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Orthopedic and Dental Industry News Complete Archive »

VITOSS' and IMBIB deliver 52% Sales growth to Orthovita BY ROBIN R. YOUNG CFA, AUGUST 16, 2004

Calcium has been good to Orthovita; particularly the nano-particle version known as beta tri calcium phosphate, sold by Orthovita under the brand name VITOSS'. VITOSS' is offered in either blocks or morsels. Compared to HA-CC blends (Hydroxyapatite and Calcium Carbonate), VITOSS' offers significantly better porosity and load bearing capabilities. As a result, VITOSS' is gaining traction among orthopedic surgeons as a synthetic bone void fill. DBM remains the most commonly used bone void fill, but such synthetics as VITOSS' are posting better growth numbers.

VITOSS' and Orthovita's bone marrow harvesting system, IMBIBE, drove overall revenues for the June quarter to $5.6 million, a rise of 52% over prior year levels. For the year, according to the consensus view of Wall Street's analysts, Orthovita should post approximately $24 million in product sales. If correct, that would represent a 50% revenue jump over 2003's $16 million sales number.

Operating expenses remain high. The company is spending nearly three quarters of every sales dollar on selling and marketing. For the just completed quarter, selling and marketing expenses reached $4.3 million, up 37% from the prior year levels. That is aggressive. And, to us, it indicates that Tony Koblish, Orthovita's CEO, is driving to establish a market leading supplier of a broad range of orthopedic biomaterials.

Indeed, Orthovita's June 24th announcement that it was going to start marketing Angiotech's liquid hemostat product (now called Vitagel, was called CoStasis) points in exactly this direction. More products, we expect, are in the works.

But most observers are waiting for CORTOSS'. Currently being sold in Europe where it is CE marked, CORTOSS' is Orthovita's line of injectable bone cement. Based on the well known dental cement, Bisphenol A-Glycidyl Methacrylat, CORTOS'S is a permanent, self-curing resin cement that will cure at a much lower temperature than the most commonly used bone cement, PMMA. This is a particularly important feature for surgeons seeking bone cement to treat vertebral compression fractures. The FDA has issued a warning letter to surgeons regarding the risk factors of using PMMA bone cement in the spine.

The version of BIS-GMA that is used in dental work was introduced in 1993 and is used routinely to cement crowns, bridges, implant prostheses, inlays and onlays.

Patient enrollment for the CORTOSS' Kyphoplasty trial was completed in early June.

Losses for the quarter came in at $2.6 million, which was $0.06 on a per share basis. With Angiotech's investment, cash balances are up to over $30 million. The company has no debt.

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