BUFFALO, N.Y., Nov. 11 /PRNewswire-FirstCall/ -- MINRAD International, Inc. today announced its financial results for the quarter ended September 30, 2005. The Company generated revenue of $1,423,000 compared to revenue of $1,240,000 in the same period in 2004, a 15% increase reflecting continued international and OEM Sales growth (combined $1,336,000 compared with $702,000 in the quarter ended September 30, 2004, a 90% increase). However, North American sales were down sharply from $539,000 to $87,000. This reflects the shipment of RxElite’s, MINRAD’s US pharmaceutical partners, initial stocking order in September, 2004. Year-to-date revenues of $5,879,000 are up 92% from the $3,067,000 during the first nine months of 2004.
For the quarter, the company experienced a loss available for common stockholders of $(1,731,000), $(0.06) per common share. This compares with a loss of $(988,000), $(0.04) per share in the third quarter of 2004. Included in the 2005 third quarter loss are $171,000 in cash dividends from the company’s preferred share offering in the second quarter and $398,000 in non- cash imputed interest related to warrant value with bridge loans made to the company by shareholders. All bridge loans were paid off by their October 7, 2005 due date. Partially offsetting these amounts was a net gain of $282,000 from the final settlement of an insurance loss in 2003.
Manufacturing performance variances in the third quarter of $(358,000) in the quarter depressed gross margins from 62.1% at standard to 36.9%, despite the impact of the insurance settlement. This compares with 30.1% in the same period a year ago. The variances reflect start-up of Buffalo image-guided manufacturing, $(103,000) and $(255,000) from volume and efficiency variances in the Bethlehem inhalation anesthetic facility. MINRAD EVP & COO, Bill Bednarski, commented on the manufacturing variances, “The unfavorable performance in our Buffalo facility is a period cost and relates to the start- up of image-guided manufacturing. It will be eliminated in November of this quarter as we begin to ship our first SabreSource devices. The nagging problems in Bethlehem have taken longer to resolve than we originally anticipated. Over the last six months, we have reviewed process steps, preventative maintenance and our production planning processes and believe that October will be the last month where our efficiency is a drag on earnings.”
The company’s third quarter operating expenses were up $447,000 to $1,644,000, a 37% increase when comparing the same period in 2004. Research and Development expense represented approximately half of the increase, $227,000, reflecting increased costs related to our international drug registration program, intellectual property expense, and the conscious sedation development program. For the third calendar quarter total R&D costs were $536,000, a 73% increase compared to the third quarter of 2004. The balance of the increase in operating expenses reflects sales and marketing costs associated with the growth in our international sales organization and launch of the image-guidance line. Total sales and marketing costs in the quarter were $425,000 compared to $183,000, in the third quarter a year ago.
Fourth Quarter Outlook
The company anticipates revenue over $3 million in the fourth quarter with a loss of $(0.02 per share).
Balance Sheet
At September 30, 2005 the company had total current assets of $8.3 million with $1.5 million cash on hand. At the same time, MINRAD had current liabilities of approximately $3.9 million including $2.5 million in demand notes from shareholders which were repaid in October 2005.
About the Company
MINRAD International, Inc. is an acute care company with real-time image guidance and anesthesia and analgesia product lines. The real-time image guidance products have broad applications in orthopedics, neurosurgery, interventional radiology and pain management. 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.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “project,” “potential,” or the negative of these terms, and similar expressions intended to identify forward-looking statement. Investors should not place undue reliance on the forward-looking statements contained in this news release. Each forward-looking statement speaks only as of the date on which it is made, and except as required by law, MINRAD International undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. Forward-looking statements are based on assumptions and estimates and are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those identified in the forward-looking statements in this news release include changes in general economic and political conditions and currency exchange rates; market factors, including competitive pressures and changes in pricing policies; changes in interpretations of existing legislation or the adoption of new legislation; loss of major customers; the occurrence of litigation or claims; natural and manmade disasters, including acts of terrorism or war; and other factors described in the “Risk Factors” and “Cautionary Factors That May Affect Future Results” sections of MINRAD International’s Form 10-KSB, filed with the Securities and Exchange Commission on March 31, 2005, which are incorporated herein by reference.
Contact: William Burns President & CEO 716-855-1068 MINRAD INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 3RD QUARTER ENDED SEPTEMBER 30,2005 COMPARED TO 3RD QUARTER ENDED SEPTEMBER 30, 2004 IN THOUSANDS UNAUDITED UNAUDITED FAVORABLE FAVORABLE 2005 2004 (UNFAVORABLE) (UNFAVORABLE) Revenue $1,423 $1,240 $183 15% Cost of goods sold Standard Cost of Sales 540 596 56 9% Manufacturing Variances 358 271 (87) (32%) 898 867 (31) (4%) Gross profit 525 373 152 41% GP % 36.9% 30.1% 6.8 pts Operating expenses: Sales and marketing 425 183 (242) (132%) Research and development 536 309 (227) (73%) Finance and administrative 683 705 22 3% Total operating expenses 1,644 1,197 (447) (37%) Operating loss (1,119) (824) (295) (36%) Interest expense: cash (43) (164) 121 74% Interest expense: imputed (398) -- (398) -- Net Loss $(1,560) $(988) $(572) (58%) Less Preferred Stock Dividends Cash dividends (171) -- (171) -- Non cash dividends -- -- -- -- Net loss available for common stockholders $(1731) $(988) $(743) (75%) Net Loss per share $(0.06) (0.04) (.02) (50%) Weighted average common shares outstanding 28,358 22,275 6,083 27% MINRAD INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) IN THOUSANDS ASSETS September 30, December 31, 2005 2004 Current Assets: Cash, and cash equivalents $1,461 $3 Accounts receivable, net 2,783 606 Inventories, net 3,373 1,070 Prepaid expenses 682 472 Total current assets 8,299 2,151 Net property and equipment 605 499 Other Assets 144 113 Total Assets $9,048 $2,763 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities: Demand notes payable $2,472 $1,471 Accounts payable 493 2,434 Accrued expenses 878 825 Due to affiliates -- 375 Current portion of long-term 33 1,022 Total current liabilities 3,876 6,127 Long -Term Debt 749 -- Stockholders’ Equity (Deficit) 4,423 (3,364) Total Liabilities & Equity $9,048 $2,763 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) IN THOUSANDS Nine Months Nine Months Ended Ended September 30, September 30, 2005 2004 Cash flows from operating activities: Net loss $(4,140) $(3,396) Adjustments to reconcile net loss to net Cash used by operating activities: (4,612) 673 Net cash used by operating activities (8,752) (2,723) Net cash used by investing activities (272) (214) Net cash provided by financing activities 10,482 2,512 Net increase (decrease) in cash and cash equivalents 1,458 (425) Cash and cash equivalents - beginning of period 3 426 Cash and cash equivalents - end of period $1,461 $1
MINRAD International, Inc.
CONTACT: William Burns, President & CEO of MINRAD International, Inc.,+1-716-855-1068
Web site: http://www.minrad.com/
