AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD
Robert V. Toni, President & CEO
Benny Ward, CFO
CLOSURE Medical Corporation
(919) 876-7800
For General Info: : Stuart Levine (212) 661-8030
For Analyst Info: Cecelia Heer (212) 661-8030
For Media Info: Deanne Eagle (212) 661-8030

FOR IMMEDIATE RELEASE: February 20, 2001

CLOSURE MEDICAL CORPORATION REPORTS FOURTH QUARTER AND YEAR-END 2000 RESULTS

Raleigh, NC, February 20, 2001 -- CLOSURE Medical Corporation (Nasdaq: CLSR), a medical device company engaged in developing, manufacturing and commercializing tissue adhesive products, today announced financial results for the fourth quarter and year ended December 31, 2000.

These results exclude the impact of the Company's adoption of Staff Accounting Bulletin No. 101: Revenue Recognition in Financial Statements (SAB 101). See “Effects of SAB 101” section below for a discussion of SAB 101's impact on the Company's 2000 financial results.

Total revenues for the fourth quarter of 2000 were $3,774,000, a 48% increase compared to $2,544,000 for the fourth quarter of 1999. The net loss for the fourth quarter of 2000 was $31,000, or $0.00 per basic and diluted common share, compared to a net loss of $773,000, or ($0.06) per basic and diluted common share in the same period of 1999.

Revenues for the year ended December 31, 2000 totaled $13,076,000 compared to $13,370,000 in the corresponding 1999 period. For the year ended December 31, 2000, the net loss was $1,537,000, or ($0.11) per basic and diluted common share, compared to a net loss of $2,527,000, or ($0.19) per basic and diluted common share for the same period of 1999.

The Company’s performance in the fourth quarter of 2000 was its best since the second quarter of 1999 and represents the fourth consecutive quarter of revenue growth. Primarily all of the Company’s revenues were from DERMABOND® Topical Skin Adhesive which is used to replace sutures and staples for the closure of certain lacerations and incisions. DERMABOND® adhesive is distributed worldwide, in approximately 34 countries, by Ethicon, Inc., a subsidiary of Johnson & Johnson. CLOSURE revenues for the full year 2000 were comparable to 1999 levels but were not representative of actual market demand, nor of Ethicon’s sales, of DERMABOND® adhesive. During 2000, Ethicon continued to reduce its DERMABOND® adhesive inventory levels that were built-up during 1999. With these inventory reductions and continued market penetration of the DERMABOND® product in the emergency and operating rooms, the Company expects 2001 revenues from DERMABOND® adhesive to be more reflective of actual market demand.

As of December 31, 2000, cash, cash equivalents, and investments were $11.8 million compared to $12.6 million at December 31, 1999.

Robert V. Toni, CLOSURE's President and Chief Executive Officer commented, “Fiscal year 2000 set the stage for several potential milestones to be achieved during 2001. In December 2000, we announced an agreement providing Colgate Oral Pharmaceuticals, Inc., a subsidiary of Colgate-Palmolive Company, with supply, distribution and development rights to the Company’s SOOTHE-N-SEAL™ canker sore relief technology. This is the first over-the-counter (OTC) product for CLOSURE and the opportunities it presents are exciting. We plan to further expand into the OTC market during 2001 with LIQUIDERM™ liquid adhesive bandage, which was cleared by the Food and Drug Administration (FDA) a couple of weeks ago. With this clearance, we anticipate completing, by mid-year 2001, a new partnership agreement for the distribution of LIQUIDERM™ adhesive setting up an early 2002 consumer launch of the product.”

SOOTHE-N-SEAL™ adhesive is the first cyanoacrylate medical device approved by the FDA for the OTC consumer market. SOOTHE-N-SEAL™ adhesive forms a protective barrier that shields oral ulcers from irritation due to eating and drinking while providing immediate and long-term pain relief. Additionally, the product utilizes the same proprietary technology as the Company’s professional product, DERMABOND® adhesive. SOOTHE-N-SEAL™ adhesive is expected to be launched to the professional and consumer markets in the first half of 2001 by Colgate Oral Pharmaceuticals, Inc.

LIQUIDERM™ adhesive is the first and only cyanoacrylate medical device approved by the FDA for the OTC adhesive bandage market. LIQUIDERM™ adhesive is painted on the wound, sealing it from dirt and germs, creating a healing environment, which allows natural healing to take place quickly. As the wound heals, the adhesive sloughs off naturally. CLOSURE is currently in negotiations with a top tier marketing partner for rights to its OTC wound care platform. The OTC wound care platform includes distribution rights to all present and future products, including LIQUIDERM™ adhesive, except for SOOTHE-N-SEAL™ adhesive.

Mr. Toni concluded by saying, “We are very pleased with the Company's progress and achievements during 2000 and look forward to strengthening shareholder value through continued growth of our core business, expansion of our product pipeline, new partnership arrangements and obtaining profitability in 2001.”

EFFECTS of SAB 101
As required by the Securities and Exchange Commission, the Company adopted SAB 101 in the fourth quarter of 2000. As a result, the Company recorded a cumulative non-cash charge of $2,656,000, effective January 1, 2000, related to previously recognized license and product development revenues. Of this amount, $625,000 was recognized as product development revenues during fiscal 2000. The year ended December 31, 2000 net loss, including the effects of SAB 101, was $3,568,000 or $(0.27) per basic and diluted common share.

CLOSURE Medical Corporation, headquartered in Raleigh, North Carolina, develops, manufactures and commercializes medical tissue adhesive products based on its proprietary cyanoacrylate technology. CLOSURE's nonabsorbable tissue adhesive products may be used to replace sutures and staples for certain topical wound closure applications, while its internal tissue adhesive products can potentially be used for internal wound closure and management. Currently marketed nonabsorbable tissue adhesive products include DERMABONDâ* Topical Skin Adhesive, which is used to replace sutures and staples for closure of certain lacerations and incisions and the NEXABANDâ* line of topical adhesives, which are used in veterinary wound closure and management.

*DERMABONDâ adhesive is a trademark of Ethicon, Inc.; SOOTHE-N-SEAL™ canker sore relief is a licensed trademark of Colgate Oral Pharmaceuticals, Inc.; and LIQUIDERM™ adhesive is a trademark of CLOSURE Medical Corporation. NEXABANDÒ adhesive is a federally registered trademark of CLOSURE Medical Corporation.

Individuals wishing to participate on the webcast, to be held at 4:30 PM EST today,can access the event at http://www.vcall.com. Please allow extra time prior to the call to download the streaming media software required for listening to the Internet broadcast. The online archive of the broadcast will be available within 2 hours of the live call and will be available for replay for 90 days.

CLOSURE Medical Corporation will be participating in the Lehman Brothers' Global Healthcare Conference, to be held at Disney's Grand Floridian Resort and Spa in Orlando, Florida from February 28 through March 2, 2001. CLOSURE representatives are scheduled to present at 2:30 PM EST on March 2, 2001.

To receive CLOSURE’s latest news release and other corporate documents via fax, at no cost, call 1-800-PRO-INFO, use the Company’s symbol CLSR. Or visit the Financial Relations Board's website at www.frbinc.com.

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 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, 1999 filed with the Securities and Exchange Commission.

CLOSURE Medical Corporation
Balance Sheet Data
(In thousands)

 
December 31, 2000
December 31, 1999
Cash, cash equivalents and investments
$ 11,832
$ 12,614
Working capital
8,462
9,745
Total assets
22,139
22,511
Long-term debt including current portion
1,487
2,100
Total stockholders' equity
13,907
16,625

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

 

THREE MONTHS ENDED DECEMBER 31,

 
2000
2000
1999
  Including
SAB 101
Excluding
SAB 101
 
  (Audited)   (Audited)
       
Product sales
$ 3,774
$ 3,774
$ 2,544
License and product development revenues
156
-
-
Total revenues
3,930
3,774
2,544
Cost of products sold
1,094
1,094
932
Gross profit
2,836
2,680
1,612
 
Research, development and regulatory affairs expenses
1,348
1,348
1,214
General and administrative expenses
1,490
1,490
1,304
Total operating expenses
2,838
2,838
2,518
 
Income (loss) from operations
(2)
(158)
(906)
Interest expense
(55)
(55)
(74)
Investment and interest income
182
182
207
Net income (loss)
$125
$ (31)
$ (773)
   
Net income (loss) per common share:  
Basic and diluted
$ 0.01
$0.00
$ (0.06)
   
Shares used in computation of net income (loss) per share:  
Basic
13,418
13,418
13,345
Diluted
13,787
13,418
13,345

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

 

TWELVE MONTHS ENDED DECEMBER 31,

 
2000
2000
1999
  Including
SAB 101
Excluding
SAB 101
 
  (Audited)   (Audited)
       
Product sales
$ 13,076
$ 13,076
$ 13,370
License and product development revenues
625
-
-
Total revenues
13,701
13,076
13,370
Cost of products sold
3,841
3,841
4,722
Gross profit
9,860
9,235
8,648
 
Research, development and regulatory affairs expenses
5,853
5,853
6,296
General and administrative expenses
5,415
5,415
5,404
Total operating expenses
11,268
11,268
11,700
 
Income (loss) from operations
(1,408)
(2,033)
(3,052)
Interest expense
(235)
(235)
(344)
Investment and interest income
731
731
869
Net income (loss) before cumulative effect of accounting change
(912)
(1,537)
(2,527)
Cumulative effect of accounting change
(2,656)
-
-
Net income (loss)
$ (3,568)
$ (1,537)
$ (2,527)
 
Net income (loss) per common share before cumulative effect of accounting change:
Basic and diluted
$(0.07)
$(0.11)
$(0.19)
 
Cumulative effect of accounting change:
Basic and diluted
$ (0.20)
-
-
 
Net income (loss) per common share:
Basic and diluted
$ (0.27)
$ (0.11)
$ (0.19)
 
Shares used in computation of net income (loss) per share:
Basic and diluted
13,390
13,390
13,324