IRVINE, Calif., May 11, 2016 (GLOBE NEWSWIRE) -- Lombard Medical, Inc. (NASDAQ:EVAR), a medical device company focused on endovascular aneurysm repair (EVAR) of abdominal aortic aneurysms (AAAs), today reported financial results and provided an operational update for the first quarter ended March 31, 2016.
Q1 and Recent Operational Highlights
- Initiated a controlled commercial launch of the new Altura® endovascular stent graft system in Germany and the United Kingdom (UK).
- The first Altura live case demonstration was broadcast at the Leipzig Interventional Course followed by the first Altura live case physician training workshop at the Pauls Stradins Clinical University Hospital in Riga, Latvia.
- The Altura endovascular stent graft has been implanted in 57 patients at 19 initial reference centers since commercial launch in late February.
- Increased direct sales force in Germany and the UK to support a new portfolio strategy with highly differentiated Altura and Aorfix™ stent graft systems.
- Reduced size of US sales force to focus resources on the most productive sales territories increasing sales rep productivity by 109 percent.
- In Japan, physicians performed 147 Aorfix AAA procedures as compared to 85 in the prior year period.
- Filed for CE Mark with European notified body for the new IntelliFlex™ LP delivery system for Aorfix.
- In April, both Altura and Aorfix endovascular stent grafts were featured in scientific presentations at the 38th annual Charing Cross International Symposium in London.
Financial and Operational Results
For the 2016 first quarter, global revenue was $2.9 million as compared to $3.4 million in the 2015 first quarter. Operating expenses were reduced to $8.3 million compared to $11.3 million in the prior year period resulting in a net loss of $7.6 million, or $0.38 loss per share, compared to a net loss of $9.5 million, or $0.59 loss per share, for the first quarter of 2015. As of March 31, 2016, the Company had cash of $22.4 million.
The year-over-year reduction in revenue is attributable to the redeployment of commercial resources from the US to Europe to support the launch of Altura coupled with delayed stocking orders from the Company’s distribution partner in Japan as it prepares for the IntelliFlex approval. US rep productivity was strong, increasing by 109 percent and partially offsetting the downsizing of the US sales team. The controlled launch of Altura in the UK and Germany in February indicates a clear near-term path to significant revenue growth in the Company’s direct markets in Europe.
Gross margin for the 2016 first quarter was 34 percent compared to the prior year’s 46 percent. First quarter margins were adversely impacted by several factors including manufacturing start-up expense related to the launch of the Altura product line. Additionally, reduced overhead absorption coupled with the Company’s transition of manufacturing activities to the new generation IntelliFlex LP delivery system contributed to the margin variance.
The significant decrease in operating expenses was accomplished by restructuring the US commercial team, trimming non-essential programs and general cost control activities in all areas of the business.
In Japan, procedure rates continued to rise as physicians performed 147 Aorfix procedures in the 2016 first quarter as compared to 85 in the prior year period. These procedures represent an approximate 7.5 percent share of the total Japanese AAA market. The continued share gain did not translate directly to revenue growth in the period as Lombard’s Japanese distribution partner continued to sell through inventory in anticipation of the launch of the new Aorfix IntelliFlex delivery system.
CEO Simon Hubbert said, “The first quarter was extremely encouraging as we launched Altura into a limited number of European sites and saw the continued fast growth of Aorfix adoption in Japan. The feedback we are getting from the physicians using Altura is exceptionally positive. The controlled launch of Altura in Germany and the UK will continue with a broader international rollout planned for the second half of the year. In short, the Altura technology is delivering on its promise of shorter and predictable implant times, accuracy and flexibility in deployment and repositioning and great initial outcomes for the patients including the use of Altura as an ‘outpatient’ AAA stent graft. With respect to the new IntelliFlex delivery system for Aorfix, we anticipate gaining the CE Mark during the second quarter of this year with a limited launch in June in the UK and Germany. FDA approval and the corresponding US launch of IntelliFlex remains on track for late 2016 or early 2017.”
Company Outlook
The Company expects to achieve year-over-year revenue growth in 2016 of approximately 20 percent.
Conference Call
Lombard’s management will discuss the Company's financial results for the first quarter ended March 31, 2016 and provide a general business update during a conference call beginning at 4:30 p.m. Eastern Time today, Wednesday, May 11, 2016. To join the call, participants may dial 1-877-407-4018 (domestic), 0800-756-3429 (UK toll-free) 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 the webcast will be available shortly following the completion of the call on the Events and Presentations page under the Investors tab at www.lombardmedical.com.
About Lombard Medical, Inc.
Lombard Medical, Inc. is an Irvine, CA-based medical device company focused on the $1.7bn market for minimally invasive treatment of abdominal aortic aneurysms (AAAs). The Company has global regulatory approval for Aorfix®, an endovascular stent graft which has been specifically designed to treat patients with the broadest range of AAA anatomies, including aortic neck angulation up to 90 degrees. The Company has also achieved CE Mark for the Altura® endograft system, an innovative ultra-low profile endovascular stent graft that offers a simple and predictable solution for the treatment of more standard AAA anatomies. Altura was launched in Europe in January 2016, with a broader international rollout planned for later in 2016. For more information, please visit www.lombardmedical.com.
Forward-Looking Statements
This announcement contains forward-looking statements that reflect the Company’s current expectations regarding future events. These forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “expect,” “future,” “anticipate,” “look forward to,” “intend,” “plan,” “foresee,” “may,” “should,” “will,” “estimates,” “outlook,” “potential,” “optimistic,” “confidence,” “continue,” “evolve,” “expand,” “growth” or words and phrases of similar meaning. Statements that describe objectives, plans or goals also are forward-looking statements. Forward-looking statements are subject to risks, management assumptions and uncertainties. Actual results 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, the uncertainty of estimated revenues and profits, the uncertainty of current domestic and international economic conditions that could adversely affect the level of demand for the Company’s products and increased volatility in foreign exchange rates, the inability to raise additional funds, and the risks, uncertainties and other factors described under the heading “Risk Factors” in the Company’s Form 20-F filed with the Securities and Exchange Commission dated April 29, 2016. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included herein are made only as of the date of this report and the Company undertakes no obligation to update these statements in the future.
- Tables Follow –
| Consolidated Statements of Comprehensive Income for the three-month period ended March 31, 2016 (In Thousands, Except Per Share Amounts) (Unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, 2016 | March 31, 2015 | ||||||||||
| Revenue | $ | 2,922 | $ | 3,409 | |||||||
| Cost of sales | 1,938 | 1,828 | |||||||||
| Gross profit | 984 | 1,581 | |||||||||
| Selling, marketing and distribution expenses | 4,110 | 6,268 | |||||||||
| Research and development expenses | 2,306 | 2,442 | |||||||||
| Administrative expenses | 1,888 | 2,628 | |||||||||
| Total operating expenses | 8,304 | 11,338 | |||||||||
| Operating loss | (7,320 | ) | (9,757 | ) | |||||||
| Finance income | 57 | 47 | |||||||||
| Finance costs | (548 | ) | (22 | ) | |||||||
| Loss before taxation | (7,811 | ) | (9,732 | ) | |||||||
| Taxation | 205 | 189 | |||||||||
| Loss for the year | $ | (7,606 | ) | $ | (9,543 | ) | |||||
| Other comprehensive income/(loss): | |||||||||||
| Items that may subsequently be reclassified to profit or loss | |||||||||||
| Currency translation differences | (1,110 | ) | (1,387 | ) | |||||||
| Total comprehensive loss for the year | $ | (8,716 | ) | $ | (10,930 | ) | |||||
| Basic and diluted loss per ordinary share | |||||||||||
| From continuing operations | $ | (0.38 | ) | $ | (0.59 | ) | |||||
| Consolidated Balance Sheets (In Thousands, Except Per Share Amounts) (Unaudited) | |||||||||||
| March 31, 2016 | December 31, 2015 | ||||||||||
| Assets | |||||||||||
| Goodwill | $ | 15,968 | $ | 16,052 | |||||||
| Intangible assets | 21,552 | 21,889 | |||||||||
| Property, plant and equipment | 2,860 | 3,043 | |||||||||
| Trade and other receivables | 176 | 176 | |||||||||
| Non-current assets | 40,556 | 41,160 | |||||||||
| Inventories | 8,061 | 6,462 | |||||||||
| Trade and other receivables | 4,082 | 4,168 | |||||||||
| Taxation recoverable | 1,783 | 1,618 | |||||||||
| Cash and cash equivalents | 22,364 | 32,332 | |||||||||
| Current assets | 36,290 | 44,580 | |||||||||
| Total assets | 76,846 | 85,740 | |||||||||
| Liabilities | |||||||||||
| Trade and other payables | 7,456 | 8,236 | |||||||||
| Current liabilities | 7,456 | 8,236 | |||||||||
| Borrowings | 23,268 | 23,115 | |||||||||
| Deferred tax liabilities | 674 | 674 | |||||||||
| Contingent consideration | 10,600 | 10,600 | |||||||||
| Non-current liabilities | 34,542 | 34,389 | |||||||||
| Total Liabilities | 41,998 | 42,625 | |||||||||
| Net assets | $ | 34,848 | $ | 43,115 | |||||||
| Equity | |||||||||||
| Called up share capital | 199 | 199 | |||||||||
| Share premium account | 63,853 | 63,853 | |||||||||
| Capital reorganization reserve | 205,686 | 205,686 | |||||||||
| Other reserves | — | — | |||||||||
| Translation reserve | 160 | 1,270 | |||||||||
| Accumulated loss | (235,050 | ) | (227,893 | ) | |||||||
| Total equity | $ | 34,848 | $ | 43,115 | |||||||
| Consolidated Statements of Changes in Equity for the three-month period ended March 31, 2016 (In Thousands, Except Per Share Amounts) (Unaudited) | ||||||||||||||||||||||
| SHARE CAPITAL | SHARE PREMIUM ACCOUNT | OTHER RESERVES | TRANSLATION RESERVE | CAPITAL REORGANIZATION RESERVE | ACCUMULATED LOSS | TOTAL EQUITY | ||||||||||||||||
| $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||||||
| At January 1, 2015 | 162 | 49,608 | — | 2,245 | 205,686 | (192,868 | ) | 64,833 | ||||||||||||||
| Loss for the year | — | — | — | — | — | (9,543 | ) | (9,543 | ) | |||||||||||||
| Share-based compensation | — | — | — | — | — | 675 | 675 | |||||||||||||||
| Currency translation | — | — | — | (1,387 | ) | — | — | (1,387 | ) | |||||||||||||
| At March 31, 2015 | 162 | 49,608 | — | 858 | 205,686 | (201,736 | ) | 54,578 | ||||||||||||||
| At January 1, 2016 | 199 | 63,853 | — | 1,270 | 205,686 | (227,893 | ) | 43,115 | ||||||||||||||
| Loss for the year | — | — | — | — | — | (7,606 | ) | (7,606 | ) | |||||||||||||
| Share-based compensation | — | — | — | — | — | 449 | 449 | |||||||||||||||
| Currency translation | — | — | — | (1,110 | ) | — | — | (1,110 | ) | |||||||||||||
| At March 31, 2016 | 199 | 63,853 | — | 160 | 205,686 | (235,050 | ) | 34,848 | ||||||||||||||
| Consolidated Cash Flow Statements for the three-month period ended March 31, 2016 (In Thousands) (Unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, 2016 | March 31, 2015 | ||||||||||
| Cash outflow from operating activities | |||||||||||
| Loss before taxation | $ | (7,811 | ) | $ | (9,732 | ) | |||||
| Depreciation and amortization of licenses, software and property, plant and equipment | 649 | 336 | |||||||||
| Share based compensation expense | 449 | 675 | |||||||||
| Net finance expense/(income) | 491 | (25 | ) | ||||||||
| Increase in inventories | (1,701 | ) | (249 | ) | |||||||
| Decrease in receivables | 34 | 13 | |||||||||
| Increase/(decrease) in payables | (664 | ) | 1,018 | ||||||||
| Net cash used in operating activities | (8,554 | ) | (7,964 | ) | |||||||
| Research and development tax credits received | — | 966 | |||||||||
| Net cash outflow from operating activities | (8,554 | ) | (6,998 | ) | |||||||
| Cash flows from investing activities | |||||||||||
| Interest received | 27 | 35 | |||||||||
| Purchase of property, plant and equipment | (223 | ) | (423 | ) | |||||||
| Purchase of intangible assets | — | (15 | ) | ||||||||
| Net cash flows used in investing activities | (196 | ) | (403 | ) | |||||||
| Cash flows from financing activities | |||||||||||
| Interest paid | (395 | ) | — | ||||||||
| Net cash flows from financing activities | (395 | ) | — | ||||||||
| (Decrease)/increase in cash and cash equivalents | (9,147 | ) | (7,401 | ) | |||||||
| Cash and cash equivalents at beginning of year | 32,332 | 53,334 | |||||||||
| Effects of exchange rates on cash and cash equivalents | (821 | ) | (837 | ) | |||||||
| Cash and cash equivalents at end of year | $ | 22,364 | $ | 45,096 | |||||||