Bay Area's Dextera Surgical Places Temporary Shipping Hold on Microcutter 5/80

-- Reports Preliminary Financial Results for Fourth Quarter and Fiscal Year 2017 –

-- Company to Host Conference Call Today, July 6, 2017 at 4:30 p.m. EDT --

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Dextera Surgical Inc. (Nasdaq: DXTR), a company developing and commercializing the Dextera MicroCutter 5/80™ Stapler, today announced that it placed a temporary shipping hold on the MicroCutter 5/80 Stapler and reload cartridges in response to six reports that surgeons were unable to clamp the MicroCutter 5/80 Stapler after inserting a MicroCutter 30 Reload into the stapler prior or during a surgical procedure. No adverse events or complications have been associated with these reports.

Dextera Surgical has conducted an engineering analysis of the affected lots of staplers and reloads. The company has identified two root causes – one in the stapler and one in the reload cartridge - which prematurely engage the lock-out safety feature within the stapler. The lock-out feature, which results in an inability to clamp the stapler and prevents firing, is a built-in safety feature in the MicroCutter 5/80 Stapler. One root cause is related to a ratchet mechanism in the handle. Dextera Surgical has already implemented changes to the MicroCutter 5/80 Stapler design and new lots of the stapler have been manufactured. Analysis of the blue and white reload cartridges revealed that, intermittently, the reload is not sitting flush within the stapler jaws which then engages the lock-out safety feature prematurely. Dextera Surgical is implementing a solution for the reload cartridges.

To assess the risk to patients, Dextera Surgical conducted extensive in vitro testing of the MicroCutter stapler and reload cartridges. The company also reviewed all prior reported complaints and associated adverse events for the last 12 months for the MicroCutter stapler and blue and white reload cartridges, related to the current configuration of the MicroCutter. A majority of the reports indicate the inability to clamp was identified prior to use in the surgical procedure and Dextera Surgical’s internal testing indicates no increased risk of tissue damage even if the problem is not identified before use in a surgical procedure. Prior to using the MicroCutter 5/80 Stapler, as provided in Dextera Surgical’s instructions for use, users are instructed to clamp and unclamp the stapler to confirm proper loading and to inspect the reload.

After evaluation and analysis of the events and testing of the noted manufacturing lots, Dextera Surgical estimates that approximately 60% of staplers have been used successfully with no incident. Since the remaining staplers do not pose a safety concern, they will remain in circulation.

“We are first and foremost committed to patient safety, and quickly implemented a voluntary temporary shipping hold to fully investigate the issue,” said Julian Nikolchev, president and CEO of Dextera Surgical. “While we are disappointed to encounter this issue, we remain steadfast in pursuing our mission to develop this innovative technology to bring smaller and more flexible surgical staplers to the marketplace. Importantly, because the MicroCutter 5/80 Stapler is the only surgical stapler with a five-millimeter diameter and 80 degrees of articulation, we believe that close monitoring of the performance and rapid incremental improvements to both the stapler and reloads is necessary so that we are able to provide this pivotal tool for surgeons who are trying to meet the increasing need for less invasive surgical procedures.”

Preliminary Results of Operations for Fourth Quarter and Full Year Fiscal 2017

Dextera Surgical expects to report total product sales including both the cardiac products and the MicroCutter of $940,000 to $960,000 for the fourth quarter of fiscal 2017. Dextera Surgical expects to report approximately $350,000 as well as a $75,000 back order for the MicroCutter 5/80 compared to prior guidance of $600,000 to $700,000 for the fourth quarter of fiscal 2017. For fiscal 2017, Dextera expects to report total product sales of $2.9 million to $3.0 million, including MicroCutter product sales of $1.1 million to $1.2 million. Previously, Dextera expected MicroCutter sales for fiscal 2017 to be $1.4 million to $1.5 million. The expected decrease in product sales of the MicroCutter 5/80 for the fourth quarter of fiscal 2017 is due in part to a backorder for blue reload cartridges in the first part of the quarter (as announced on the May 4, 2017 quarterly call) as well as the current temporary shipping hold on staplers and reloads. Dextera will record an expense of approximately $150,000 related to the finished goods in stock but not shipped in the fourth quarter of fiscal 2017.

Conference Call Details

To access the live conference call today at 4:30 p.m. Eastern Time via phone, please dial 844-419-1785 from the United States and Canada or 216-562-0472. The conference ID is 51626212. Please dial in approximately 10 minutes prior to the start of the call. A telephone replay will be available beginning approximately four hours after the call through July 13, 2017, and may be accessed by dialing 855-859-2056 from the United States and Canada or 404-537-3406 internationally. The replay passcode is 51626212.

To access the live and subsequently archived webcast of the conference call, please visit the Investor Relations section of the company’s website at ir.dexterasurgical.com. Please connect to the website at least 15 minutes prior to the presentation to allow for any necessary software downloads.

The webcast is also being distributed through the Thomson StreetEvents Network. Institutional investors can access the call via Thomson StreetEvents at www.streetevents.com, a password-protected event management site.

MicroCutter Indication Information

The MicroCutter 5/80 Stapler and MicroCutter 30 Reloads are manufactured and cleared for use in the United States for transection and resection in multiple open or minimally invasive urologic, thoracic and pediatric surgical procedures, as well as application for transection, resection and/or creation of anastomoses in the small and large intestine, and the transection of the appendix. The MicroCutter 5/80 Stapler may be used with both MicroCutter 30 White Reloads in vascular/thin tissue and MicroCutter 30 Blue Reloads for standard tissue.

About Dextera Surgical

Dextera Surgical designs and manufactures proprietary stapling devices for minimally invasive surgical procedures. In the U.S., surgical staplers are routinely used in more than one million minimally invasive laparoscopic, video-assisted or robotic-assisted surgical procedures annually.

Dextera Surgical also markets the only automated anastomosis devices for coronary artery bypass graft (CABG) surgery on the market today: the C-Port® Distal Anastomosis Systems and PAS-Port® Proximal Anastomosis System. These products, sold by Dextera Surgical under the Cardica brand name, have demonstrated long-term reliable clinical performance for more than a decade.

Forward-Looking Statements

The statements in this press release regarding the extent of the root causes of the clamping issue of MicroCutter 5/80 and the reload cartridges, and the preliminary results of operations are “forward-looking statements." There are a number of important factors that could cause results to differ materially from those indicated by these forward-looking statements, including the risks detailed from time to time in Dextera Surgical’s reports filed with the U.S. Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, under the caption “Risk Factors.” Dextera Surgical expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein. You are encouraged to read Dextera Surgical’s reports filed with the U.S. Securities and Exchange Commission, available at www.sec.gov.