TSL.L Regulatory News (TSL)

26 Jan 2007 07:01

Tissue Science Laboratories PLC26 January 2007 26 January 2007 Pre-close Trading Update Tissue Science Laboratories plc (LSE: TSL), the medical technology companyspecialising in biologic tissue replacement and repair products, will announceits results for the year ended 31 December 2006 on Thursday 29 March 2007. Inadvance of entering its close period it is today issuing the following update(unaudited) on trading. 2006 was a transitional year for TSL as the company moved from its reliance on apartner-based sales model to a direct sales force model. As stated at ourinterim results, the impact of this transition is evident in the figures for2006. Total sales in 2006 were 5% ahead of the previous year and 4% ahead in constantcurrency terms. Within this figure, sales in general surgery increased by 61%year on year with sales in our key US market up by c70%. In contrast, salesthrough partner channels, principally in urology/gynaecology through CR Bard,were around 40% below the previous year's level. As indicated in our lastupdate, this was mainly due to lower stocking orders from CR Bard following arealignment of their inventory levels to meet changed market conditions. We have seen strong gross margin progression in the year influenced by our movefrom a partner based model to the direct sales model and increased operatingefficiencies. In conjunction with increased investment in sales and marketingand new product development as planned, we anticipate that the net loss for theyear will be in line with current market expectations. We are very pleased with the progress of the direct sales team to date, althoughit has taken longer to build the team in certain areas than expected. Thisreflects our focus on ensuring the quality of the team. Despite this and thefact that the further build up of the direct sales team only commenced from themiddle of the year, direct sales in the US saw a near eightfold increase in theyear. The Board is confident that it now has the correct operational managementinfrastructure in place to support the continued success and growth of its USsales force. In addition we have recently launched Permacol(R) through ourdirect sales team into the Head and Face market. This will enable us to leverageone of our key current sales call-points - the plastic surgeons who are involvedin the reconstructive surgery that is often a feature of complex/massive herniarepair procedures. To further support our direct sales model, we are pleased to announce that wehave entered into a logistics support agreement with one of the largestdistributors of pharmaceutical and medical supplies in the US, for our entirePermacol(R) product range. For the first time we will be able to offer customersa guaranteed same-day delivery service across the whole of the US. We are encouraged by the fact that a number of leading US surgeons are publiclystating that they believe Permacol(R) should become the gold standard productfor use in a range of surgical procedures, in particular hernia repair. Inaddition we have recently sought and obtained a decision by Medicare, the USgovernment's health insurance programme, to re-code Permacol(R), resulting in asubstantial increase in the reimbursement payments surgeons and hospitalsreceive when using Permacol(R) products. In addition to progress on existing products, we have also seen considerableprogress in the year in our R&D pipeline, as we seek to exploit our technologyplatform across other applications, in particular porcine derived bone, ligamentand vascular grafts. As reported in September we achieved proof of principle for the bone graftproject as planned and work on this project has continued with the definitivein-vivo efficacy study, and this data will be used to support a 510(k)submission for US clearance in H2 2007. We are pleased to announce today that we have also achieved pre-clinical proofof principle for the vascular graft project, ahead of plan. In-vivo functionalstudies with the TSL processed vascular grafts demonstrated excellentbiocompatibility and cell response leading to a fully patent graft whichperformed significantly better than gold standard vein autograft repairs in thesame model. Finally, the ligament graft project continues to plan and is on target toachieve pre-clinical proof of principle by the end of March 2007. Preliminarydata is already indicating excellent initial performance of the grafts in thereconstruction of sheep cruciate ligaments. In light of the good progress on these research projects, TSL will be holding anR&D seminar update for analysts and shareholders on 16 April to review theprogress achieved on each of these studies and the next steps for thesepromising projects. This R&D seminar will also feature a presentation from aleading US surgeon on the use of Permacol(R) in complex hernia repair. -Ends- Enquiries:TSL plc Tel: 01252 369 603Martin Hunt, Chief ExecutiveDavid Jennings, Finance Director Hogarth Partnership Limited Tel: 020 7357 9477James Longfield / Sarah Richardson www.tissuescience.com. This information is provided by RNS The company news service from the London Stock Exchange