Inion announces Preliminary Results for the Year Ended 31 December 2005

The full results announcement is attached.

Financial Highlights – 2005

- Sales up 11% to €7.6m (2004: €6.8m)

-  R&D expenditure up 79% to €4.3 m (2004: €2.4m)

-  Consolidated losses up 21% to €9.9m (2004: €8.2m)

- €1.9m grant approved from the Finnish Technology funding body TEKES to fund development project for OptimaPLUS™ third-generation biomaterials

- Cash, cash equivalents and short-term investments €43m (2004: €51.4m)

Operational Highlights

Two major new product launches

- Inion S-1™ Anterior Cervical Fixation System – its first biodegradable spinal product – exclusive North America distribution deal signed with Aesculap – first revenues from early orders received from Aesculap and existing EU distributors

- Inion Anchron™ suture anchor device for sports medicine applications – US distribution deal signed with Richard Wolf Medical Instruments

- Further 510(k) clearances for additional OTPS™ orthopaedic and CPS™ cranio-maxillofacial product lines

- UK office established in Takeley, to support international business operations

- Manufacturing capacity expanded in Tampere, Finland

- New European Technical Centre established in Cambridge, UK, to focus on development of third-generation bioactive and biodegradable materials

- Three-year collaboration with University of Cambridge to expand third-generation biomaterials platform

New Appointments

Paul Garvey, Finance Director of Axis Shield plc (LSE: ASD.L), appointed as Non-executive Director in April 2005

Outlook for 2006

The slower than anticipated development of our distribution agreement with Stryker has meant that our revenue growth in 2005 has fallen behind our earlier expectations. This is also likely to be the case in 2006. Although sales are expected to grow at a significant double-digit rate they will not reach the levels that we had estimated under our previous contractual arrangement with Stryker. Sales in 2006 are forecast to be in line with the current market estimates.

Against this background, the Board has taken the view that the Company needs to maintain extremely tight financial discipline to reflect its revised revenue expectations.

Dr Auvo Kaikkonen, Chief Executive Officer of Inion, commenting on today’s statement, said "In many ways, 2005 was a very successful year for Inion: we launched several significant new products and also expanded our global distribution network into new territories, some of which have performed extremely well over the year. We continue to make solid progress in the development of our OptimaPLUS™ third-generation biomaterials platform and have set aside the funds needed to advance this important platform. In addition, we have established a new dedicated facility in Cambridge to focus on developing new bioactive biomaterials, which will be of benefit to our business longer term.

"However, our sales growth fell short of our ambitious expectations in 2005 primarily due to the underperformance of Stryker’s US and European trauma businesses. As a result, we have made this agreement non-exclusive and have taken steps to identify additional distributors for our Orthopaedic Trauma range. We are confident of regaining traction in these important markets during 2006.

"This loss of sales momentum in this key area has led the Board to re-examine our business plan for 2006. As a result, we are now focusing on bringing a new higher momentum to our sales expansion across the whole business while as the same time maintaining a tight financial discipline. Taken together these actions are designed to ensure that we contain our operating loss at current levels. This is despite the need for higher investments in both clinical programmes and new product development.

"These actions, which are designed to conserve Inion’s cash resources, do not reflect any change in our view of the biodegradable implant opportunity. The 77% sales growth that we achieved in 2005 stripping out the impact of our Stryker orders from the previous year reinforces our view that biodegradable implants are gaining greater support in the orthopaedics industry and we believe Inion’s continued growth prospects remain positive."

A presentation to analysts will take place at 09.30 today at the offices of Piper Jaffray Ltd, Phoenix House, 18 King William Street, London EC4N 7US. Refreshments will be served from 09.15. Please contact Mark Swallow or Helena Podd at Citigate Dewe Rogerson on 020 7638 9571 for further information.

-Ends-

For further information, please contact: 

Inion Oy
Dr Auvo Kaikkonen, Chief Executive Officer
Tel: +358 3 230 6600

Citigate Dewe Rogerson

David Dible / Mark Swallow / Helena Podd
Tel: +44 (0)207 638 9571