At the Company
At FRB | Weber Shandwick
Robert V. Toni, President & CEO For General Info: Alison Ziegler
Benny Ward, CFO For Analyst Info: Julie Tu
(919) 876-7800 For Media Info: Judith Sylk-Siegel
  (212) 445-8400

FOR IMMEDIATE RELEASE: February 19, 2002

CLOSURE MEDICAL REPORTS FOURTH QUARTER AND YEAR-END 2001 RESULTS

RALEIGH, N.C., Feb. 19, 2002-- CLOSURE Medical Corporation (Nasdaq: CLSR), a leader in medical tissue adhesives for wound closure and wound care, announced today that its revenue and profits grew during the fourth quarter and year ended December 31, 2001, with the year's strongest revenue growth rate (52 percent) and highest gross profit in the fourth quarter. The Company reported earnings of $0.08 per share for the fourth quarter and $0.19 per share ($0.18 fully diluted) for the year, versus earnings of $0.01 and a loss of $0.27 for the prior year periods, respectively.

President & CEO Robert V. Toni commented, "The financial landmarks of 2001 -- climbing profits, strong revenue growth rates, steady margins -- were gratifying, the product of years of hard work. Dermabond Topical Skin Adhesive accounted for the lion's share of 2001 results supported by the oral shield and pain reliever, SOOTHE-N-SEAL® adhesive, launched during 2001 by Colgate Oral Pharmaceuticals, Inc. We are looking forward to seeing the continued success of current products and agreements as well as those that have not yet had a significant impact on the financial results.''

"Of more specific interest is LIQUIDERM(TM) liquid adhesive, which is being marketed for topical applications by Johnson & Johnson Consumer Products Company under the BAND-AID® Brand Liquid Bandage name. We are not in a position to reveal details about the marketing launch, but we feel that we should have visibility of its performance in the marketplace either later in 2002 or early 2003,'' Toni said.

Total revenues for the fourth quarter ended December 31, 2001 were $6.0 million with net income of $1.1 million or $0.08 per share, as compared to revenues of $3.9 million with net income of $125,000 or $0.01 per share for the comparable prior year period.

Total revenues for the year ended December 31, 2001, were $19.2 million with net income of $2.5 million or $0.19 per share, up from revenues of $13.7 million with a net loss of $3.6 million or $0.27 loss per share for the previous year.

Results for the fourth quarter and year include a charge of $430,000 relating to the replacement of certain lots of DERMABOND adhesive due to blister packages that may have had compromised seals due to a mechanized packaging problem. The problem was addressed and corrected, and the Company does not expect the situation or the charges to recur.

At December 31, 2001, the Company had cash and investments of $13.0 million, a current ratio of 2.6:1, stockholder's equity of $17.2 million, and total debt obligations of $1.3 million.

CLOSURE Medical will host a conference call and simultaneous webcast, available at www.closuremed.com or www.vcall.com at 4:30 PM on Tuesday, February 19, 2002. The call will be archived online at the Company's website,www.closuremed.com, shortly after the completion of the live webcast.

About CLOSURE Medical
CLOSURE Medical Corporation, headquartered in Raleigh, North Carolina, develops, manufactures, and commercializes medical tissue adhesive products based on its proprietary cyanoacrylate technology. CLOSURE's proprietary technology has customized the physical and chemical properties of cyanoacrylates to develop medical adhesive formulations to close and seal topical skin wounds and incisions. In addition, CLOSURE is currently developing internal adhesive formulations to close or seal internal wounds and an adhesive formulation for the possible treatment of emphysema.

DERMABOND Topical Skin Adhesive is a topical tissue adhesive used to close wounds from skin lacerations and incisions, minimally invasive surgery and plastic surgery. DERMABOND adhesive can be used as a replacement for topical sutures or staples and is marketed and distributed by ETHICON, Inc., a Johnson & Johnson company and the world leader in wound closure products.

BAND-AID® Brand Liquid Bandage is the first and only cyanoacrylate medical device approved by the FDA for the over-the-counter ("OTC'') adhesive bandage market. BAND-AID® Brand Liquid Bandage is painted on the wound, sealing it from dirt and germs and creating a healing environment which allows natural healing to take place quickly. As the wound heals, the adhesive sloughs off naturally. CLOSURE has signed a worldwide supply, distribution and development rights agreement with Johnson & Johnson Consumer Products Company which includes rights to BAND-AID® Brand Liquid Bandage and distribution rights to all present and future OTC products, except for SOOTHE- N-SEAL® adhesive. Distribution of BAND-AID® Brand Liquid Bandage by Johnson & Johnson Consumer Products Company is underway.

SOOTHE-N-SEAL® adhesive is indicated for the treatment of oral ulcers and mouth sores. It forms a protective barrier that shields oral ulcers from irritation due to eating and drinking while providing immediate and long-term pain relief. SOOTHE-N-SEAL® adhesive is distributed to the professional and consumer markets by Colgate Oral Pharmaceuticals, Inc.

The NEXABAND® liquid adhesive line consists of two products used in veterinary wound closure and wound care. The adhesives are used in cat declaw procedures as well as spay and neuter procedures. In July 2001, the Company entered into an agreement providing Abbott Laboratories with worldwide supply, distribution and development rights to the NEXABAND® product line. In accordance with the agreement, Abbott has been granted immediate worldwide distribution rights of NEXABAND® adhesives excluding the United States and Canada. Upon the expiration of the Company's prior distribution arrangement in the second quarter of 2002, Abbott can begin the distribution of NEXABAND® products in the United States and Canada.

In November 2001, the Company entered into an agreement providing Johnson & Johnson Wound Management, a division of ETHICON, Inc., a Johnson & Johnson company, with worldwide supply, distribution and development rights to the Company's professional wound management platform, including the novel Liquid Occlusive Dressing ("LOD'') for the treatment of partial thickness wounds. The agreement is in the form of an amendment to the terms of its existing licensing and development agreement with ETHICON, Inc.

DERMABOND adhesive is a registered trademark of ETHICON, Inc.; BAND-AID® Brand Liquid Bandage is a registered trademark of Johnson & Johnson; LIQUIDERM(TM) is a trademark of CLOSURE Medical Corporation; SOOTHE-N-SEAL® is a registered trademark of Colgate Oral Pharmaceuticals, Inc.; and NEXABAND® is a registered trademark of CLOSURE Medical Corporation..

This release contains certain forward-looking statements which involve known and unknown risks, delays, uncertainties or other factors not under the Company's control which may cause actual results, performance or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to the early stage of commercialization of the Company's products; the progress of its research and development programs for future products; the need for regulatory approval and effects of governmental regulation; technological uncertainties; the satisfactory conclusion of negotiations with, and dependence on marketing partners, and dependence on patents and trade secrets, as well as those detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 filed with the Securities and Exchange Commission.

Financial Tables Follow

CLOSURE Medical Corporation
Statement of Operations
(Unaudited)
(In thousands, except per share data)

 
THREE MONTHS ENDED
TWELVE MONTHS ENDED
 
December 31
December 31
 
2001
2000
2001
2000
         
Product sales
$ 5,753
$3,774
$ 18,405
$ 13,076
License and product development revenues
222
156
768
625
Total revenues
5,975
3,930
19,173
13,701
Cost of products sold
1,652
1,094
5,450
3,841
Gross profit
4,323
2,836
13,723
9,860
 
Research, development and regulatory affairs expenses
1,444
1,348
5,622
5,853
General and administrative expenses
1,418
1,490
5,575
5,415
Special charge -voluntary packaging recall
430
-
430
-
Total operating expenses
3,292
2,838
11,627
11,268
 
Income (loss) from operations
1,031
(2)
2,096
(1,408)
Interest income, net
109
127
459
496
Income (loss) before
taxes
1,140
125
2,555
(912)
Provision for income taxes
-
-
21
-
Income (loss) before cumulative effect of accounting change
1,140
125
2,534
(912)
Cumulative effect of accounting change*
-
-
-
(2,656)
Net income (loss)
$1,140
$125
$2,534
$(3,568)
 
Shares used in computation of net income (loss) per common share:
Basic
13,494
13,418
13,468
13,390
Diluted
13,845
13,787
13,852
13,390
Net income (loss) per common share:
Basic
$0.08
$ 0.01
$ 0.19
$(0.27)
Diluted
$ 0.08
$0.01
$0.18
$(0.27)

* See the Company's Annual Report on Form 10-K for the year ended December 31, 2000.

CLOSURE Medical Corporation
Balance Sheet
(In thousands)

 
December 31, 2001
December 31, 2000
Cash, cash equivalents and investments
$12,958
$ 11,832
Working capital
9,321
8,462
Total assets
25,340
22,139
Total debt obligations
1,269
1,487
Total stockholders' equity
17,247
13,907
 
Total shares outstanding
13,508
13,428