Sales Force More Than Doubled During Q2; Implant Data Suggest Broad Applicability
Irvine, CA and London, UK – August 11, 2014 – Lombard Medical, Inc (NASDAQ: EVAR), a medical device company focused on endovascular aneurysm repair (EVAR) of abdominal aortic aneurysms (AAA), today reported operational progress and financial results for the second quarter and six months ended June 30, 2014.
The Company’s lead product, Aorfix™, is the only endovascular stent graft cleared by the FDA for the treatment of AAAs with angulation at the neck of the aneurysm of up to 90 degrees. All other approved grafts are only cleared for the treatment of anatomies that are less complex (neck angulations of up to 60 degrees).
Q2 and Recent Operational Highlights
Operational and Financial Results
Global Aorfix commercial revenue increased 38 percent to $2.2 million in the second quarter of 2014 compared with $1.6 million in the second quarter of 2013. For the first six months of 2014, global Aorfix commercial revenue grew 64 percent to $4.2 million compared with $2.6 million in the first six months of 2013.
In the US, where Aorfix is sold direct through the Company’s own sales force and where it was formally launched in November 2013, revenue in the second quarter and first six months of 2014 were $0.6 million and $1.1 million, respectively. Comparative revenue in both the second quarter and first six months of 2013 was minimal.
“The early stage adoption of Aorfix in the US across a broad range of anatomies is a strong indicator of our future success,” said CEO Simon Hubbert. “More than 60 percent of the first 108 cases were performed percutaneously with the remainder performed by traditional surgical cut-down method. We believe this rate is comparable with percutaneous rates across competitive devices and the range of device profiles. In addition, more than a third of the cases involved patients with aortic neck angles below 60 degrees, indicating that physicians are understanding the clinical benefits of using Aorfix in both high and low angle anatomy.”
In the Western Europe markets (UK and Germany) where Lombard Medical also sells direct, second quarter 2014 revenue grew 19 percent to $0.9 million compared with $0.7 million in the second quarter of 2013. For the first six months of 2014, revenue in these direct European markets increased 38 percent to $1.8 million compared with $1.3 million in the prior year period.
Revenue in the International distributor markets for the second quarter and first six months of 2014 were $0.8 million and $1.3 million, respectively, compared with $0.9 million and $1.2 million, respectively, in the prior year periods.
“The significant increase in Aorfix commercial revenue follows the formal US commercial launch of the device in November 2013 and an increase in Aorfix procedures in Germany, where we also sell direct,” said Hubbert. “During the second quarter, we completed the IPO of our shares on the NASDAQ Global Market, allowing us to further build out our commercial infrastructure in the US, including an expansion of our US sales team from 13 to 34 sales professionals. Approval of Aorfix in Japan, the world’s second largest standalone AAA device market opens up another significant opportunity for the Company through our distribution partner Medico’s Hirata. As we progress through the second half of the year, we expect to accelerate growth and remain confident in our ability to build a meaningful share of this $1.4 billion global market.”
Total revenue for the second quarter of 2014 increased 19 percent to $2.2 million compared with $1.8 million in the second quarter of 2013. For the first six months of 2014, total revenue increased 37 percent to $4.3 million compared with $3.1 million in the first six months of 2013. 2013 revenue included contributions of $0.2 million in the second quarter and $0.5 million in the first six months from the Company’s OEM business, which was subsequently divested in December 2013.
Gross margins for the second quarter and first six months of 2014 were 46 percent and 40 percent, respectively, compared to 33 percent and 32 percent for the comparative 2013 periods. The improvement was due to the effect of higher average selling prices experienced in the US and the spreading of fixed manufacturing costs over increased production volumes.
Total operating expenses for the second quarter and first six months of 2014 were $12.4 million and $20.2 million, respectively, compared to $5.2 million and $8.5 million for the comparative 2013 periods. The net loss for this year’s second quarter was $11.1 million, or $0.86 loss per share, compared to a net loss of $4.7 million, or $0.58 loss per share for last year’s second quarter. The net loss for the first six months of 2014 was $18.0 million, or $1.49 loss per share, compared to a net loss of $7.6 million, or $1.14 loss per share for the first six months of 2013. The increased operating expense and net loss were principally due to on-going investments in the US-based operation, commercial infrastructure, direct sales force and training activities, expenses of the IPO and the share-based compensation charge.
The Company’s balance sheet as of June 30, 2014, showed total cash and cash equivalents of $72.6 million, including proceeds from the US IPO.
Company Outlook
The Company expects to achieve revenue for 2014 of between $12 million and $14 million, representing growth of between 72 percent to 101 percent, over the prior year.
Conference Call
Lombard Medical’s management will discuss the Company’s financial results for the second quarter ended June 30, 2014 and provide a general business update during a conference call beginning at 4:30 p.m. Eastern Time today, Monday, August 11, 2014. To join the call, participants may dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). To listen to a live webcast of the conference call, visit the Events and Presentations page under the Investors tab at www.lombardmedical.com. An archived replay of webcast will be available on the Events and Presentations page under the Investors tab at www.lombardmedical.com will be available shortly following the completion of the call.
About Lombard Medical, Inc.
Lombard Medical, Inc. is a medical device company focused on device solutions for the $1.4 billion per annum abdominal aortic aneurysm repair market. The Company’s lead product, Aorfix™, is an endovascular stent graft which has been specifically designed to solve the problems that exist in treating complex tortuous anatomy, which is often present in advanced AAA disease. Lombard Medical, Inc. is based in Oxfordshire, England with US commercial headquarters in Irvine, CA and is registered in the Cayman Islands.
FORWARD-LOOKING STATEMENTS:
This announcement may contain forward-looking statements that reflect the Company’s current expectations regarding future events, including the commercialization and additional regulatory clearances of the Company’s products, the Company’s liquidity and results of operations, as well as future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the success of the Company’s research and development and commercialization strategies, the uncertainties related to the regulatory process and the acceptance of the Company’s products by hospitals and other medical professionals and the risks, uncertainties and other factors described under the heading “Risk Factors” in the Company’s prospectus filed with the Securities and Exchange Commission dated April 25, 2014. The Company undertakes no obligation to update these statements in the future.
For further information:
Lombard Medical, Inc.
Simon Hubbert, Chief Executive Officer
Ian Ardill, Chief Financial Officer
Tel: +1 949 379 3750
Tel: +44 (0)1235 750 800
Pure Communications
Matt Clawson
Tel: +1 949 370 8500
matt@purecommunicationsinc.com
FTI Consulting (UK)
Simon Conway, Victoria Foster Mitchell
Tel: +44 (0)20 3727 1000
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