CryoLife, Inc. (CRY) Downgraded by The Benchmark Company to “Hold”‎

CRY executives say no more Hemostats....

PerClot and HemoStase [More on that HERE and HERE]

Revenues from the sale of PerClot and HemoStase increased 17% for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. This increase was primarily due to a 40% increase in the volume of grams sold, which increased revenues by 34%, partially offset by a decrease in average selling prices, which decreased revenues by 17%...

CryoLife may begin manufacturing PerClot from plant starch modified by Starch Medical Inc. under the terms of the License Agreement, which is anticipated to occur sometime in late 2011 or in 2012. The License Agreement extends for an indefinite period. Following the start of manufacturing and U.S. regulatory approval... [after transition from the current Chinese site of manufacture].

Excerpt Benchmark Cryolife Q1

Operator

Our next question comes from Raymond Myers with Benchmark. Please proceed with your question.

Raymond Myers – Benchmark

Great, thank you. Most of my questions have been answered, but let me ask this one. PerClot revenue in Q1 was 660,000. We’ll have a lot to compare that with except for Q4 where……(technical difficulty)

Steve Anderson

We lost you.

Ashley Lee

We lost you Ray.

Raymond Myers – Benchmark:

…… after having a very strong $660,000 in Q1, is any of that due to stocking and what does that tell you about the potential for the product over the course of the year?

Ashley Lee

We have actually seen the majority of our distributors reorder already. So we remain very optimistic about PerClot revenues for the balance of this year and our expectations are included in the guidance that we gave for all powdered hemostats that we talked about earlier.

Raymond Myers – Benchmark

I guess what I’m driving at is trying to understand how contributed that guidance is. I’m assuming, for starters, we’re not going to sell any more hemostats, correct?

Steve Anderson

That is correct.

Raymond Myers – Benchmark

And PerClot increased by well over 200% sequentially from Q4 to Q1. Was any of that due to stocking orders that you don’t expect to repeat in Q2?

Steve Anderson

No, most of the distributors have reorders by this time. Not all, but most.

Raymond Myers – Benchmark

So with that kind of a quarter-on-quarter growth rate, what kind of PerClot revenue would we expect in Q2?

Ashley Lee

We don’t give quarterly guidance out Ray, but again we gave for powdered HemoStase, it could be as much as 5 million for the full year and we would expect to see sequential growth in PerClot revenues over the balance of this year, so we’ll leave it to that.

Steve Anderson

One of the things that we have pointed in the previous calls is that our R&D people feel that the PerClot absorbs two to three times the amount of fluid that the prior product absorbed and I can tell you that the difference in the activity of the product is striking, but you exhibit them side by side. Now it’s very hard to describe that conversationally. But what I would suggest is the next time we have a booth at a convention that you ask to personally see the demonstration of the two products side by side because the doctors’ reaction to the activity, the chemical activity of PerClot has been extraordinary, and we are very, very enthusiastic about that product.

Raymond Myers – Benchmark

Well, that sounds great. I’ll do that and look forward to growth in that area. Thanks.