ORCHARD PARK, N.Y., Aug. 14 /PRNewswire-FirstCall/ -- MINRAD International, Inc. today announced its financial results for the quarter ended June 30, 2007.
(in thousands, except per share data) Quarter Ended Variance June 30, 2007 June 30, 2006 $ % Revenue $4,304 $2,047 $2,257 110% Cost of goods sold 3,287 1,343 1,944 145% Gross profit 1,017 704 313 44% Gross margin 24% 34% Operating Expenses Sales & marketing 1,962 809 1,153 143% Research & development 1,386 593 793 134% Finance & administrative 1,097 1,003 94 9% Total Operating Expenses 4,445 2,405 2,040 85% Interest income (expense) 40 36 4 11% Preferred dividends - (162) (162) N/A Net loss available to common $(3,388) $(1,827) $(1,561) 85% Earnings per share $(0.07) $(0.05) $(0.02) Revenue: (in thousands) Quarter Ended Variance June 30, 2007 June 30, 2006 $ % Revenue Sevoflurane $3,160 $1,203 $1,957 163% Other inhalants 1,050 808 242 30% Total Anesthesia & Analgesia 4,210 2,011 2,199 109% Image Guidance 94 36 58 161% Total Revenue $4,304 $2,047 $2,257 110%
Revenue increased by $2.257 million or 110%, to $4.304 million for the second quarter of 2007 as compared to $2.047 million for the second quarter of 2006. This increase is primarily attributed to the ability to sell sevoflurane in certain markets in 2007 which were not yet approved in 2006. The potential revenue from additional sevoflurane sales was reduced by the production of both isoflurane and sevoflurane on our isoflurane active pharmaceutical production line to meet customer demands while we are in the process of completing our additional sevoflurane active pharmaceutical production line. In the second quarter of 2007, the Company shipped to several new markets, including sevoflurane to Venezuela and isoflurane to Canada. Volume in the United States was up, but should increase in future periods as a result of the Company’s May 2, 2007 approval of Sojourn(TM) (sevoflurane) by the United States Food & Drug Administration.
(in thousands) Quarter Ended Variance June 30, 2007 June 30, 2006 $ % Revenue United States $1,033 $850 $183 22% Europe 313 414 (101) (24)% Western Hemisphere (excluding U.S.) 2,622 657 1,965 299% Pacific Rim 336 126 210 167% Total Revenue $4,304 $2,047 $2,257 110% Cost of Goods Sold:
Margins in the second quarter remained at levels seen in the first quarter as the company continued to campaign product lines (isoflurane vs. sevoflurane) and incurred under-absorbed overhead variances as a result of clean-out during change over and the operation of a single production system. The company also completed the manufacturing validation of desflurane during the quarter. Until proven commercially viable, desflurane is treated as a research product. As such, no overhead was allocated to the three production lots and residual work-in-process was assigned a zero value.
Margins are anticipated to remain below historical levels until the new sevoflurane line is validated. This is presently projected to occur in the fourth quarter. At that time, we will be producing sevoflurane in production equipment designed for those reactions and distillations.
Operating Expenses:
Sales and marketing expense increased by $1.153 million, or 143%, to $1.962 million for the second quarter of 2007 from $809 thousand in the second quarter of 2006. The primary cause of this growth was due to the creation and expansion of our field sales organization in the second-half of 2006 and into 2007, with its corresponding employee and incentive costs. As of June 30, 2007, the Company has completely filled its U.S. sales force and has only four vacancies internationally.
Research and development expenses for the second quarter of 2007 increased by $793 thousand, or 134%, to $1.386 million from $593 thousand in the second quarter of 2006. The increase between the two periods is due to an expansion of our research and development efforts and headcount related to our anesthesia & analgesia, real-time image guidance, and conscious sedation projects. During the quarter the company filed a 510(k) application on a spinal access product, completed its validation batches on desflurane, and developed initial prototypes of the conscious sedation device. Desflurane stability studies for US FDA Abbreviated New Drug Application (“ANDA”) are anticipated to be completed early in the fourth quarter.
Finance and administrative expenses increased by $94 thousand or 9%, to $1.097 million for the second quarter 2007 from $1.003 million for the second quarter of 2006. This correlated with the build out of our finance administrative structure in anticipation of the growth in our business.
Net Loss:
For the second quarter of 2007, the Company experienced a loss of $(3.388) million, $(0.07) per common share. This compares with a loss of $(1.827) million, $(0.05) per common share for the second quarter of 2006. The increased operating loss for the quarter is primarily due to decreases in gross margin combined with increases in overhead and headcount associated with our sales force, research and development efforts and administrative costs as we prepare to grow our business across our three product lines over the upcoming years.
Contact: Timothy Sheehan, VP - Corporate Development tsheehan@minrad.com (716) 855-1068 www.minrad.com
About the Company
MINRAD International, Inc. is an interventional pain management company with real-time image guidance, anesthesia and analgesia, conscious sedation product lines. The real-time image guidance products facilitate minimally invasive surgery especially for pain management and have broad applications in orthopedics, neurosurgery, and interventional radiology. 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. Additional information can be found at the company’s website, http://www.minrad.com.
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, filed with the Securities and Exchange Commission on March 29, 2007. 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
MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands) June 30, December 31, 2007 2006 ASSETS Current assets: Cash and cash equivalents $1,202 $4,664 Investments - 7,249 Interest receivable - 86 Accounts receivable 9,258 10,473 Inventories, net 10,291 4,360 Prepaid expenses and other current assets 2,979 1,477 Total current assets 23,730 28,309 Property and equipment: Machinery and equipment 2,927 2,420 Computers and software 1,414 571 Furniture and fixtures 786 662 Leasehold improvements 385 385 Construction in progress 10,047 4,177 15,559 8,215 Less accumulated depreciation 1,706 1,234 Total property and equipment 13,853 6,981 Other assets 427 439 Total assets $38,010 $35,729 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Bank demand note payable $3,800 $- Accounts payable 3,260 965 Accrued expenses 714 1,262 Current portion of long term debt 203 - Total current liabilities 7,977 2,227 Long term debt 1,826 - Stockholders’ equity Common stock 476 470 Additional paid-in-capital 77,986 76,513 Accumulated deficit (50,255) (43,481) Total stockholders’ equity 28,207 33,502 Total liabilities and stockholders’ equity $38,010 $35,729 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts) Three-Month Three-Month Period Ended Period Ended June 30, 2007 June 30, 2006 Revenue $4,304 $2,047 Cost of goods sold 3,287 1,343 Gross profit 1,017 704 Operating expenses: Sales and marketing 1,962 809 Research and development 1,386 593 Finance and administrative 1,097 1,003 Total operating expenses 4,445 2,405 Operating loss (3,428) (1,701) Interest income (expense): Interest expense (17) (78) Interest income 57 114 Total interest income (expense) 40 36 Net loss (3,388) (1,665) Less preferred stock dividends - cash - (162) Less preferred stock dividends - non cash - - Net loss available for common stockholders $(3,388) $(1,827) Net loss per share, basic and diluted $(0.07) $(0.05) Weighted average common shares outstanding, basic and diluted 47,214 33,605 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts) Six-Month Six-Month Period Ended Period Ended June 30, 2007 June 30, 2006 Revenue $7,230 $5,171 Cost of goods sold 5,523 2,907 Gross profit 1,707 2,264 Operating expenses: Sales and marketing 3,872 1,570 Research and development 2,447 1,020 Finance and administrative 2,293 1,864 Total operating expenses 8,612 4,454 Operating loss (6,905) (2,190) Interest income (expense): Interest expense (20) (153) Interest income 151 114 Total interest income (expense) 131 (39) Net loss (6,774) (2,229) Less preferred stock dividends - cash - (162) Less preferred stock dividends - non cash - (183) Net loss available for common stockholders $(6,774) $(2,574) Net loss per share, basic and diluted $(0.14) $(0.08) Weighted average common shares outstanding, basic and diluted 47,142 31,378 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Six-Month Six-Month Period Ended Period Ended June 30, 2007 June 30, 2006 Cash flows from operating activities: Net loss $(6,774) $(2,229) Adjustments to reconcile net loss to net cash used by operating activities: Decrease in inventory reserve - (10) Depreciation and amortization 478 226 Stock based compensation 397 249 (Increase) decrease in assets: Accounts receivable 1,215 (147) Interest receivable 87 - Inventories (5,932) (2,231) Prepaid expenses (1,502) 199 Increase (decrease) in liabilities: Accounts payable 1,789 (1,734) Accrued expenses (548) (130) Net cash used by operating activities (10,790) (5,807) Cash flows from investing activities: Purchases of property and equipment (6,838) (962) Proceeds from sales of investments 7,249 Acquisition of other assets 7 (85) Net cash used by investing activities 418 (1,047) Cash flows from financing activities: Borrowings under demand notes payable 3,800 400 Repayments under demand note payable - (3,120) Principal payments on long-term debt (33) - Proceeds from long term debt 2,063 - Proceeds from options exercised 525 211 Proceeds from sale of common stock; net of costs - 34,512 Proceeds from warrants exercised 555 475 Preferred cash dividends paid - (170) Net cash provided by financing activities 6,910 32,308 Net increase (decrease) in cash and cash equivalents (3,462) 25,454 Cash and cash equivalents - Beginning of period 4,664 670 Cash and cash equivalents - End of period $1,202 $26,124 MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY SIX-MONTH PERIOD ENDED JUNE 30, 2007 (UNAUDITED) (in thousands, except number of shares) Series A Convertible Additional Preferred Stock Common Stock Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance at December 31, 2006 - $- 47,048,240 $470 $76,513 $(43,481) $33,502 Conversion of preferred stock and accrued dividends to common stock Stock options exercised - - 45,291 1 116 - 117 Stock based compensation - - - - 122 - 122 Stock warrants exercised - - - - - - - Net loss - - - - - (3,386) (3,386) Balance at March 31, 2007 - - 47,093,531 $471 $76,751 $(46,867) $30,355 Stock options exercised - - 241,331 2 407 - 409 Stock based compensation - - - - 275 - 275 Stock warrants exercised - - 389,400 3 553 - 556 Net loss - - - - - (3,388) (3,388) Balance at June 30, 2007 - $- 47,724,262 $476 $77,986 $(50,255) $28,207
MINRAD International, Inc.
CONTACT: Timothy Sheehan, VP - Corporate Development of MINRADInternational, Inc., +1-716-855-1068, tsheehan@minrad.com
Web site: http://www.minrad.com/
