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Mela Sciences (MELA) Announces Second Quarter 2012 Financial Results



8/8/2012 9:52:21 AM

IRVINGTON, NY--(Marketwire - August 07, 2012) - MELA Sciences, Inc. (NASDAQ: MELA), the medical device company that has developed and is commercializing MelaFind®, today announced financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Performance Highlights:

  • Continued its controlled and deliberate launch of MelaFind in the US and in several key cities throughout Germany.
    • The Company ended the second quarter with 25 MelaFind systems in the field in the US and Germany and continues to work with customers to train and assist them in using MelaFind appropriately to incorporate its use successfully into their practices.

  • Published positive and highly statistically significant clinical results of the impact of MelaFind in a German clinical study.
    • The study demonstrated that dermatologists, who incorporated MelaFind into their biopsy decision-making process for the detection of melanoma at its earliest, most curable stages, outperformed those who did not have the MelaFind information.
    • The study was conducted in collaboration with the German Cooperative Oncology Group (DeCOG) and German Skin Cancer Society. It included over two hundred dermatologists.

  • Added resources to support the expanding and accelerating commercial launch and demand for the MelaFind system.
    • Continued to build sales, field service, and medical affairs capabilities, including the addition of four sales people, a technical support engineer and an Assistant Medical Affairs Director in the quarter.
    • Ramped up contract manufacturing by expanding the utilization of existing capabilities and adding a new manufacturing bay to further increase capacity.

"We continued our controlled launch of MelaFind in the US and Germany in the second quarter and are thrilled with the level of demand we are experiencing and broad based clinician acceptance," said Dr. Joseph V. Gulfo, President and CEO of MELA Sciences. "While we are still in the initial phase of our controlled and deliberate launch, MelaFind has been put into the offices of over 25 dermatologists in the US and Germany. We are working alongside our initial dermatologist customers to help them incorporate MelaFind into their practices, which we believe will, in turn, facilitate wider penetration. We are finalizing various programs and tactics designed to encourage increased utilization of installed systems, and we look forward to rolling-out these initiatives in the coming months."

"We were pleased with the results of the German study, the largest study of its kind, which were consistent with studies performed with dermatologists in the US. The clinical data were recently presented by the principal investigator, Dr. Axel Hauschild, Professor of Dermatology from the University Hospital (UKSH) of Kiel, Germany, at the 23rd Practical Dermatology & Venereology Conference (FoBi) in Munich in July," Dr. Gulfo continued.

"Based on the favorable customer experiences and in concert with our plans, we will now accelerate the pace at which we will be placing MelaFind systems in dermatologists' offices. We look forward to the Summer American Academy of Dermatology meeting next week and the American Society of Dermatologic Surgery meeting in October to engage customers and drive sales. We believe we are on track to achieve our stated goal of placing 200 systems in the US and 75 in Germany by the end of 1Q 2013," Dr. Gulfo concluded.

MelaFind is the Company's breakthrough non-invasive and objective automated point of care system for use when a dermatologist chooses to obtain additional information for a decision to biopsy clinically atypical pigmented skin lesions with one or more clinical or historical characteristics of melanoma.

Second Quarter 2012 Financial Results
Revenues for the three months ended June 30, 2012 were $75,757 compared to no revenues reported for the same period in 2011 and up from revenues of $11,250 reported in 1Q 2012. Deferred revenues for the second quarter were $70,724 versus no deferred revenue for 2Q 2011 and up from $17,250 of deferred revenue in 1Q 2012. Deferred revenues reflect the timed recognition of the installation fee revenue over the term of the user agreement, or two years.

The Company's net loss for the three months ended June 30, 2012 was $5.5 million, or $0.18 per diluted share, compared to a net loss of $4.8 million, or $0.19 per diluted share, for the same period in 2011. The increase in the net loss was primarily attributable to an increase in General and Administrative expenses related to the expansion of the Company's salesforce and the Company's incremental marketing costs as well as the increase in direct costs associated with the placement of MelaFind systems in dermatologists' offices.

As of June 30, 2012, the Company's cash and cash equivalents were $17.2 million.

Conference Call
MELA Sciences will host a conference call today at 4:30 PM EST to discuss second quarter 2012 quarterly results. To participate in the call, dial 1-888-240-9345 approximately 10 minutes before the conference call is scheduled to begin. To listen via live webcast, please go to the investor relations section of the MELA Sciences website at http://www.melasciences.com approximately 10 minutes prior to the teleconference start time. If you are unable to participate during the live conference call and webcast, the conference call audio cast will be archived and available for replay for approximately 90 days.

About MELA Sciences, Inc.
MELA Sciences is a medical device company focused on the commercialization of its flagship product, MelaFind®, and its further design and development. MelaFind is a non-invasive tool to provide additional information to dermatologists during melanoma skin examinations. The device uses light from visible to near-infrared wavelengths to evaluate skin lesions up to 2.5 mm beneath the skin. The device provides information on a lesion's level of morphologic disorganization to provide additional objective information that may be used by dermatologists in the biopsy decision-making process. MelaFind has been approved by the US Food and Drug Administration for use in the US. In addition, MelaFind has received CE Mark approval and is approved for use in the European Union.

For more information on MELA Sciences, visit www.melasciences.com.

Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to our plans, objectives, expectations and intentions and other statements that contain words such as "expects," "contemplates," "anticipates," "plans," "intends," "believes," "assumes," "predicts" and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters. These statements are based on our current beliefs or expectations and are inherently subject to significant known and unknown uncertainties and changes in circumstances, many of which are beyond our control. There can be no assurance that our beliefs or expectations will be achieved. Actual results may differ materially from our beliefs or expectations due to financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the company and the medical device industry in general, as well as more specific risks and uncertainties facing the company such as those set forth in its reports on Forms 10-Q and 10-K filed with the US Securities and Exchange Commission (the "SEC"). Factors that might cause such a difference include whether MelaFind® achieves market acceptance. Given the uncertainties affecting companies in the medical device industry such as the Company, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. The Company urges you to carefully review and consider the disclosures found in its filings with the SEC which are available at www.sec.gov and www.melasciences.com.

MELA SCIENCES, INC. CONDENSED BALANCE SHEETS June 30, December 31, 2012 2011 -------------- --------------- (unaudited) * ASSETS Current Assets: Cash and cash equivalents $ 17,211,098 $ 27,996,871 Accounts receivable 68,360 - Inventory 473,454 - Prepaid expenses and other current assets 664,463 1,061,550 -------------- --------------- Total Current Assets 18,417,375 29,058,421 Property and equipment, net 3,214,932 1,626,791 Patents and trademarks, net 53,258 59,208 Deferred financing costs - 62,391 Deferred public offering cost 144,199 - Other assets 71,235 586,498 -------------- --------------- Total Assets $ 21,900,999 $ 31,393,309 -------------- --------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable (includes related parties of $50,000 and $36,027- as of June 30, 2012 and December 31, 2011, respectively) $ 1,328,742 $ 670,950 Accrued expenses 976,775 745,754 Deferred revenue (ST) 47,334 - Other current liabilities 43,270 30,993 -------------- --------------- Total Current Liabilities 2,396,121 1,447,697 -------------- --------------- Long Term Liabilities: Deferred rent 140,994 138,216 Deferred revenue (LT) 40,640 - -------------- --------------- Total Long Term Liabilities 181,634 138,216 -------------- --------------- Total Liabilities 2,577,755 1,585,913 -------------- --------------- COMMITMENTS, CONTINGENCIES and LITIGATION (Note 8) Stockholders' Equity Preferred stock - $.10 par value; authorized 10,000,000 shares; issued and outstanding: none Common stock - $.001 par value; authorized 45,000,000 shares; issued and outstanding 30,332,217 shares at June 30, 2012 and 30,307,538 at December 31, 2011 30,332 30,308 Additional paid-in capital 150,057,460 149,304,424 Accumulated deficit (130,764,548) (119,527,336) -------------- --------------- Stockholders' Equity 19,323,244 29,807,396 -------------- --------------- Total Liabilities and Stockholders' Equity $ 21,900,999 $ 31,393,309 -------------- --------------- * Derived from the audited balance sheet as of December 31, 2011 MELA SCIENCES, INC. CONDENSED STATEMENTS OF OPERATIONS (unaudited) Three months ended June 30, Six months ended June 30, ------------------------ -------------------------- 2012 2011 2012 2011 ----------- ----------- ------------ ------------ Revenue $ 75,757 $ - $ 87,007 $ - Cost of revenue 372,048 - 502,458 - ----------- ----------- ------------ ------------ Gross profit (296,291) - (415,451) - Operating expenses: Research and development 1,673,338 2,620,554 4,108,096 5,196,682 General and administrative 3,528,575 2,208,059 6,746,066 4,601,179 Operating loss (5,498,204) (4,828,613) (11,269,613) (9,797,861) Interest income 9,021 13,934 22,405 34,465 Other income 4,996 5,022 9,996 11,670 ----------- ----------- ------------ ------------ Net loss: $(5,484,187) $(4,809,657) $(11,237,212) $ (9,751,726) ----------- ----------- ------------ ------------ Basic and diluted net loss per common share $ (0.18) $ (0.19) $ (0.37) $ (0.39) =========== =========== ============ ============ Basic and diluted weighted average number of common shares outstanding 30,332,217 25,262,538 30,323,061 25,262,538 =========== =========== ============ ============



MELA SCIENCES, INC. CONDENSED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, ----------------------------- 2012 2011 -------------- ------------- Cash flows from operating activities: Net loss $ (11,237,212) $ (9,751,726) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 330,395 283,785 Noncash compensation 774,493 734,222 Write off of unamortized financing costs 62,391 - Changes in operating assets and liabilities: Increase in accounts receivable (68,360) - Increase in inventory (383,181) - Decrease (increase) in prepaid expenses and other current assets 306,814 (410,357) Increase (decrease) in accounts payable and accrued expenses 888,813 (419,525) Increase in deferred rent 2,778 16,956 Increase in other assets (6,751) - Increase in deferred revenue 87,974 - Increase (decrease) in other current liabilities 12,277 (647) -------------- ------------- Net cash used in operating activities (9,229,569) (9,547,292) -------------- ------------- Cash flows from investing activities: Purchases of property and equipment (1,390,572) (30,811) -------------- ------------- Net cash used in investing activities (1,390,572) (30,811) -------------- ------------- Cash flows from financing activities: Proceeds from exercise of stock options 33,310 - Expenses related to Public Offerings (198,942) - -------------- ------------- Net cash used in financing activities (165,632) - -------------- ------------- Net decrease in cash and cash equivalents (10,785,773) (9,578,103) Cash and cash equivalents at beginning of period 27,996,871 30,520,812 -------------- ------------- Cash and cash equivalents at end of period $ 17,211,098 $ 20,942,709 -------------- ------------- Supplemental disclosure of cash flow information: Non-cash investing activity: Re-classification of MelaFind® components from other assets to property and equipment $ 522,014 $ -


For further information contact:

For Investors
Lynn Pieper
Westwicke Partners
415-202-5678

For Media
Melissa Hurley
Post+Beam
646-442-2773


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