ART Advanced Research Technologies Announces Second Quarter 2009 Financial Results

  ART Advanced Research Technologies Inc. (ART) (TSX: ARA), a Canadian medical device company and a leader in optical molecular imaging products for the healthcare and pharmaceutical industries, announced its financial results for the second quarter ended June 30, 2009. ART reported revenues of $1,016,308 for the three-month period ended June 30, 2009, compared to $1,212,860 for the same quarter a year ago. For the six-month period ended June 30, 2009, revenues were $1,112,222, compared to $2,454,781, for the six-month period ended June 30, 2008. For the 2009 second quarter, the operating loss decreased by $158,128, or 14%, to $932,835, from $1,090,963 for the same period a year ago. For the six-month period ended June 30, 2009, the operating loss was $2,412,387, compared to $2,425,284, for the six-month period ended June 30, 2008. ART incurred a net loss for the three-month period ended June 30, 2009, of $1,092,308 or $0.01 per share, compared to $1,101,220 or $0.01 per share for the three-month period ended June 30, 2008. For the six-month period ended June 30, 2009, the net loss was $2,483,721 or $0.03 per share, compared to $2,380,676 or $0.02 per share, for the six-month period ended June 30, 2008. All dollar amounts referenced herein are in U.S. dollars, unless otherwise stated.

2009 Second Quarter Highlights

- ART conducted the pre-commercial launch of its new Optix® MX3 system at the European Society for Molecular Imaging meeting in Barcelona, Spain.

- ART secured the sale of SoftScan® breast imaging device to Gottingen University in Germany, where the device will be used to measure treatment response for breast cancer.

- Gottingen has also committed to purchase a second SoftScan system, fully upgraded for use in screening with molecular probes, subject to grant funding.

- ART participated in the American Association of Cancer Research (AACR) conference in Denver, Colorado, which was well attended and generated a number of important leads for ART, further consolidating the sales funnel.

- ART has further solidified its sales team with the hiring of two sales representatives for the western half of North America, which regroups a significant cluster of major pharmaceutical and academic research labs, and with the hiring of a European agent to drive business growth in the European Life Science market.

- ART strengthened its cash position by closing $2.1 million in long-term debt financings.

Post Quarter Events

- ART received a C$500,000 contribution in repayable funding from the Government of Canada to pursue commercialization activities in North America.

Revenues

For the three-month period ended June 30, 2009, revenues were $1,016,308, compared to $1,212,860 for the same period ended June 30, 2008. Sales resulting from products amounted to $982,033 in the quarter ended June 30, 2009, compared to $37,177 for the same quarter of last year. Revenues resulting from sales of products for the six-month period ended June 30, 2009, amounted to $1,052,729, compared to $1,243,389 for the same period of last year. During the quarter ended June 30, 2009, product sales mainly resulted from the sale of one Optix and one SoftScan unit whereas for the same quarter ended June 30, 2008, product sales were mainly from Fenestra products. In both the six-month periods ended June 30, 2009 and 2008, ART sold one Optix unit and one SoftScan unit. The decrease in products sales during the six-month period ended June 30, 2009, compared to the same period in 2008, mainly resulted from the sales of add-ons that resulted in the conversion of two Optix systems to the MX2 version in the six-month period ended June 30, 2008. During the second quarter of 2009, the Company sold two new service contracts, and recognized a total of $34,275 in services and other revenues. In the second quarter of 2008, the Company had recognized revenue from service contracts in the amount of $1,175,683, of which an amount of $1,075,517 resulted from services rendered on behalf of GE, as ART was completing the transition out of the Optix distribution agreement with GE.

Gross Margin

During the three and six-month periods ended June 30, 2009, ART generated a gross margin of $833,619 or 85% and $901,817 or 86% respectively from the sales of its products compared to $32,775 or 88% and $991,194 or 80% for the same periods in the previous year. The gross margin ratio generated on the sales of services and other revenues was 70% for both the three-month and the six-month periods ended June 30, 2009, compared to 97% and 95% for the same periods in 2008. The increase in the product gross margin ratio during the six-month period ended June 30, 2009, resulted from a different sales product mix compared to the six-month period ended June 30, 2008. In both semesters, the Company sold one Optix unit and one SoftScan prototype unit having approximately equivalent gross margin ratio. The gross margin ratio on the SoftScan prototype sales in 2008 and 2009 represent almost 100% of the sale, given that these units had been expensed as incurred in the previous years. Furthermore, the Company sold more of its Fenestra line of molecular imaging agents in 2009.

Operating Expenses

The Company's research and development ("R&D") expenditures for the three-month period ended June 30, 2009, net of investment tax credits, amounted to $509,967, compared to $618,279 for the same period ended June 30, 2008. For the six-month period ended June 30, 2009, R&D expenditures, net of investment tax credits, were $1,145,877, compared to $1,472,929 for the six-month period ended June 30, 2008. The R&D expenditures during the three-month and the six-month periods ended June 30, 2009, decreased by 18% and 22% compared to the same periods in 2008. The decrease of the R&D expenses during the three-month and the six-month periods ended June 30, 2009, compared to the same periods of last year mainly resulted from the cost reduction plan which was put in place during the first days of 2009. As a result, the R&D headcount decreased by approximately 15% compared to the R&D headcount at the end of the second quarter of 2008. During the second quarter of 2009, the R&D team pursued the development of the next generation of the Optix system and continued to support Optix users, while collaborating with clients for the development of applications to demonstrate the utility of the system in research areas such as oncology, cardiology and neurology.

Selling, general, and administrative ("SG&A") expenses for the three-month period ended June 30, 2009, totaled $1,109,578, compared to $1,468,810 for the same period ended June 30, 2008. For the six-month period ended June 30, 2009, SG&A expenses were $1,978,524, compared to $2,752,064 for the six-month period ended June 30, 2008. The decrease of the SG&A expenses during both the three-month and six-month periods ended June 30, 2009, compared to the same periods in 2008, mainly resulted from the cost reduction plan which took effect during the first days of 2009. In fact, the Company reduced its workforce and implemented a four-day shared workweek schedule for about 20 percent of the workforce. Senior management has taken at least a 10 percent salary cut.

Net Loss

The net loss for the three-month period ended June 30, 2009 was $1,092,308 or $0.01 per share, compared to $1,101,220 or $0.01 per share for the three-month period ended June 30, 2008. For the six-month period ended June 30, 2009, the net loss was $2,483,721 or $0.03 per share, compared to $2,380,676 or $0.02 per share, for the six-month period ended June 30, 2008.

Financial Outlook

As at June 30, 2009, the Company has $1,753,509 in cash and cash equivalents, and a working capital of $3,744,937. During the second quarter, the Company strengthened its cash position by closing $2.1 million in long-term debt financings, maturing in three years. The long-term debt bears interest at a rate of 9% payable annually and is secured by movable hypothecs on the intellectual property rights of the Company.

Following the close of the second quarter of 2009, the Government of Canada granted C$500,000 in repayable funding to ART for commercialization activities, through Canada Economic Development's Business and Regional Growth program. ART is also considering other financing options, such as assistance programs for businesses offered by the different levels of government, to strengthen the Company's financial situation. Further, sales growth prospects for Optix are favourable as the Obama administration has increased the funding to the National Institutes of Health ("NIH") by as much as $10.4 billion under the stimulus package recently passed by the U.S. congress, for a total NIH allocation expected to reach $40.7 billion, compared to $29.3 billion last year. Moreover, the Canadian government's recent budget allocated C$250 million for the modernization of federal labs throughout the country and another C$750 million in research infrastructure through the Canadian Foundation for Innovation, which are anticipated to be directly relevant to the sector as well. These factors combined are expected to benefit the industry starting in the third quarter of this year, coinciding with the launch of the new Optix MX3 system.

The financial statements, accompanying notes to the financial statements, and Management's Discussion and Analysis for the three-month period ended June 30, 2009, will be available online at www.sedar.com, or at www.art.ca, in the "Investors" section. Summary financial tables are provided below. A detailed list of the risks and uncertainties affecting the Company can be found in the Management's Discussion and Analysis for the year ended December 31, 2008, and in the Company's most recent Annual Information Form, available on SEDAR at www.sedar.com.

Conference Call

ART will host a conference call today at 5:00 PM (EDT). The telephone number to access the conference call is [phone] when dialing within the Montreal area, or [phone] for the rest of North America. Outside of North America, please dial [phone]. A replay of the call will be available until August 27, 2009. To listen to the replay from the Montreal area, please dial [phone], or, [phone] for the rest of North America. From outside of North America, please dial [phone]. The access code for the replay is 1806385#.

About ART

ART Advanced Research Technologies Inc. is a leader in molecular imaging products for the healthcare and pharmaceutical industries. ART has developed products in medical imaging, medical diagnostics, disease research, and drug discovery with the goal of bringing new and better treatments to patients faster. The Optix® optical molecular imaging system, designed for monitoring physiological changes in living systems at the preclinical study phases of new drugs, is used by industry and academic leaders worldwide. The SoftScan® optical medical imaging device is designed to improve the diagnosis and treatment of breast cancer. Finally, the Fenestra® line of molecular imaging contrast products provides image enhancement for a wide range of preclinical Micro CT applications allowing scientists to see greater detail in their imaging studies, with potential extension into other major imaging modalities. ART is commercializing some of these products in a global strategic alliance with GE Healthcare, a world leader in mammography and imaging. ART's shares are listed on the TSX under the ticker symbol ARA. For more information on ART, visit our website at www.art.ca.

This press release may contain forward-looking statements subject to risks and uncertainties that would cause actual events to differ materially from expectations. These risks and uncertainties are described in the most recent Annual Information Form and the financial statements for the year ended December 31, 2008, available on SEDAR (www.sedar.com).

Financial Statements (in U.S. dollars)

ART Advanced Research Technologies Inc.
Balance Sheets
(In U.S. dollars)

                                              June 30, 2009   December 31,
                                                 (unaudited)         2008
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ASSETS
Current assets
  Cash                                           $1,753,509    $1,446,086
  Term deposits (2008 - 0.67% and 0.90%
   matured in January 2009)                               -     1,700,000
  Accounts receivable                             1,564,573     1,700,365
  Investment tax credits receivable                 443,363       779,682
  Inventories                                     1,192,348     1,168,702
  Prepaid expenses                                1,316,301       547,127
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                                                  6,270,094     7,341,962
Property, equipment and assets under
 capital leases                                     381,332       415,932
Patents                                           1,531,843     1,462,918
Deferred development costs                        2,978,159     2,383,180
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                                                $11,161,428   $11,603,992
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LIABILITIES
Current liabilities
  Bank loan                                         516,129       489,956
  Accounts payable and accrued liabilities        1,861,062     2,224,509
  Deferred revenues                                 109,526       112,926
  Current portion of obligations under
   capital leases                                    38,440        35,267
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                                                  2,525,157     2,862,658

Obligations under capital leases                     21,821        39,271
Long-term debt                                    1,989,258             -
-------------------------------------------------------------------------
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                                                  4,536,236     2,901,929

SHAREHOLDERS' EQUITY
Share capital and share purchase warrants        39,057,319    39,142,553
Contributed surplus                               4,974,091     4,845,266

Deficit                                         (38,894,412)  (36,410,691)
Accumulated other comprehensive income            1,488,194     1,124,935
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                                                (37,406,218)  (35,285,756)
-------------------------------------------------------------------------
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                                                  6,625,192     8,702,063
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                                                $11,161,428   $11,603,992
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ART Advanced Research Technologies Inc.
Shareholders' Equity
As at June 30, 2009
(In U.S. dollars)

                                 Common Shares           Preferred Shares
-------------------------------------------------------------------------
                          Number        Amount       Number        Amount
-------------------------------------------------------------------------
Balance as at
 January 1, 2008      94,540,592   $23,030,023    8,341,982   $7,907,043
Net loss
Translation
 adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Issue of shares
 for cash                                        53,101,296     7,100,000
Share issue expenses
Stock-based
 compensation
Deferred share units
Expired warrants
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at
 December 31, 2008    94,540,592    23,030,023   61,443,278    15,007,043
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited)
-------------------------------------------------------------------------
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Stock-based
 compensation
Deferred share units
Expired warrants
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at
 June 30,2009         94,540,592   $23,030,023   61,443,278   $15,007,043
-------------------------------------------------------------------------
-------------------------------------------------------------------------

                                                                    Share
                                                              Capital and
                                                           Share Purchase
                                                   Warrants      Warrants
-------------------------------------------------------------------------
                                         Number      Amount         Total
-------------------------------------------------------------------------
Balance as at January 1, 2008         4,855,791  $1,280,876   $32,217,942
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Issue of shares for cash                                        7,100,000
Share issue expenses
Stock-based compensation
Deferred share units
Expired warrants                       (594,907)   (175,389)     (175,389)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at December 31, 2008       4,260,884   1,105,487    39,142,553
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited)
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Stock-based compensation
Deferred share units
Expired warrants                       (305,555)    (85,234)      (85,234)
-------------------------------------------------------------------------
Balance as at June 30, 2009           3,955,329  $1,020,253   $39,057,319
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                                                  Accumulated
                                                        Other
                     Contributed                Comprehensive
                         Surplus        Deficit        Income       Total
-------------------------------------------------------------------------

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Balance as at
 January 1, 2008      $4,537,336   $(31,007,264)   $3,326,739  $9,074,753
Net loss                             (4,819,230)               (4,819,230)
Translation
 adjustment                                        (2,201,804) (2,201,804)
-------------------------------------------------------------------------
Comprehensive loss                   (4,819,230)   (2,201,804) (7,021,034)
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Issue of shares
 for cash                                                       7,100,000
Share issue expenses                   (584,197)                 (584,197)
Stock-based
 compensation             84,065                                   84,065
Deferred share units      48,476                                   48,476
Expired warrants         175,389
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at
 December 31, 2008     4,845,266    (36,410,691)    1,124,935   8,702,063
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited)
-------------------------------------------------------------------------
Net loss                              (2,483,721)              (2,483,721)
Translation adjustment                                363,259     363,259
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Comprehensive loss                    (2,483,721)     363,259  (2,120,462)
-------------------------------------------------------------------------
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Stock-based
 compensation             31,291                                   31,291
Deferred share units      12,300                                   12,300
Expired warrants          85,234
-------------------------------------------------------------------------
Balance as at
 June 30, 2009        $4,974,091    $(38,894,412)  $1,488,194  $6,625,192
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ART Advanced Research Technologies Inc.
Operations
(In U.S. dollars)
(Unaudited)

                           Three-month Periods          Six-month Periods
                                 ended June 30              ended June 30
-------------------------------------------------------------------------
                            2009          2008         2009          2008
-------------------------------------------------------------------------
Sales
  Products              $982,033       $37,177   $1,052,729    $1,243,389
  Services and other
   revenues               34,275     1,175,683       59,493     1,211,392
-------------------------------------------------------------------------
                       1,016,308     1,212,860    1,112,222     2,454,781
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Cost of sales
  Products               148,414         4,402      150,912       252,195
  Services and other
   revenues               10,437        38,995       18,142        57,100
-------------------------------------------------------------------------
                         158,851        43,397      169,054       309,295
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Gross margin             857,457     1,169,463      943,168     2,145,486
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Operating expenses
  Research and
   development,
   net of investment
   tax credits           509,967       618,279    1,145,877     1,472,929
  Selling, general
   and administrative  1,109,578     1,468,810    1,978,524     2,752,064
  Amortization           170,747       173,337      231,154       345,777
-------------------------------------------------------------------------
                       1,790,292     2,260,426    3,355,555     4,570,770
-------------------------------------------------------------------------
Operating loss           932,835     1,090,963    2,412,387     2,425,284
Other expenses
 (revenues)              159,473        10,257       71,334       (44,608)
-------------------------------------------------------------------------
Net loss              $1,092,308    $1,101,220   $2,483,721    $2,380,676
-------------------------------------------------------------------------
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Basic and diluted
 net loss per share        $0.01         $0.01        $0.03         $0.02
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
 weighted average
 number of common
 shares outstanding   94,540,592    94,540,592   94,540,592    94,540,592
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ART Advanced Research Technologies Inc.
Notes to Financial Statements
(In U.S. dollars)
(Unaudited)

                           Three-month Periods          Six-month Periods
                                 ended June 30              ended June 30
-------------------------------------------------------------------------
                            2009          2008         2009          2008
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss             $(1,092,308)  $(1,101,220) $(2,483,721)  $(2,380,676)
Items not affecting
 cash
  Amortization           170,747       173,337      231,154       345,777
  Stock-based
   compensation           18,834        37,080       31,291        74,160
  Gain on disposal
   of fixed assets             -       (26,707)           -       (26,707)
  Deferred share units    12,300             -       12,300             -
Net changes in working
 capital items
  Accounts receivable     67,163      (731,199)     215,774      (335,270)
  Investment tax
   credits receivable    (84,265)     (236,413)     347,547       903,656
  Inventories             85,999      (254,966)      41,607      (199,477)
  Prepaid expenses      (766,433)      282,647     (738,877)     (559,589)
  Accounts payable and
   accrued liabilities   140,083      (666,239)    (441,415)     (426,700)
  Deferred revenues      (30,793)       83,236      (10,739)       47,527
  Deferred grant               -             -            -         5,821
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Cash flows from
 operating activities (1,478,673)   (2,440,444)  (2,795,079)   (2,551,478)
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INVESTING ACTIVITIES
Acquisition of property
 and equipment                 -        (9,745)      (6,301)       (9,745)
Proceed on disposal of
 property and equipment        -        33,481            -        59,172
Patents                  (23,685)      (42,668)     (54,772)     (131,843)
Deferred development
 costs                  (289,810)     (468,375)    (553,972)     (763,546)
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Cash flows from
 investing activities   (313,495)     (487,307)    (615,045)     (845,962)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Repayment of
 obligations under
 capital leases           (9,171)      (12,456)     (17,620)      (17,995)
Long-term debt         1,981,417             -    1,981,417             -
Issue of convertible
 preferred shares              -     1,100,000            -     1,100,000
Share issue expenses           -       (82,193)           -       (82,193)
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Cash flows from
 financing activities  1,972,246     1,005,351    1,963,797       999,812
Effect of foreign
 currency translation
 adjustments on cash
 and cash equivalents    123,394        53,047       53,750       (63,691)
-------------------------------------------------------------------------
                       2,095,640     1,058,398    2,017,547       936,121
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Net increase
 (decrease)
 in cash and cash
 equivalents             303,472    (1,869,353)  (1,392,577)   (2,461,319)
Cash and cash
 equivalents,
 beginning
 of period             1,450,037     2,995,688    3,146,086     3,587,654
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Cash and cash
 equivalents, end
 of period            $1,753,509    $1,126,335   $1,753,509    $1,126,335
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CASH AND CASH
 EQUIVALENTS
Cash                  $1,753,509      $537,291   $1,753,509      $537,291
Term deposits                  -       589,044            -       589,044
-------------------------------------------------------------------------
                      $1,753,509    $1,126,335   $1,753,509    $1,126,335
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Supplemental
 disclosure
 of cash flow
 information
Interest paid             $7,703       $24,382      $15,765       $33,016
Interest received              -         9,720        1,403        30,109
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Contacts: ART Advanced Research Technologies Inc. Jacques Bedard Chief Financial Officer 514-832-0777 [e-mail] www.art.ca