Under the revised strategic plan, the Company is reducing costs to align its operations with clinical development priorities. Actions taken include a curtailment of the Company’s clinical and development activities not directly related to depression, an additional workforce reduction, and sublease of a portion of its headquarters facility. In connection with these efforts, the Company expects to incur costs totaling approximately $1.1 million, including non-cash share-based compensation of $190,000, associated with employee termination benefits and sublease losses. The majority of these costs will be incurred in the third quarter.
Mr. Bowers continued, “During the quarter, we announced long-term data from our PROSPECT study showing that patient depression symptoms continue to improve over time. Additionally, we recently submitted an IDE supplement to the FDA for our PROSPECT II study to further evaluate cortical stimulation for depression in a larger number of subjects. Under our revised strategic plan, we are focused on moving this program forward in a way that preserves cash resources and financial flexibility.” Mr. Bowers added, "In addition to these steps, management and the Board of Directors continue to evaluate other strategic alternatives to enhance shareholder value."
The Company also announced financial results for its second quarter ended June 30, 2008. Investments in the Company’s existing clinical programs resulted in a net loss of $4.1 million, or $0.16 per share, for the second quarter of 2008, compared to a net loss for the second quarter of the prior year of $7.0 million, or $0.27 per share. Northstar also reported cash and investments of $74.0 million at June 30, 2008.
Research and development expenses totaled $2.8 million for the quarter ended June 30, 2008, compared to $5.9 million for the same quarter of the prior year. The lower current quarter expenses reflect a reduction in clinical trial and related costs due to the completion of EVEREST trial enrollment in 2007.
General and administrative expenses totaled $2.0 million for the quarter ended June 30, 2008, compared to $2.4 million for the same quarter of the prior year. The decrease is primarily due to lower overall intellectual property investments for the current period and decreases in compensation related to the workforce reduction implemented during the first quarter of 2008.
“Our balance sheet remains strong and debt free,” commented Ray Calvert, Northstar’s Chief Financial Officer. “The cost reductions implemented in February 2008 along with the current actions will significantly reduce cash use during 2009 as we advance our cortical stimulation program for depression. We expect to end 2009 with approximately $53.0 million in cash and investments.”
Conference Call
Northstar Neuroscience will hold a conference call today to discuss the Company’s revised strategic plan and cost reductions, second quarter operating results and to provide an update on its review of strategic alternatives starting at 4:30 p.m. EDT (1:30 p.m. PDT). To listen to the conference call on your telephone, please dial 1-800-638-4817 (US/Canada) or 1-617-614-3943 (International) and use the participant code "34124827" approximately ten minutes prior to the start time. The conference call will be concurrently webcast. The link to the webcast will be available on the Northstar Neuroscience web site at www.northstarneuro.com under the investor relations section and will be archived for 30 days after the call.
About Northstar Neuroscience
Northstar Neuroscience is a medical device company focused on developing neuromodulation therapies to treat neurological injury, disorder, and disease. Northstar's proprietary Renova™ Cortical Stimulation System is an investigational device that delivers targeted electrical stimulation to the outer surface of the brain - the cerebral cortex. The Renova system is currently under investigation for several indications. For more information, visit www.northstarneuro.com.
Investors:
Northstar Neuroscience, Inc. Ray Calvert, 206-902-1930 Vice President, Finance/CFO ir@northstarneuro.com or
Westwicke Partners Mark Klausner, 410-321-9651 mark.klausner@westwickepartners.com or
Media:
Schwartz Communications Helen Shik, 781-684-0770 northstar@schwartz-pr.com
