Three-month report 2001

Three-month report 2001 · Preparations for certification of Artimplant's first product, the ACL implant, continued apace. A notified body will perform the certification audit May 29-31. · Interim follow-up on randomized multi-center studies with Artimplant's augmentation implant for the reconstruction of anterior cruciate ligament injuries (ACL injuries) showed no deviations from the expected results and no differences in comparison with the pilot study completed previously. The results of the pilot study's first 30-36 months will be presented internationally for the first time at the ISAKOS congress in Montreux, on May 17, 2001. · In the 12-month follow-up on patients who had received Artimplant's spacer implant, patients demonstrated enhanced gripping strength and reduced pain as early as six months after the operation. The results were presented in March at a conference on hand surgery in Malmö, Sweden. · A new project was launched aimed at developing products using augmentation sutures. Clinical studies on augmentation sutures made of degradable materials developed by Artimplant are scheduled to start in the latter half of 2001. · Consolidated income for January-March 2001 totaled SEK 6.0 million (SEK 6.1 million). The operating loss was SEK 10.4 million (SEK 4.5 million loss), and the loss after taxes SEK 9.1 million (SEK 4.2 million loss). The loss per share after taxes was SEK 0.98 (SEK 0.51 loss). Artimplant's earnings, January-March 2001 Consolidated net sales for the period January-March 2001 totaled SEK 6.0 million (SEK 6.1 million for the same period the preceding year). The operating loss for the period reached SEK 10.4 million (SEK 4.5 million loss). The loss after taxes totaled SEK 9.1 million (SEK 4.2 million loss). Goodwill for Gothenburg Medical Center (GMC) equaled SEK 12.1 million at March 31 and will be amortized over a period of 20 years. The parent company's net sales of SEK 0.5 million consisted primarily of compensation from Mölnlycke Health Care. Net sales by the subsidiary GMC for January-March totaled SEK 6.2 million (SEK 5.5 million). Operating profit for January-March was SEK 0.4 million (SEK 0.2 million). Business activities Artimplant is a Life Science company in the service of life that gives biology a helping hand. The Company's innovative and degradable implants support the body's unique self-healing ability, and the purpose-designed products afford patients new opportunities for returning to a healthy and active lifestyle. Artimplant develops and markets new materials and products and finds new areas of application in close cooperation with clinically active doctors and leading partners in the medical sector and scientific circles. Efforts to achieve certification in Europe of the Company's first product, an ACL implant, continued. Work on the quality assurance system has involved all sections of the Company. A documentation audit was conducted on April 30, 2001, and the notified body Lloyd's Register Quality Assurance will conduct the final certification audit on May 29- 31, 2001. EU certification of the Company's augmentation implants for reconstruction of anterior cruciate ligament injuries (ACL injuries) requires extensive documentation, including clinical and immunohistological data from three years of follow-up on the pilot study that began in the autumn of 1997. The certification documents will also include data from two multi-center studies, both proceeding as planned. In one multi-center study, through surgery 200 patients received patellar tendons reinforced with Artimplant's materials. In the other multi-center study, 100 patients were operated on using the "hamstring method." The results from the three-year follow-up on the ACL pilot study will be presented at an international congress for orthopedic surgery, ISAKOS, in Montreux, Switzerland, on May 17, 2001. During the next few years, Artimplant expects to secure certification for several implant products for orthopedics and hand surgery. In the field of hand surgery, clinical studies are under way on Artimplant's materials for the treatment of thumb-base arthritis and damaged thumb ligaments. Clinical studies using augmentation sutures made of degradable materials developed and produced by Artimplant are scheduled to start in the latter half of 2001. The extensive efforts to prepare for the launch, begun in the latter half of 2000, continued in the form of reconnaissance on markets for implant materials in orthopedic surgery in the Nordic countries, the rest of Europe and the United States and as additions to the organization being built for marketing and sales. Production and logistics entered a phase in which preparations are far advanced for production on a large scale. One production line has been tested and stands ready to produce ligaments for ACL operations. Anterior cruciate ligament (ACL) A ruptured anterior cruciate ligament (ACL) in the knee is the most common ligament injury and often leads to lifelong suffering for the injured person as well as significant costs to society. Artimplant's first product to be submitted for certification is an implant to augment the reconstruction of an ACL injury. The application augments (reinforces) the tissue taken from the patient (the autograft). The global market potential is estimated at SEK 10-15 billion. Thus far, Artimplant has initiated three clinical studies with this application. 1. A pilot study began in the autumn of 1997 comprising 20 patients. Some of the patellar tendons in these patients was reinforced using Artimplant's implant. 2. The first randomized multi-center study with 200 patients began in the spring of 1999. Half of the group was operated on in the same manner as in the pilot study, and half of the group received patellar tendons without augmentation. This study was structured to comply with the U.S. Food and Drug Administration's recommendations for long-term follow-up on ACL injuries (follow-up at least 24 months after operation). 3. Another randomized multi-center study comprising 100 patients began in the spring of 2000 at centers in Sweden and Finland. Half of the group received tendons from the rear of the thigh (the hamstring) reinforced with Artimplant's implants, and half of the group received hamstring without augmentation. This series of operations has been completed. The first multi-center study obtained data from 200 patients through ongoing internal reports and has 12 months of data from more than half of the patients. In the second multi-center study, the last patient was operated on in early April 2001. The second multi-center study, involving hamstring, will be extended to Norway and Denmark in the latter half of 2001. Spacer In the field of hand surgery, Artimplant is conducting a pilot study with 15 patients (five more patients than reported previously) suffering from arthritis at the base of the thumb. This condition causes increasing pain and inhibits gripping strength. Thumb-base arthritis is one of the most common deterioration injuries on the ligaments in the hand and primarily strikes elderly women. Its prevalence in the West is estimated at 10 percent of the population over the age of 55, and no satisfactory method of treatment is available. The market potential is estimated at more than SEK 5 billion. At a hand surgery congress in Malmö in March 2001, interim results were presented from a 12-month follow-up on five patients who had received Artimplant's degradable spacer implant. The results showed that patients had enhanced gripping strength and reduced pain as early as six months after the operation. A multi-center study on spacer implants for the treatment of thumb-base arthritis is being planned, and recruitment of patients will begin in the third quarter of 2001. Thumb ligaments Promising short-term results were achieved using a new method to treat chronic injuries with instability in the thumb ligament. The results were presented in 2000 at an international congress in Finland and at the Annual General Meeting of the Swedish Society of Medicine, in Gothenburg. In the six-month follow-up, all five patients in the pilot study had regained normal load stability and gripping strength in the thumb operated on. Today, patients with this kind of injury are usually offered arthrodesis (joint stiffening by operative means) as the only remaining option for treatment. The pilot study uses the augmentation technique, by which tendon tissue is taken from a patient's own wrist and reinforced with Artimplant's degradable implant. The study was expanded to 10 more patients following the approval of Sweden's committee on research ethics. The use of the augmentation principle is new in hand surgery and attracted great interest at the scientific gatherings in Finland and Gothenburg. About a half a million people in the West suffer from thumb-ligament injuries each year. This is one of the most common hand injuries in alpine skiing. An early diagnosis results in an emergency surgical procedure to sew the ligament onto its original point of attachment. An incorrect diagnosis or failed operation leads to chronic injury in the long run, with instability in the ligament, deterioration of the cartilage and the development of arthritis. The market potential for Artimplant's degradable implants for repairing chronic injuries of the thumb ligament is estimated at roughly SEK 500 million. Augmentation sutures A new project began aimed at developing products using augmentation sutures. Augmentation sutures are used in orthopedic surgery and other special surgical fields. Clinical studies using augmentation sutures made of degradable materials developed and produced by Artimplant are scheduled to start in the latter half of 2001. A number of applications have been identified, of which one - augmentation sutures for thorax surgery - has an estimated market potential in Europe and the US of SEK 2.5 billion. Investments and financial position Investments for January-March 2001 amounted to SEK 9.4 million (SEK 8.2 million), including SEK 8.1 million (SEK 6.4 million) for intangible assets. At the end of the period, liquid funds totaled SEK 123.2 million (SEK 31.5 million). Human resources Artimplant continued building its sales and marketing organization as planned. In March 2001, two international product managers and one market communications manager joined the Company. In January 2001, Kristina Lindberg took a new position as Director of Human Resources. In March 2001, Ulf Åkerblom became the new Director of Corporate Communications, and in April 2001 Ingrid Ekenman joined Artimplant as the new Medical Director. At March 31, 2001, the number of employees was 66 (47), including 33 (33) employees at GMC. At that time, the number of consultants associated with the Company was 11 (11). Patents At April 26, 2001, Artimplant had obtained five patents in Sweden, four of those also approved internationally. Applications for an additional six patents have been submitted. Six other patent applications are being prepared and are scheduled to be submitted in 2001. Financial information in 2001 Six-month report August 22, 2001 Nine-month report November 7, 2001 Gothenburg, May 2, 2001 Artimplant AB (publ) Anders Cedronius Chief Executive Officer This report has not been audited by Artimplant's auditors. Artimplant's annual reports, interim reports and press releases are available at the Company's web site www.artimplant.se For additional information, please contact: Lars Erik Nygren, Chief Financial Officer phone +46 (0)31 746-5600 lars.erik.nygren@artimplant.se Ulf Åkerblom, Director Corporate Communications phone +46 (0)709 675-999 ulf.akerblom@artimplant.se ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/02/20010502BIT00910/bit0001.doc Full Report http://www.bit.se/bitonline/2001/05/02/20010502BIT00910/bit0001.pdf Full Report