ORCHARD PARK, N.Y., Nov. 13 /PRNewswire-FirstCall/ -- MINRAD International, Inc. (AMEX:BUF) today announced its financial results for the quarter ended September 30, 2007.
(in thousands, except per Quarter Ended Variance
share data) September 30, September 30,
2007 2006 $ % Revenue $2,691 $5,278 $( 2,587) (49)%
Cost of goods sold 3,286 3,214 72 2 %
Gross profit (loss) (595) 2,064 (2,659) (129)% Gross margin (22)% 39 % Operating Expenses
Sales & marketing 2,144 1,613 531 33 %
Research & development 1,590 836 754 90 %
Finance & administrative 842 1,444 (602) (42)%
Total Operating Expenses 4,576 3,893 683 18 % Interest income (expense) (89) 304 (393) (129)%
Preferred dividends - (162) (162) N/A Net loss available to $(5,260) $(1,687) $(3,573) 212 %
common Earnings per share $(0.11) $( 0.04) $(0.07) Revenue: (in thousands) Quarter Ended Variance
September 30, September 30,
2007 2006 $ % Revenue
Sevoflurane $1,425 $4,562 $(3,137) (69)%
Other inhalants 1,101 698 403 58 %
Total Anesthesia & 2,526 5,260 (2,734) (52)%
Analgesia
Image Guidance 165 18 147 817 %
Total Revenue $2,691 $5,278 $(2,587) (49)% Revenue decreased by $2.587 million or 49%, to $2.691 million for the third quarter of 2007 as compared to $5.278 million for the third quarter of 2006. This decrease is primarily attributed to the reduction in Sevoflurane sales in the United States during the third quarter of 2007. This was primarily a result of the timing of regulatory approvals on products in the United Sates and their subsequent launch. Revenues were limited during the first nine months of 2007 due to the manufacturing of both isoflurane and sevoflurane on our isoflurane line (as opposed to separate production lines) and a focus on expanding our Bethlehem Anesthetic Facility. The Company received approval of Sojourn(TM) (sevoflurane) by the United States Food & Drug Administration on May 2, 2007. We expect this approval (and others around the world) to increase demand for our products in future periods.
On November 5, 2007, the Company completed construction of its Sevoflurane Active Pharmaceutical Line ("API") and will be completing validation of this line over the next several weeks. We believe the addition of our Sevoflurane API Line will allow us to increase production by a factor of four times from previous production constraints.
(in thousands) Quarter Ended Variance
September 30, September 30,
2007 2006 $ %
Revenue
United States $1,295 $4,359 $(3,064) (70)%
Europe 95 233 (138) (59)%
Western Hemisphere 909 434 475 110 %
(excluding
U.S.)
Pacific Rim 392 252 140 55 %
Total Revenue $2,691 $5,278 $(2,587) (49)%
Cost of Goods Sold:
Cost of goods sold increased by $72 thousand, or 2%, to $3.286 million for the third quarter of 2007 from $3.214 million for the third quarter of 2006. As a percentage of revenue, cost of goods sold increased from 61% in the third quarter of 2006 to 122% in the third quarter of 2007. The Company's manufacturing variance of $1.923 million in the third quarter of 2007, resulted in cost of goods rising from a projected 51% of revenue to the 122% experienced in the third quarter. The manufacturing variances experienced in the third quarter were primarily a result of two items; variances due to volume of approximately $800 thousand and inventory write-downs and reserves of approximately $1.100 million. The volume variance of $800 thousand was a result of decreased production during the quarter due to construction in our Bethlehem Facility (which was completed on November 5th), the limitations caused by producing both isoflurane and sevoflurane on our isoflurane API line during the quarter, and changes in plant personnel. The inventory write-downs of $1.100 million during the quarter were a result of several items including adjustments as a result of a physical inventory, changes in engineering specifications in our real-time image guidance line, and reserves against our work-in-process inventory due to potential reprocessing of work-in-process material.
Operating Expenses: Sales and marketing expense increased by $531 thousand, or 33%, to $2.144 million for the third quarter of 2007 from $1.613 million in the third quarter of 2006. The primary cause of this growth was due to the creation and expansion of our field sales organization in the second-half of 2006 and into 2007, with its corresponding employee and incentive costs. As of September 30, 2007, the Company has completely filled its U.S. sales force and had a limited number of vacancies internationally.
Research and development expenses for the third quarter of 2007 increased by $754 thousand, or 90%, to $1.590 million from $836 thousand in the third quarter of 2006. The increase between the two periods is due to an expansion of our research and development efforts, headcount related to our anesthesia & analgesia, real-time image guidance, and conscious sedation projects and costs with registering our products internationally. During the quarter the Company received 510(k) acceptance on a spinal access product to be used with our image guidance product line, started accelerated stability studies on our validation batches of desflurane, and continued development of our conscious sedation device. Desflurane stability studies are anticipated to be completed in the fourth quarter and the US FDA Abbreviated New Drug Application ("ANDA") is expected to be filed.
Finance and administrative expenses decreased by $602 thousand or 42%, to $842 thousand for the third quarter 2007 from $1.444 million for the third quarter of 2006. The decrease was primarily as a result of a decrease in option expense recognized for finance and administrative employees between the two periods of $241 thousand and $228 thousand of expenses due to changes in finance and administrative staff which occurred during the third quarter of 2006 that did not occur in 2007.
Net Loss: For the third quarter of 2007, the Company experienced a loss of $(5.260) million, $(0.11) per common share. This compares with a loss of $(1.687) million, $(0.04) per common share for the third quarter of 2006. The increased operating loss for the quarter is primarily due to decreases in gross margin combined with increases in our overall operating expenses between the two periods.
Contact: Timothy Sheehan, VP - Corporate Development
(716) 855-1068
http://www.minrad.com/ About the Company
MINRAD International, Inc. is an interventional pain management company with real-time image guidance, anesthesia and analgesia, conscious sedation product lines. The real-time image guidance products facilitate minimally invasive surgery especially for pain management and have broad applications in orthopedics, neurosurgery, and interventional radiology. These devices enable medical professionals to improve the accuracy of interventional procedures and reduce radiation exposure. MINRAD International also manufactures and markets generic inhalation anesthetics for use in connection with human and veterinary surgical procedures. The company is developing a drug/drug delivery system for conscious sedation, which, similar to nitrous oxide in dental surgery, provides a patient with pain relief without loss of consciousness. Additional information can be found at the company's website, http://www.minrad.com/.
The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Factors that may cause actual results to differ materially from those expressed or implied by its forward-looking statements include, but are not limited to, Minrad International's limited operating history and business development associated with being a growth stage company; its dependence on key personnel; its need to attract and retain technical and managerial personnel; its ability to execute its business strategy; the intense competition it faces; its ability to protect its intellectual property and proprietary technologies; its exposure to product liability claims resulting from the use of its products; general economic and capital market conditions; financial conditions of its customers and their perception of its financial condition relative to that of its competitors; as well as those risks described under the heading "Risk Factors" of Minrad International's Form 10-KSB, filed with the Securities and Exchange Commission on March 29, 2007. Although Minrad International, Inc. believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.
MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands) September 30, December 31,
ASSETS 2007 2006 Current assets:
Cash and cash equivalents $118 $ 4,664
Investments - 7,249
Interest receivable - 86
Accounts receivable 3,304 10,473
Inventories, net 14,176 4,360
Prepaid expenses and other
current assets 1,607 1,477
Total current assets 19,205 28,309 Property and equipment:
Machinery and equipment 3,027 2,420
Computers and software 1,446 571
Furniture and fixtures 797 662
Leasehold improvements 385 385
Construction in progress 15,135 4,177 20,790 8,215 Less accumulated depreciation 1,973 1,234
Total property and equipment 18,817 6,981 Other assets, net 592 439
Total assets $38,614 $35,729 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Bank demand note payable $4,300 $-
Accounts payable 8,101 965
Accrued expenses 678 1,262
Current portion of long term debt 205 -
Total current liabilities 13,284 2,227 Long term debt 1,775 - Stockholders' equity
Common stock 479 470
Additional paid-in-capital 78,591 76,513
Accumulated deficit (55,515) (43,481)
Total stockholders' equity 23,555 33,502
Total liabilities and stockholders' equity $38,614 $35,729 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts) Three month Nine month
periods ended periods ended
September September September September
30, 2007 30, 2006 30, 2007 30, 2006 Revenue $2,691 $ 5,278 $ 9,921 $10,449 Cost of goods sold 3,286 3,214 8,809 6,121 Gross profit (loss) (595) 2,064 1,112 4,328 Operating expenses:
Sales and marketing 2,144 1,613 6,016 3,183
Research and
development 1,590 836 4,037 1,856
Finance and
administrative 842 1,444 3,135 3,308
Total operating
expenses 4,576 3,893 13,188 8,347 Operating loss (5,171) (1,829) (12,076) (4,019) Interest income
(expense):
Interest expense: (98) - (118) (153)
Interest income 9 304 160 418
Total non-operating
income (expense) (89) 304 42 265 Net loss (5,260) (1,525) (12,034) (3,754) Less preferred
stock dividends:
Cash dividends - (162) - (324)
Non cash dividends - - - (183)
Net loss available for
common stockholders $(5,260) $(1,687) $(12,034) $(4,261)
Net loss per share
basic and diluted $(0.11) $(0.04) $(0.25) $ (0.12)
Weighted average
common shares
outstanding basic
and diluted 47,876 41,563 47,390 34,810 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine-Month Period Nine-Month Period
Cash flows from Ended Ended
operating activities: September 30, September 30,
2007 2006 Net loss $(12,034) $(3,754)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 747 368
Stock based compensation 665 647
(Increase) decrease in assets:
Accounts receivable 7,169 (3,062)
Interest receivable 86 (88)
Inventories (9,816) (3,038)
Prepaid expenses (130) (742)
Increase (decrease) in liabilities:
Accounts payable 3,921 (1,834)
Accrued expenses (584) 1,871
Net cash used by operating activities (9,976) (9,632) Cash flows from investing activities:
Purchases of property and equipment (9,360) (2,439)
Proceeds from sales of investments 7,249 -
Acquisition of other assets (161) (136)
Purchases of investments - (10,778)
Net cash used by investing activities (2,272) (13,353) Cash flows from financing activities:
Borrowings under demand notes payable 4,300 400
Repayments under demand note payable - (3,120)
Principal payments on long-term debt (83) -
Proceeds from long term debt 2,063 -
Proceeds from options exercised 719 310
Proceeds from sale of common stock;
net of costs - 34,512
Proceeds from warrants exercised 703 475
Preferred cash dividends paid - (324)
Net cash provided by financing activities 7,702 32,253 Net increase (decrease) in cash
and cash equivalents (4,546) 9,268
Cash and cash equivalents
- Beginning of period 4,664 669
Cash and cash equivalents
- End of period $118 $9,937 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2007 (UNAUDITED)
(in thousands, except number of shares) Series A
Convertible Additional
Preferred Stock Common Stock Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit Total
Balance at
December 31,
2006 - $- 47,048,240 $470 $76,513 $(43,481) $33,502
Stock options
exercised - - 45,291 1 116 - 117
Stock based
compensation - - - - 122 - 122 Net loss - - - - - (3,386) (3,386)
Balance at
March 31,
2007 - $- 47,093,531 $471 $76,751 $(46,867) $30,355 Stock options
exercised - - 241,331 2 407 - 409
Stock based
compensation - - - - 275 - 275
Stock warrants
exercised - - 389,400 3 553 - 556
Net loss - - - - - (3,388) (3,388)
Balance at
June 30,
2007 - $- 47,724,262 $476 $77,986 $(50,255) $28,207 Stock options
exercised - - 79,559 1 192 - 193
Stock based
compensation - - - - 268 - 268
Stock warrants
exercised - - 196,164 2 145 - 147
Net loss - - - - - (5,260) (5,260) Balance at
September 30,
2007 - $- 47,999,985 $479 $78,591 $(55,515) $23,555
DATASOURCE: MINRAD International, Inc.
CONTACT: Timothy Sheehan, VP - Corporate Development of MINRAD International, Inc., +1-716-855-1068, Web site: http://www.minrad.com/
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