ORCHARD PARK, N.Y., May 13 /PRNewswire-FirstCall/ -- MINRAD International, Inc. , an interventional pain management company, today reported revenue of $11.8 million for the first quarter of 2008, an increase of 307% compared to $2.9 million of revenue in the first quarter of 2007. The Company had a net loss of $3.2 million, or a $0.06 loss per basic and diluted share for the quarter of 2008 compared to a net loss of $3.4 million, or $0.07 loss per basic and diluted share in the first quarter of 2007.
"First Quarter 2008 performance demonstrated solid improvement in revenue and gross margin over the same period a year ago. While we continue to experience start-up issues with our new sevoflurane line, the plant expansion clearly puts us at a new operating plateau. Gross margins should also improve in future quarters. During the first quarter we incurred $1.4 million in expenses in conjunction with the World Congress of Anesthesia ("WCA") and our international distributor meeting. The WCA is held once every four years. As a result, these one-time expenses will not recur during the balance of 2008," said Bill Burns, Chairman and Chief Executive Officer.
Dave DiGiacinto, President and Chief Operating Officer said "Our first quarter performance provides a solid indication of what the company is capable of achieving as we grow our presence in all markets and continue to increase our production output of anesthesia products. Additionally our recently completed $40 million financing that was supported by both existing and new investors provides the Company the needed funding as we enter the execution phase of our 2008 business plan."
Revenue for the three months ended March 31, 2008 was $11.8 million, an increase of $8.9 million or 307% compared to the three months ended March 31, 2007. The primary driver of the change in revenue was an increase in sevoflurane revenue in the United States.
The following table summarizes the Company's revenues by geographical region for the first quarter of 2008 compared to the first quarter of 2007:
Revenue increases were achieved in all regions except the Western Hemisphere. The increase in the United States accounted for 72% of the $8.9 million revenue increase for the first quarter of 2008 compared to the same period in 2007. Revenue from our primary distributor in the United States was $6.6 million in the first quarter of 2008 compared to $0.1 million in the first quarter of 2007 primarily because sevoflurane was not approved for sale in the United States by the company until May, 2007.
The following table summarizes the Company's revenue by product line for the first quarter of 2008 compared to the first quarter of 2007:
The increase in sevoflurane revenue accounted for 82% of the $8.9 million increase in revenue for the first quarter of 2008 compared to the same period in 2007.
Gross profit for the three months ended March 31, 2008 was $4.0 million, an increase of $3.3 million or 471% compared to the three months ended March 31, 2007. The increase in gross profit resulted from increased revenue and lower costs of production achieved at the Company's Bethlehem, Pennsylvania manufacturing facility, driven primarily by the start-up of the new independent sevoflurane production line in December, 2007. Gross margin for the first quarter was 33.5% of revenue, an increase of 1000 basis points compared to 23.5% for the first quarter of 2007.
Sales and Marketing Expenses (S&M):
S&M expenses were $3.7 million or 31% of revenue for the first three months of 2008 compared to $1.9 million or 65% revenue for the three months ended March 31, 2007. The $1.8 million increase in S&M for the first quarter of 2008 was primarily related to $1.4 million related to the World Congress of Anesthesia, an event held once every four years. These expenses will not reoccur in future quarters of 2008. Excluding the latter, S&M increased $0.4 million to support the $8.9 million revenue increase.
Research and Development Expenses (R&D):
R&D expenses were $1.1 million in the first quarter ending March 31 in both 2008 and 2007. As a percentage of revenue, R&D was 9% for the first quarter of 2008 compared to 36% for the first quarter of 2007.
Finance and Administrative Expenses (F&A):
F&A expenses were $1.7 million or 15% of revenue for the three months ended March 31, 2008 compared to $1.2 million or 41% of revenue for the three months ended March 31, 2007. The $0.5 million increase in 2008 related primarily to increases in incentive compensation and stock option expenses.
Loss from operations was $2.6 million or 22% of revenue for the first quarter of 2008 compared to $3.5 million or 119% of revenue for the same period in 2007.
Interest expense was $0.6 million for the first quarter of 2008 and resulted from interest expense on the increase in long-term debt.
Chief Financial Officer Appointed
As previously announced in a Form 8-K flied with the Securities and Exchange Commission on January 24, 2008 the Board of Directors appointed Charles R. Trego, Jr. to the position of Executive Vice President and Chief Financial Officer effective March 3, 2008.
President and Chief Operating Officer Appointed
As previously announced in a Form 8-K filed with the Securities and Exchange Commission on March 24, 2008 the Board of Directors appointed David T. DiGiacinto to the position of President and Chief Operating Officer. Effective April 1, 2008, Mr. DiGiacinto assumed responsibility for day-to day operations of MINRAD International, Inc. Mr. DiGiacinto's appointment is the first step in a transition in which he will become Chief Executive Officer of the Company beginning on January 1, 2009.
$40 million in New Long-term Financing Completed
As previously announced in a Form 8 -K filed with the Securities and Exchange Commission on May 6, 2008, the Company completed a $40 million private placement of senior secured convertible notes with a group of institutional investors.
First Quarter Conference Call
The Company will host a conference call at 4:30 PM Eastern Time today to provide additional detail related to first quarter performance. The call can be accessed by dialing toll free in the United States (866) 866-1333. The International access is (404) 260-1421.
About the Company
The Company is an interventional pain management company with three focus areas: (1) anesthesia and analgesia, (2) real-time image guidance, and (3) conscious sedation. The Company's products are sold throughout the world. The anesthesia and analgesia business currently manufactures and sells generic inhalation anesthetics that are used for human and veterinary surgical procedures. The Company manufactures patented real-time image guidance technologies that facilitate minimally invasive surgery. The SabreSource(TM) system and the accompanying Light Sabre(TM) disposable products have broad applications in orthopedics, neurosurgery, interventional radiology and anesthesia. They enable improved accuracy and reduced radiation in interventional procedures and support the transfer of these procedures to the outpatient setting. The Company is in the process of developing a drug/drug delivery system for the use of halogenated ethers as inhalation analgesics for conscious sedation.
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/A, filed with the Securities and Exchange Commission on April 21, 2008. 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., Executive Vice President and CFO,
Web site: http://www.minrad.com/