ORCHARD PARK, N.Y., March 31 /PRNewswire-FirstCall/ -- MINRAD International, Inc. today announced its financial results for the year and quarter ended December 31, 2007.
Revenue was $12,952 for 2007, a decrease of $3,389 or 21% compared to $16,341 in 2006. This decrease is primarily attributable to a decline in domestic sales due to disruptions in our manufacturing operations which limited production output and sales in 2007 which resulted from the addition and start-up of a new independent sevoflurane manufacturing line in December, 2007. International sales were relatively flat between the two periods.
Our anesthesia and analgesia product line generated 96% and 99% of revenue for 2007 and 2006, respectively. Sevoflurane sales in 2007 were $8,378, a decrease of $2,160 compared to 2006. Isoflurane sales in 2007 were $3,211, a decrease of $1,068 when compared to 2006.
Sales to Original Equipment Manufacturers, or OEMs, which are included in United States sales, increased by $188, or 15%, from $1,257 for 2006 compared to $1,445 for 2007 due to the availability of sevoflurane as a product choice in addition to isoflurane and enflurane. Sales to our primary North American distributor decreased by $3,899 from $5,367 in 2006 to $1,468 for 2007.
Gross profit or loss was $(566), a decrease of $6,153, or 110% compared to $5,587 in 2006. The reduction in gross profit was driven by a decrease in revenue and an increase in cost of goods sold, both of which are attributable to the disruption in operations which limited production output and sales resulting from the addition and start-up of a new independent sevoflurane manufacturing line in 2007. A reduction in gross profit also resulted from a charge to cost of goods sold of $2,510 to establish a reserve for work-in-process inventory to cover supplier related issues that have unfavorably affected product yield. It is the Company's intent to resolve these issues in an expedited manner and recover some of the costs incurred associated with the yield losses. Gross margin was (4.4)% in 2007 compared to 34.2% in 2006.
Sales and marketing expenses for 2007 were $8,407 or 65% of revenue compared to $5,074, or 31% of revenue in 2006. The $3,333 increase was primarily driven by the expansion of our sales organization both domestically and internationally to accommodate anticipated expanded sales growth.
Research and development expenses for 2007 were $5,404, or 42% of revenue compared to $2,916 or 18% of revenue in 2006. The increase was primarily due to an expansion of our research and development efforts related to our anesthesia & analgesia, real-time image guidance, and conscious sedation product lines.
Finance and administration expenses for 2007 were $4,375 or 34% of revenue compared to $4,636 or 28% of revenue in 2006. Increases in deprecation and office rental expenses in 2007 were offset by decreases in employment expenses in 2007.
For 2007, the Company experienced a loss of $(18,798), or $(0.39) per common share. This compares with a loss of $(7,272), or $(0.20) per common share the Company experienced in 2006. The increased operating loss for the year is primarily due to decreases in gross margin and revenue combined with increases in our overall operating expenses between the two periods.
We estimate revenue for the first quarter of 2008, ending on March 31st, 2008, will be in the range of $11.5 to $12.0 million.
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.
CONTACT: Charles R. Trego, Jr., Chief Financial Officer of MINRAD
International, Inc., +1-716-855-1068, firstname.lastname@example.org
Web site: http://www.minrad.com/