the DSMB proposed
these changes to ensure sufficient data to evaluate the safety and effectiveness
of the Beta-Cath System with the revised anti-platelet therapy protocol. At
April 27, 1999, we had enrolled 1,186 patients in the Beta-Cath System Trial at
58 clinical sites, principally located in the United States. The PTCA subgroup
is now complete and we are focusing on completing the stent placement subgroup.
We currently plan to enroll up to an additional 300 patients in that subgroup
with a goal of having approximately 480 patients in the stent placement subgroup
with the extended anti-platelet therapy.
The START Trial. On September 21, 1998, we initiated the "STents And Radiation
Trial" or START Trial, a randomized, triple-masked, placebo-controlled,
multicenter human clinical trial, under an investigational device exemption
granted by the FDA. The primary endpoint of this trial is the incidence of
additional revascularization procedures in the previously treated artery within
eight months of treatment. The START Trial seeks to determine the safety and
effectiveness of the Beta-Cath System in treating "in-stent" restenosis. We
divided patients into two approximately equal subgroups, one receiving vascular
brachytherapy through the Beta-Cath System and the other receiving no vascular
brachytherapy through a placebo version of the Beta-Cath System. Patients who
received the beta radiation received dosages of 16 gray for vessels ranging from
2.70 to 3.35mm and 20 gray for vessels ranging from 3.36 to
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4.00mm, slightly higher doses than those used in our Beta-Cath System Trial
because of radiation shielding from stents previously implanted in a procedure
unrelated to this trial. Although the START Trial protocol does not contemplate
the placement of new stents, we believe that approximately 20% of the enrolled
patients received new stents. We have achieved our targeted enrollment of 386
patients and enrollment in this trial was stopped effective April 30, 1999. A
total of 460 patients were enrolled at 51 sites, located principally in the
United States. A follow-up angiogram eight months after the initial treatment
will be performed to observe the treated artery. The angiogram will include a
determination if there has been an incidence of restenosis and a measurement of
late loss index.
Results of Operations
Net loss for the three months ended March 31, 1999 was $8,062,000, or ($.72) per
share, as compared to $4,178,000 or ($.40) per share, for the three months ended
March 31, 1998. The increase in net loss for the three months ended March 31,
1999 compared to the year earlier period was primarily due to increased research
and development spending related to the company's clinical trials and product
development activities and increased sales and marketing spending related to the
commercial launch of the Beta-Cath System in Europe.
Net Revenues. Net Revenues of $80,900 were earned in the three months ended
March 31, 1999 and resulted from sales of the Beta-Cath System in Europe. No
revenues were earned for the three months ended March 31, 1998.
Cost of Sales. Cost of sales of $175,148 were incurred in the three months ended
March 31, 1999. No cost of sales were incurred for the three months ended March
31, 1998. Due to the relatively low production volumes, cost of sales exceeded
net revenue in the three months ended March 31, 1999. The Company expects cost
of sales to also exceed sales throughout 1999 as the Company increases both its
European production and sales activities.
Research and Development Expenses. Research and development expenses increased
57% to $6,163,000 for the three months ended March 31, 1999 from $3,929,000 for
the three months ended March 31, 1998. These increases were primarily a result
of patient enrollment and follow-up costs in the Company's clinical trials, the
cost of supplying the Beta-Cath System to all the clinical sites, services
provided by outside consultants in the development of the Beta-Cath System, and
costs related to the ongoing ramp-up of manufacturing activities in Scotland to
support product sales in Europe.
Sales and Marketing Expenses. Sales and marketing expenses increased 275% to
$1,374,000 for the three months ended March 31, 1999 from $366,000 for the three
months ended March 31, 1998. These increases were primarily the result of higher
personnel, trade show, consulting and promotional literature costs associated
with selling the Company's product and maintaining a direct sales operation in
Europe. The Company expects sales and marketing expenses to significantly
increase in the future, as direct distribution is expanded in Europe, and if and
when the Beta-Cath System is approved in the U.S. and launched commercially.
General and Administrative Expenses. General and administrative expenses
increased 45% to $744,000 for the three months ended March 31, 1999 from
$511,000 for the three months ended March 31, 1998. This increase for the three
month period was primarily the result of additional management personnel, higher
salaries, and the costs associated with the move to a new facility. The Company
expects general and administrative expenses to increase in the future in support
of a higher level of operations.
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Interest Income. Net interest income decreased 50% to $313,000 for the three
months ended March 31, 1999 from $628,000 for the three months ended March 31,
1998. The decrease in interest income was primarily due to the decrease in
average cash equivalent and short-term investment balances.
Liquidity and Capital Resources
During the three months ended March 31, 1999 and 1998 the Company used cash to
fund operations of $8.0 million and $3.8 million, respectively. The increase in
cash used in operations was due primarily to increased research and development
activities, the expansion of marketing activities in Europe. At March 31, 1999,
the Company had commitments to purchase $3.9 million in inventory components of
the Beta-Cath System over the next two years and $400,000 in production
equipment. Future cash needs for operating activities are anticipated to be
higher than historical levels because of the development, manufacturing scale-up
and commercialization of the Beta-Cath System, subject to the factors discussed
below.
On March 19, 1999 the Company completed a follow-on public offering (the
"Offering") of 2,400,000 newly issued shares of its common stock at a public
offering price of $20 per share. On March 24, 1999 the Company issued an
additional 160,000 shares of common stock pursuant to the exercise of the
underwriters' over-allotment option. Net proceeds to the Company after the
exercise of the underwriters' over-allotment option totaled $47.5 million.
The Company's principal source of liquidity at March 31, 1999 consisted of cash,
cash equivalents and short-term investments of $65.6 million. The Company did
not have any credit lines available or outstanding borrowings at March 31, 1999.
The Company anticipates that its operating losses will continue through at least
2000 as it expends substantial resources in funding clinical trials in support
of regulatory approvals, and continues to expand research and development and
marketing activities. We believe that our existing capital resources will be
sufficient to fund the company through the end of 2000, but those resources may
prove insufficient. We cannot assure that additional financing, if required,
will be available on satisfactory terms, or at all. However, the Company's
future liquidity and capital requirements will depend upon numerous factors,
including: the progress of the Company's clinical research and product
development programs; the receipt of and the time required to obtain regulatory
clearances and approvals; the resources required to gain approvals; the
resources the Company devotes to the development, manufacture and marketing of
its products; the resources required to hire and develop a direct sales force in
the United States and in the larger market of Europe, develop distributors
internationally, and to expand manufacturing capacity; market acceptance and
demand for its products; and other factors. Additional capital may be required
to launch the Beta-Cath System in the United States. Novoste may in the future
seek to raise additional funds through bank facilities, debt or equity offerings
or other sources of capital. There can be no assurance that additional
financing, if required, will be available on satisfactory terms, or at all.
Impact of Year 2000
We are in the process of evaluating the potential impact of what is commonly
referred to as the year 2000 issue, concerning the inability of certain computer
systems to properly recognize and process dates starting with the year 2000 and
beyond. We are taking steps to ensure that our business systems software and
equipment will continue to function properly after December 31, 1999. In doing
so, we have established a team, which will work directly with management to (1)
assess and test all internal information systems and other systems that may be
affected by the year 2000 date change; (2) assess and
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test our products that may be affected by the year 2000 date change; (3)
communicate with third parties that supply our products to ensure they are
addressing the year 2000 issue; and (4) compose a contingency and disaster
recovery plan to ensure resolution of problems that may arise as a result of the
year 2000 date change. Until we complete this assessment, we will not be able to
determine the costs of becoming Year 2000 compliant, the risks of non-compliance
and our ability to conduct our business under a contingency plan.
The Beta-Cath System does not contain any real time clocks and therefore the
device itself does not present any year 2000 issues.
With respect to our information technology business systems, the assessment of
equipment and software was started in September 1998. In addition, in
anticipation of in-house manufacturing, in January 1998 we purchased a complete
manufacturing software package that includes integrated financial modules that
replaces our previous financial software program. The contract for the purchase
of the new software package requires year 2000 compliance.
We will commence testing shortly to determine that our internal systems are year
2000 compliant. We expect to complete testing and establish compliance with
respect to all of our systems and products by June 30, 1999, subject to possible
equipment upgrades during 1999 and ongoing communications with third parties. We
believe that this time frame will allow internal auditing and testing of our
systems, as well as further remediation, if necessary.
We plan to devote the necessary resources to resolve all significant year 2000
issues in a timely manner. Based upon current estimates, we believe that our
direct costs for year 2000 compliance will consist of costs related to the staff
time devoted to year 2000 compliance. We do not expect capital expenditures will
be necessary for year 2000 related compliance costs and capital expenditures in
these areas have not been material for historical periods.
Regardless of the year 2000 compliance of our systems and products, we may be
adversely affected by disruptions in the operations of the enterprises with
which we interact. These business enterprises include suppliers, clinical
research organizations, corporate partners, both domestic and international,
government agencies, hospitals, physicians and other third parties. We cannot
reasonably predict the impact on our operations and financial condition if any
such businesses are adversely affected by the year 2000 issue.
Statements made herein about the implementation of various phases of our year
2000 program, the costs expected to be associated with that program and the
results we expect to achieve constitute forward-looking information. There are
many uncertainties involved in the year 2000 issue and the following important
factors, among others, could affect the impact of the year 2000 issue: (1) the
inherent uncertainty of the costs and timing of achieving compliance on the wide
variety of systems used by us, (2) the reliance on the efforts of vendors,
customers, government agencies and other third parties beyond our control to
achieve adequate compliance and avoid disruption of our business in early 2000
and (3) the uncertainty of the ultimate costs and consequences of any
unanticipated disruption of our business resulting from the failure of one of
our applications or of a third party's systems.
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CERTAIN FACTORS THAT MAY IMPACT FUTURE OPERATIONS
Dependence On The Successful Development And Commercialization Of The Beta-Cath
System
We have not yet successfully commercialized any product in the United States and
have only recently started to sell the Beta-Cath System in Europe. We anticipate
that for the foreseeable future we will be solely dependent on the successful
development and commercialization of the Beta-Cath System. Our failure to
commercialize the Beta-Cath System would have a material adverse effect on our
business, financial condition and results of operations.
The Beta-Cath System will require further development and clinical testing, as
well as regulatory approval, before we can market it in the United States. Our
development efforts and clinical testing may not be successful.
Commercialization of the Beta-Cath System in Europe is subject to certain
additional risks. Physicians in Europe are generally less receptive to and
slower to adopt new medical devices and technologies than physicians in the
United States due to various factors. These factors include the influence of
national health care policies and reimbursement strategies of health care payors
and the frequent absence of pivotal human clinical trial results at the time a
manufacturer qualifies to apply the CE marking to a new medical device and
commences sale of the device. We may never achieve significant revenue from
sales in Europe or ever achieve or sustain profitability in our European
operations.
Limited Operating History; History Of Losses And Expectation Of Future Losses
Through At Least The Year 2000
We have a limited history of operations. Since our inception in May 1992, we
have been primarily engaged in developing and testing our Beta-Cath System. We
have generated only limited revenue and do not have experience in manufacturing,
marketing or selling our products in quantities necessary for achieving
profitability.
At March 31, 1999 we had accumulated a deficit of approximately $60.3 million
since our inception in 1992. The commercialization of the Beta-Cath System and
other new products, if any, will require substantial additional development,
clinical, regulatory, manufacturing, sales and marketing and other expenditures.
We expect our operating losses to continue through at least 2000 as we continue
to expand our product development, clinical trials and marketing efforts. We may
never commercialize the Beta-Cath System or any other product or achieve
profitability.
Early Stage Of Clinical Testing Of Beta-Cath System; No Assurance Of Its Safety
And Effectiveness
The safety and effectiveness of the Beta-Cath System has not been determined in
a placebo-controlled, pivotal trial. We are currently conducting two
multi-center human clinical trials of the Beta-Cath System to determine its
safety and effectiveness. At April 27, 1999 we had enrolled 1,186 patients in
the Beta-Cath System Trial at 58 clinical sites and at April 30, 1999 had
completed enrollment in the START Trial having enrolled 460 patients at 51
sites, principally located in the United States. On April 27, 1999, as discussed
above, we announced approval of our intention to increase patient enrollment in
the stent placement subgroup of the Beta-Cath System Trial by up to 300 more
patients.
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As is typical for patients receiving stent placement, the patients in the stent
placement subgroup of the Beta-Cath System Trial receive anti-platelet therapy
to prevent stent thrombosis, a condition which can lead to acute closure of the
treated artery. Stent thrombosis typically occurs within 30 days of treatment in
a small percentage of patients receiving stent placement. There have been
reported incidences of stent thrombosis in the Beta-Cath System Trial. These
patients developed the condition later following their treatment than is
normally observed. As a result, in November 1998, we modified the Trial protocol
for the stent placement subgroup to extend the anti-platelet therapy from two
weeks to 60 days following stent placement and to provide for additional
follow-up contact with these patients in the second, third and fourth months
after treatment. On April 27, 1999 we announced approval of our intention to
increase patient enrollment in the stent placement subgroup of the Trial by up
to 300 more patients and to extend the anti-platelet therapy to a minimum of 90
days following stent placement. These changes were made based upon a
recommendation made by the Data Safety and Monitoring Board (DSMB) at its March
1999 meeting. Based on its review of the available data set, including the
incidence of major adverse cardiac events, the DSMB proposed these changes to
ensure sufficient data to evaluate the safety and effectiveness of the Beta-Cath
System with the revised anti-platelet therapy protocol.
Both of our current pivotal trials require follow-up examinations with patients
after eight months. It is only after analysis of a statistically significant
number of patients in one of these trials that we would apply for the regulatory
approvals required to commence marketing the Beta-Cath System in the United
States. Various factors, including difficulties in enrolling patients and
performing follow-up examinations on patients, could delay completion of either
trial for an indeterminate amount of time. The data from these trials, if
completed, may not demonstrate the safety and effectiveness of the Beta-Cath
System and may not be adequate to support our application to the FDA for
pre-market approval. In particular, we cannot be sure that the incidence of
stent thrombosis seen in the Beta-Cath System Trial will be resolved by the
protocol modification. If the Beta-Cath System does not prove to be safe and
effective in clinical trials, our business, financial condition and results of
operations will be materially adversely affected. In addition, the clinical
trials may identify significant technical or other obstacles to obtaining
necessary regulatory approvals. Because vascular brachytherapy in human coronary
arteries is a relatively new treatment, the long-term effects on patients are
not known and likely will not be known for several years. As a result, even if
our current clinical trials indicate the Beta-Cath System is safe and effective
over an eight-month period, we cannot be sure that the Beta-Cath System will be
safe and effective over the long term.
No Assurance of Regulatory Approvals
United States Pre-Market Approvals.
We will not be able to commence marketing or commercial sales of the Beta-Cath
System in the United States unless we receive pre-market approval from the FDA.
We do not expect to submit a pre-market approval application until the second
quarter of 2000 at the earliest, following analysis of a statistically
significant number of patients in the START Trial. We do not anticipate making
an additional submission to the FDA seeking approval to market the Beta-Cath
System for reducing the incidence of restenosis following PTCA or stent
placement prior to the second half of 2000, after analysis of a statistically
significant number of patients in the Beta-Cath System Trial.
We do not anticipate FDA approval of any application to market the Beta-Cath
System in the United States for any indication any earlier than one year after
the FDA accepts the application for filing. Assuming the START Trial yields
positive results, we expect that our application submitted to the FDA seeking
approval to market the Beta-Cath System in the United States to treat "in-stent"
restenosis will be submitted first and will be based upon the enrollment of 460
patients in that Trial. The FDA could require
14
<PAGE>
that we submit results from our Beta-Cath System Trial prior to considering our
initial application for approval of our device in treating "in-stent"
restenosis. Instead of filing an additional, separate application, we may amend
our initial application relating to "in-stent" restenosis to seek pre-market
approval of the Beta-Cath System for use following PTCA and stent placement
based upon the results of the Beta-Cath System Trial. If we file such an
amendment, the FDA would restart the statutory review period for our initial
application as of the date of the filing of the amendment. This would cause a
delay in obtaining FDA approval. Moreover, if either Trial does not yield
positive results, the FDA's consideration of any application we have submitted
could be adversely affected; any such application could be refused filing for
substantive review, or if filed, could be subject to requests for substantial
amounts of additional information, or ultimately could be denied approval.
The FDA may request additional data or require that we conduct further clinical
trials, either of which could delay or preclude our receipt of pre-market
approval as well as require significant additional expenditures. Such a delay or
failure to receive pre-market approval would have a material adverse effect on
our business, financial condition and results of operations and could result in
cessation of our operations. Even if we receive approval based on the results of
the START Trial, we will be limited to marketing the Beta-Cath System for use
with patients who are being treated for "in-stent" restenosis in a single
coronary artery. In order to market the Beta-Cath System for a broader range of
patients, we will seek to expand the indications for which the Beta-Cath System
can be marketed to include patients receiving PTCA or stent placement. Even if
we receive approval based on the results of the Beta-Cath System Trial, we would
be limited to marketing the Beta-Cath System for use with patients who are being
treated for one lesion in a single coronary artery following PTCA or stent
placement. In order to market the Beta-Cath System for use with a broader range
of patients, we will likely be required to demonstrate to the FDA through
additional clinical trials that the Beta-Cath System is safe and effective in
treating a broader range of indications and the FDA must approve a pre-market
approval application, application amendment or application supplement covering
the broader range of indications for the device.
Foreign Pre-Market Approvals.
Sales of the Beta-Cath System outside the United States are subject to
regulatory requirements that vary widely from country to country but generally
include pre-marketing governmental approval. The time required to obtain
approval for sale in foreign countries may be longer or shorter than required
for FDA approval, and the requirements for the conduct of clinical trials,
marketing authorization, pricing and reimbursement differ from those in the
United States. Moreover, the export of medical devices from the United States
must be in compliance with FDA regulations. In August 1998, we qualified to
apply CE marking to the Beta-Cath System, a requirement necessary to sell our
device in most of Western Europe. We are subject to continuing audit and
reporting requirements related to this marking. We may be delayed or precluded
from marketing the Beta-Cath System in other foreign countries. Foreign
pre-market and other regulatory approvals of the Beta-Cath System, if granted,
may include significant limitations on the indicated uses for which the device
may be marketed.
Approvals to Use, Handle and Transfer Radioactive Materials.
Our business involves the import, manufacture, transfer, use and disposal of
Strontium 90 (Strontium/Yttrium), the beta-emitting radioisotope utilized in the
Beta-Cath System's radiation source train. Accordingly, manufacture,
distribution, use and disposal of the radioactive material used in the Beta-Cath
System in the United States will be subject to federal, state and/or local laws
and regulations relating to the use and handling of radioactive materials.
Specifically, we must obtain approval from the State of Georgia Department of
Natural Resources to commercially distribute our radiation sources to licensed
recipients in the United States. In addition, we must also comply with NRC,
Georgia and United States Department of Transportation regulations on the
labeling and packaging requirements for shipment
15
<PAGE>
of radiation sources to hospitals or other users of the Beta-Cath System.
Further, hospitals and/or physicians in the United States may be required to
amend their radiation licenses to hold, handle and use Strontium 90 prior to
receiving and using our Beta-Cath System.
The distribution and use of the Beta-Cath System outside the United States is
subject to radiation regulatory requirements that vary from country to country
and sometimes vary within a given country. Generally, each country has a
national regulatory agency responsible for regulating the safe practice and use
of radiation in its jurisdiction. In addition, each hospital desiring to use the
Beta-Cath System is generally required to amend its license to store, handle and
receive the Strontium 90 sources in our device. Generally, these licenses are
specific to the amount and type of radioactivity utilized. In addition,
generally the use of a radiation source by a physician, either for a diagnostic
or therapeutic application, also requires a license, which again is specific to
the isotope and the clinical application.
Obtaining any of the foregoing radiation-related approvals and licenses can be
complicated and time consuming. If we or any hospital or physician is
significantly delayed in obtaining any of the foregoing approvals or any of
those approvals are not obtained, our business, financial condition and results
of operations could be materially adversely affected.
Rapid Technological Change And Intense Competition
Competition in the medical device industry, and specifically the markets for
cardiovascular devices, is intense and characterized by extensive research and
development efforts and rapidly advancing technology. New developments in
technology could render vascular brachytherapy generally or the Beta-Cath System
in particular noncompetitive or obsolete.
Vascular brachytherapy may compete with other treatment methods designed to
improve outcomes from coronary artery procedures that are well established in
the medical community, such as coronary stents. Stents are the predominant
treatment currently utilized to reduce the incidence of coronary restenosis
following PTCA and were used in approximately 60% of all PTCA procedures
performed worldwide in 1998. Manufacturers of stents include Johnson & Johnson,
Medtronic, Inc., Guidant Corporation and Boston Scientific Corporation. Stent
manufacturers often sell many products used in the cardiac catheterization labs,
commonly referred to as cath labs, and as discussed below certain of these
companies are developing vascular brachytherapy devices.
Other devices under development that use vascular brachytherapy include:
o a radioactive-tipped guidewire;
o a radioactive stent; and
o a radioactive fluid-filled balloon.
The most advanced competitive approach may be represented by the radioactive
guidewire, as we are aware that Johnson & Johnson, Tyco International Ltd. and
Guidant are investigating this general type of device in the pivotal clinical
trial stage in the United States. Many of our competitors and potential
competitors have substantially greater capital resources than we do and also
have greater resources and expertise in the areas of research and development,
obtaining regulatory approvals, manufacturing and marketing. We cannot assure
you that competitors and potential competitors will not succeed in developing,
marketing and distributing technologies and products that are more effective
than those we will develop and market or that would render our Beta-Cath System
obsolete or noncompetitive. Additionally, many of the competitors have the
capability to bundle a wide variety of products in sales to
16
<PAGE>
cath labs. We may be unable to compete effectively against such competitors and
other potential competitors in terms of manufacturing, marketing and sales.
Any product we develop that gains regulatory clearance or approval will have to
compete for market acceptance and market share. An important factor in such
competition may be the timing of market introduction of competitive products.
Accordingly, we expect the relative speed with which we can develop products,
gain regulatory approval and reimbursement acceptance and supply commercial
quantities of the product to the market to be an important competitive factor.
One of our competitors, Cordis Corporation, has announced its intention to
submit a pre-market approval application to the FDA by mid-year 1999 for its
gamma-emitting vascular brachytherapy device. Other manufacturers may be the
first to market a vascular brachytherapy system to reduce the incidence of
restenosis in the United States. We may also not be the first to market a
beta-emitting vascular brachytherapy system in the United States or be able to
market such a system effectively.
Limitations On Third-Party Reimbursement For The Beta-Cath System
The Beta-Cath System, where approved for commercial sale, will be sold primarily
to hospitals. Hospitals and physicians bill various third-party payors, such as
government health programs, private health insurance plans, managed care
organizations and other similar programs, for the health care services provided
to their patients.
If and when we receive FDA approval to market the Beta-Cath System in the United
States, third-party payors may not cover procedures using the Beta-Cath System
or, if covered, third-party payors may place certain restrictions on the
circumstances in which coverage will be available. In addition, payors may deny
reimbursement if they determine a product was not used in accordance with
established payor protocol regarding cost-effective treatment methods or was
used for an unapproved indication. Third-party payors are increasingly
challenging the prices charged for medical products and services and, in some
instances, have put pressure on medical device suppliers and health care
providers to lower their prices. We are unable to predict what changes
third-party health care payors will make in their reimbursement methodologies.
Third-party payors or health care providers may not consider the Beta-Cath
System cost-effective and may not reimburse for its usage or, if they do, may
reimburse at levels that adversely affect its market acceptance and our ability
to sell the Beta-Cath System on a profitable basis.
The cost of health care has risen significantly over the past decade, and
legislators, regulators, third-party payors and health care providers have made
and may continue to make proposals to curb these costs. Failure by hospitals and
physicians to obtain reimbursement from third-party payors, changes in
third-party payors' policies toward reimbursement for the Beta-Cath System or
legislative action could have a material adverse effect on our business,
financial condition and results of operations.
Reimbursement systems in international markets vary significantly by country and
by region within some countries, and reimbursement approvals must be obtained on
a country-by-country basis. Many international markets have government managed
health care systems that control reimbursement for new devices and procedures.
In most markets there are private insurance systems as well as government
managed systems. Reimbursement for our products may not be available in
international markets under either government or private reimbursement systems.
17
<PAGE>
Uncertainty Of Market Acceptance Of Vascular Brachytherapy And The Beta-Cath
System
Even if we obtain regulatory approvals and reimbursement from third party payors
for the use of the Beta-Cath System, our device may not gain any significant
degree of market acceptance among physicians and patients. Vascular
brachytherapy is a new treatment method and has not been used to any significant
extent by physicians outside the context of clinical trials. We believe that
physicians' acceptance of vascular brachytherapy generally and the Beta-Cath
System in particular will be essential for our operations and we may not obtain
this acceptance. Even if we establish clinical efficacy of the Beta-Cath System,
cardiologists, radiation oncologists and other physicians may elect not to
recommend vascular brachytherapy generally or the Beta-Cath System in
particular. Even if recommended, physicians may not utilize the Beta-Cath System
in a sufficient number of procedures to generate significant revenues or to
enable us to operate profitably. In addition, market acceptance of our device
could be hindered because using the Beta-Cath System currently requires the
participation not only of an interventional cardiologist, but also a radiation
oncologist appropriately credentialed to administer our beta radiation source
train.
Uncertainty Regarding Our Issued Patent, Pending Patent Applications And Other
Matters
On November 4, 1997 we received United States Patent No. 5,683,345 on the
Beta-Cath System and on May 4, 1999 we received United States Patent No.
5,899,882. United States Patent Nos. 5,683,345 and 5,899,882 may not offer any
protection to us. It may also be reexamined, invalidated or circumvented. In
addition, claims under our other pending applications may not be allowed, or if
allowed, may not offer any protection or may be reexamined, invalidated or
circumvented. Competitors may have or obtain patents that will prevent, limit or
interfere with our ability to make, use or sell our products in either the
United States or international markets.
We received a letter from NeoCardia, L.L.C., dated July 7, 1995, in which
NeoCardia notified us that it is the exclusive licensee of United States Patent
No. 5,199,939, or the Dake patent, and requested that we confirm that our
products did not infringe the claims of the Dake patent. On August 22, 1995 our
patent counsel responded on our behalf that we did not infringe the Dake patent.
The United States Patent and Trademark Office later reexamined the Dake patent.
In the reexamination proceeding some of the patent claims were amended and new
claims were added. We have concluded, based upon advice of patent counsel, that
our Beta-Cath System would not infringe any claim of the Dake patent as
reexamined.
In May 1997 Guidant acquired NeoCardia together with the rights under the Dake
patent. Guidant is attempting to develop and commercialize products that may
compete with the Beta-Cath System and has significantly greater capital
resources than the company. Guidant may sue for patent infringement in an
attempt to obtain damages from us and/or injunctive relief restraining us from
commercializing the Beta-Cath System in the United States. If Guidant were
successful in any such litigation, we might be required to obtain a license from
Guidant under the Dake patent to market the Beta-Cath System in the United
States, if such license were available, or be prohibited from selling the
Beta-Cath System in the United States. Any of these actions could have a
material adverse effect on our business, financial condition and results of
operations, or could result in cessation of our business.
We have two versions of our delivery catheter: a "rapid exchange" catheter and
an "over the wire" catheter. As a result of certain United States patents held
by other medical device manufacturers covering "rapid exchange" catheters, we
currently intend to sell the "over the wire" version of our delivery catheter in
the United States. If further investigation reveals that we may sell a "rapid
exchange" version in the
18
<PAGE>
United States without infringing the valid patent rights of others, we might
decide to do so in the future. However, we cannot assure that we will be able to
sell a "rapid exchange" version in the United States without a license of third
party patent rights or that such a license would be available to us on favorable
terms or at all.
The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights. Companies in the
medical device industry have employed intellectual property litigation to gain a
competitive advantage. There can be no assurance that we will not become subject
to patent-infringement claims or litigation or interference proceedings declared
by the United States Patent and Trademark Office to determine the priority of
inventions. The defense and prosecution of intellectual property suits, or
interference proceedings and related legal and administrative proceedings are
both costly and time-consuming. Litigation may be necessary to enforce our
patents, to protect our trade secrets or know-how or to determine the
enforceability, scope and validity of the proprietary rights of others. Any
litigation or interference proceedings will result in substantial expense to us
and significant diversion of effort by our technical and management personnel.
An adverse determination in litigation or interference proceedings to which we
may become a party could subject us to significant liabilities to third parties,
require us to seek licenses from third parties, require us to redesign our
products or processes to avoid infringement or prevent us from selling our
products in certain markets, if at all. Although patent and intellectual
property disputes regarding medical devices have often been settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include significant ongoing royalties. Furthermore,
there can be no assurance that the necessary licenses would be available to us
on satisfactory terms, if at all, or that we could redesign our products or
processes to avoid infringement. Any adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a material
adverse effect on our business, financial condition and results of operations.
Dependence On Single Vendor To Supply Radioisotopes
To date, we have obtained all our beta radiation isotope requirements from a
single supplier, Bebig Isotopentechnik und Umweltdiagnostik GmbH, a German
corporation. Our supply agreement with Bebig has an initial term ending in
November 2000. During the term, we have agreed not to purchase more than 30% of
our annual radioisotope requirements from any supplier other than Bebig. In view
of the technical expertise and capital investment required to manufacture the
radioactive sources and the limited number of manufacturers of Strontium 90, it
would be difficult to find an alternate source of supply. Our business, results
of operations and financial condition could be materially adversely affected by
Bebig's failure to provide us with beta isotopes on a timely basis during the
term of the agreement or by our inability to obtain an alternative source of
supply on a timely basis and on terms satisfactory to us following any
termination of the agreement. In addition, portions of the process used to
manufacture the materials may be proprietary to Bebig. Bebig has no obligation
to make any of its know-how or technology available to us or to any alternate
source of supply, except in limited circumstances.
Limited Manufacturing Experience; Scale-Up Risk
To date, we have not yet successfully commercialized the Beta-Cath System, and
our manufacturing activities have consisted of producing small quantities of our
products for use in clinical trials and our initial product launch in Europe. To
achieve profitability, the Beta-Cath System must be manufactured in commercial
quantities in compliance with regulatory requirements and at acceptable costs.
Production in commercial quantities will require us to expand our manufacturing
capabilities and to hire and train additional personnel. We have no experience
in manufacturing our products in commercial quantities. We
19
<PAGE>
may encounter difficulties in scaling up production, including problems
involving production yields, quality control and assurance, component supply and
shortages of qualified personnel. Difficulties encountered in manufacturing
scale up could have a material adverse effect on our business, financial
condition and results of operations. We cannot assure that future manufacturing
difficulties, which could have a material adverse effect on our business,
financial condition and results of operations, will not occur.
Risk Of Inadequate Funding
We anticipate that our losses will continue through at least the year 2000 as we
expend substantial resources to fund clinical trials in support of regulatory
approvals, continue development of the Beta-Cath System and launch our product
first in Europe and then in the United States. Our future liquidity and capital
requirements will depend upon numerous factors.
We believe that our existing capital resources will be sufficient to fund the
company through the end of 2000, but those resources may prove insufficient.
Additional capital may be required to launch the Beta-Cath System in the United
States. We may in the future seek to raise additional funds through bank
facilities, debt or equity offerings or other sources of capital. We cannot
assure that additional financing, if required, will be available on satisfactory
terms, or at all.
Price Volatility And Fluctuations In Operating Results
Specific factors relating to our business or broad market fluctuations may
materially adversely affect the market price of our common stock. The trading
price of our common stock could be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results, announcements of
technological innovations, new products or clinical data announced by us or our
competitors, governmental regulatory action, developments with respect to
patents or proprietary rights, general conditions in the medical device or
cardiovascular device industries, changes in earnings estimates by securities
analysts, or other events or factors, many of which are beyond our control. In
addition, the stock market has experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many medical
device companies and which have often been unrelated to the operating
performance of such companies. Our revenue or operating results in future
quarters may be below the expectations of securities analysts and investors. In
such an event, the price of our common stock would likely decline, perhaps
substantially. During the twelve month period ended April 30, 1999, the closing
price of our common stock ranged from a high of $30.25 per share to a low of
$11.00 per share and ended that period at $22.25 per share.
In addition, our results of operations may fluctuate significantly from quarter
to quarter and will depend upon numerous factors, including product development
efforts, actions relating to regulatory and reimbursement matters, progress and
costs related to clinical trials, the extent to which our products gain market
acceptance, and competition. These factors may cause the price of our stock to
fluctuate, perhaps substantially.
20
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Effective April 1, 1999, William A. Hawkins was elected Chief Executive Officer
by the Board of Directors. Thomas D. Weldon, who had been CEO since founding the
Company in 1992, will remain Chairman of Novoste Corporation.
Effective May 3, 1999, Charles E. Larsen has resigned from his position of
Senior Vice President and Chief Technology Officer of Novoste Corporation. Mr.
Larsen, who remains on Novoste's Board of Directors, will continue to serve the
Company as an active consultant. Additionally, Thomas D. Weldon, Chairman of
Novoste, has changed his status from a full-time to a part-time employee of
Novoste Corporation.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
27 Financial data schedule
(b) The Company filed a Form 8-K on January 27, 1999, filing Exhibit 10.20,
Manufacturing Supply Agreement, dated April 21, 1998, between Registrant
and SeaMED Corporation and exhibits thereto. An order granting
confidential treatment was issued by the Securities and Exchange
Commission on February 18, 1999.
The Company filed a Form 8-K on March 12, 1999 stating that it issued a
press release announcing its intention to increase the number of patients
anticipated to be enrolled in the stent subgroup of the Beta-Cath System
Trial thereby delaying the projected completion of the trial. This trial
is one of the two pivotal clinical trials being conducted by the Company
to support anticipated applications to the FDA for pre-market approval to
sell its Beta-Cath System in the United States.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NOVOSTE CORPORATION
May 10, 1999 /s/ William A. Hawkins
- ------------ -----------------------------------------
Date William A. Hawkins
President & Chief Executive Officer
May 10, 1999 /s/ David N. Gill
- ------------ -----------------------------------------
Date David N. Gill
Vice President - Finance,
Chief Operating Officer
and Chief Financial Officer
(Principal Financial & Accounting Officer)
22
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------ -------------------
27 Financial data schedule
23
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 43,335,098
<SECURITIES> 22,256,214
<RECEIVABLES> 83,910
<ALLOWANCES> 0
<INVENTORY> 1,819,084
<CURRENT-ASSETS> 67,739,908
<PP&E> 4,478,194
<DEPRECIATION> 1,662,321
<TOTAL-ASSETS> 70,944,465
<CURRENT-LIABILITIES> 6,147,806
<BONDS> 0
0
0
<COMMON> 140,722
<OTHER-SE> 64,655,937
<TOTAL-LIABILITY-AND-EQUITY> 70,944,465
<SALES> 83,910
<TOTAL-REVENUES> 80,913
<CGS> 175,148
<TOTAL-COSTS> 8,280,307
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 312,597
<INCOME-PRETAX> (8,061,945)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,061,945)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,061,945)
<EPS-PRIMARY> (.72)
<EPS-DILUTED> (.72)
</TABLE>
