IRVINE, Calif., Nov. 10, 2008 (GLOBE NEWSWIRE) -- SenoRx, Inc. (Nasdaq:SENO) today reported financial results for its third quarter ended September 30, 2008. Revenue for the quarter increased 26.5 percent to $11.3 million compared with $8.9 million in the third quarter a year ago. Gross profit increased 36.8 percent to $7.3 million, or 65.0 percent of revenue, up from $5.4 million, or 60.1 percent of revenue, in the third quarter of 2007.
SenoRx reported an operating loss for the third quarter of $1.8 million, consistent with the operating loss of $1.8 million in the same period last year. The operating loss for the quarter included expenses of approximately $295,000 associated with being a public company compared with $185,000 in the third quarter a year ago. Stock-based compensation expense in the third quarter was $641,000, compared with $655,000 in the same quarter last year. Also included in the results for the third quarter was $128,000 in attorney and related litigation costs incurred as a result of the complaint by Hologic for patent infringement related to our Contura MLB(tm). In addition, sales and marketing expenses in the quarter increased 39.3 percent over the third quarter a year ago to $6.1 million primarily due to planned investment to support ongoing Contura MLB commercialization expansion efforts.
Interest expense for the third quarter declined significantly to $22,000, compared with $453,000 a year ago, primarily due to the retirement of a subordinated debt facility with Escalate Capital in the fourth quarter of 2007. Interest income declined to $99,000 from $551,000 in the third quarter of 2007 due to lower cash balances and lower interest rates. The lower cash balances are a result of our continued use of the proceeds from the April 2007 initial public offering to fund operations and repay debt.
Net loss for the third quarter of 2008 was $1.7 million or 10 cents per share, compared with $1.7 million or 10 cents per share in the same period last year. Excluding patent litigation and non-cash charges for stock-based compensation, the net loss was $908,000 for the quarter compared with $1.0 million for the same period last year.
Lloyd Malchow, SenoRx President and Chief Executive Officer, said "Our third quarter results continue to reflect solid operational performance. While revenue growth was below our internal expectations, this was more than offset by strong improvement in gross margin, which resulted in better than expected performance on the bottom line. Revenue growth in the quarter was benefitted by a significant increase in sales of Contura MLB, along with continued strength in biopsy disposables compared with the third quarter a year ago. This was offset in part by slowing capital equipment purchases in the U.S. in the latter stages of the third quarter, which may partially be attributable to the general economic turmoil and credit crisis that was unfolding in the final weeks of the quarter. Some of these deferred orders have since been received and will be booked in the fourth quarter of this year."
Revenue from biopsy disposables for the third quarter increased 28.5 percent to $5.1 million compared with $3.9 million in the third quarter a year ago. The increase was primarily a result of continuing growth in the installed base of EnCor systems, which increased to 696 systems from 456 systems at the end of the third quarter of 2007 and from 646 systems at the end of the second quarter of 2008. Biopsy capital equipment revenue in the third quarter declined 4.8 percent to $980,000. Therapeutic disposable revenue, which reflects sales of Contura MLB, was $1.4 million in the third quarter of 2008, compared with $187,000 in the third quarter of 2007, which was the first full quarter of commercial sales for Contura. Sequentially, Contura MLB sales increased 32.9 percent from the second quarter of 2008, reflecting encouraging ongoing adoption of the product by clinicians.
"We are very encouraged by the trend of expanding usage of Contura MLB at existing sites as we exited the third quarter," Malchow added. "This emerging trend bodes well going into the fourth quarter, which is seasonally the strongest quarter of the year for the number of brachytherapy procedures performed."
"Importantly, we achieved significant improvement in our gross margin for the third quarter, which demonstrated increased positive momentum near the end of the period," Malchow continued. "The increase reflects continuation of the cost efficiencies anticipated in the execution of our long-term strategy. We also continued to extend our international distribution, with several of our products now being sold in more than 20 countries outside the U.S. and Canada. Despite the unsettling external financial market conditions, we don't believe the fundamentals for our business have materially changed. We will continue to focus on making solid business decisions and executing our strategy to capitalize on the significant growth opportunities we see for SenoRx in the expanding market for interventional and therapeutic products in breast care."
For the first nine months of 2008, SenoRx posted revenue of $33.1 million, an increase of 34.0 percent compared with $24.7 million for the same period in 2007. Gross profit grew 47.1 percent to $20.8 million from $14.1 million in the first nine months last year. Net loss for the first nine months of 2008 was $8.8 million, or 51 cents per share, compared with $5.9 million, or 50 cents per share for the same period a year ago. Excluding patent litigation, non-cash charges for stock-based compensation and the non-cash fair value adjustments for convertible notes and warrant valuation, the net loss for the nine-month period was $2.7 million compared with $5.4 million for the same period in 2007.
At the end of the third quarter, SenoRx had $14.6 million in cash and short-term investments. During the quarter, the company renegotiated its credit facility to increase its available borrowing capability from $4.0 million to $12.0 million.
2008 Outlook
Based on performance through the first nine months of the year, SenoRx management is narrowing its current estimate for 2008 revenue to be in the range of $46.5 million to $48.5 million. In addition, SenoRx continues to estimate that deferred compensation and equity-based compensation expense will range between $2.8 million and $3.2 million for 2008. These ranges could be materially impacted based upon the number of options granted and fluctuation in the market price of the company's common stock.
With regard to the complaint filed by Hologic in January 2008, a Markman claims construction hearing was held on October 15. No ruling has yet been issued. Our current outlook for patent litigation costs beyond the $4.4 million incurred to date is an additional $750,000 to $1.5 million for the remainder of 2008, depending upon the disposition of the Markman hearing and a potential trial.
Conference Call
SenoRx will host a conference call at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) on Tuesday, November 11, 2008. The conference call can be accessed by calling 877-397-0297 (719-325-4857 for international callers) or via the company's website at http://investor.senorx.com/events.cfm.
Use of Non-GAAP Financial Measures
To supplement certain GAAP financial information, SenoRx has provided non-GAAP adjusted net loss information that excludes the impact of the stock-based compensation, patent litigation expenses and fair value adjustments to convertible notes and warrant liability. SenoRx management believes that in order to properly understand SenoRx's short-term and long-term financial trends, investors may wish to consider the impact of certain charges and the fair value adjustments. These result from facts and circumstances that vary in frequency and/or impact on continuing operations. In addition, SenoRx management uses the adjusted net loss before certain charges and fair value adjustments to evaluate the operational performance of the company and as a basis for strategic planning. A table reconciling the GAAP financial information to the non-GAAP information is included in our earnings release. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures in accordance with GAAP.
About SenoRx
SenoRx (Nasdaq:SENO) develops, manufactures and sells minimally invasive medical devices used by breast care specialists for the diagnosis and treatment of breast cancer, including its EnCor(r) vacuum-assisted breast biopsy system and Contura(tm) MLB catheter for delivering radiation to the tissue surrounding the lumpectomy cavity following surgery for breast cancer. SenoRx's field sales organization serves over 1,000 breast diagnostic and treatment centers in the United States and Canada. In addition, SenoRx sells several of its products through distributors in more than 20 countries outside the U.S. and Canada. The company's line of breast care products includes biopsy disposables, biopsy capital equipment, diagnostic adjunct products and therapeutic disposables. SenoRx is developing additional minimally invasive products for the diagnosis and treatment of breast cancer. For more information, visit the company's website at www.senorx.com.
The SenoRx, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3605
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning expectations of future revenue growth and opportunities, the growing markets for SenoRx's products, the ability to continue to innovate and execute, estimates of litigation costs, SenoRx's guidance for 2008, and the factors that would impact that guidance are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause SenoRx's actual results to differ materially from the statements contained herein. SenoRx's third quarter September 30, 2008 financial results, as discussed in this release, are preliminary and unaudited, and subject to adjustment. Further information on potential risk factors that could affect SenoRx's business and its financial results are detailed in its most recent quarterly report on Form 10-Q as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. SenoRx undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
SENORX, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2008 2007
------------ -----------
ASSETS
Current Assets:
Cash and cash equivalents $14,609,523 $17,185,259
Short-term investments -- 10,764,490
Accounts receivable, net of allowance
for doubtful accounts of $232,115,
and 107,728, respectively 7,133,540 5,421,184
Inventory 9,158,486 6,650,955
Prepaid expenses and deposits 575,101 544,276
----------- -----------
Total current assets 31,476,650 40,566,164
Property and equipment, net 1,523,417 1,071,435
Other assets, net of accumulated
amortization of $702,926, and
$436,380, respectively 952,788 424,649
----------- -----------
TOTAL $33,952,855 $42,062,248
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,427,229 $ 2,580,249
Accrued expenses, including accrued
employee compensation of $2,015,156
and $1,137,889, respectively 3,793,367 2,904,603
Deferred revenue 143,059 93,888
Current portion of long-term debt 30,332 2,093,346
----------- -----------
Total current liabilities 6,393,987 7,672,086
Long-term debt--less current portion 9,904 26,820
----------- -----------
Total liabilities 6,403,891 7,698,906
Stockholders' Equity:
Common stock, $0.001 par value--
100,000,000 shares authorized;
17,268,348 (2008) and 17,202,395
(2007) issued and outstanding 17,268 17,202
Additional paid-in capital 111,804,318 109,815,612
Accumulated deficit (84,272,622) (75,469,472)
----------- -----------
Total stockholders' equity 27,548,964 34,363,342
----------- -----------
TOTAL $33,952,855 $42,062,248
=========== ===========
SENORX, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net revenues $11,264,471 $ 8,906,086 $33,133,364 $24,727,447
Cost of goods
sold 3,942,922 3,555,638 12,322,674 10,582,993
----------- ----------- ----------- -----------
Gross profit 7,321,549 5,350,448 20,810,690 14,144,454
Operating
expenses:
Selling and
marketing 6,063,248 4,354,056 16,928,701 13,085,547
Research and
development 1,631,898 1,580,130 4,656,700 4,694,999
General and
administrative 1,380,333 1,205,515 8,474,316 3,092,703
----------- ----------- ----------- -----------
Total
operating
expenses 9,075,479 7,139,701 30,059,717 20,873,249
----------- ----------- ----------- -----------
Loss from
operations (1,753,930) (1,789,253) (9,249,027) (6,728,795)
Interest expense 22,334 452,670 59,160 1,379,405
Change in fair
value of conver-
tible promissory
notes and warrant
valuation -- -- -- (990,875)
Interest Income (99,243) (551,288) (505,037) (1,182,327)
----------- ----------- ----------- -----------
Loss before pro-
vision for
income taxes (1,677,021) (1,690,635) (8,803,150) (5,934,998)
Provision for
income taxes -- -- -- --
----------- ----------- ----------- -----------
Net loss $(1,677,021) $(1,690,635) $(8,803,150) $(5,934,998)
=========== =========== =========== ===========
Net loss per
share-basic and
diluted $ (0.10) $ (0.10) $ (0.51) $ (0.50)
=========== =========== =========== ===========
Weighted
average shares
outstanding-
basic and
diluted 17,262,817 17,076,002 17,232,661 11,973,240
=========== =========== =========== ===========
REVENUE BY PRODUCT CLASS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Biopsy disposable
products $ 5,068,871 $ 3,945,941 $15,130,043 $11,487,122
Biopsy capital
equipment
products 979,922 1,029,065 3,330,531 2,130,294
Diagnostic
adjunct products 3,834,850 3,744,039 11,636,457 10,897,893
Therapeutic
disposables 1,380,828 187,041 3,036,333 212,138
----------- ----------- ----------- -----------
Total $11,264,471 $ 8,906,086 $33,133,364 $24,727,447
=========== =========== =========== ===========
ADJUSTED NET LOSS RECONCILIATION
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net loss $(1,677,021) $(1,690,635) $(8,803,150) $(5,934,998)
Stock-based
compensation 640,832 655,142 1,735,295 1,522,648
Patent litigation
expenses 128,399 -- 4,386,778 --
Change in fair
value of conver-
tible promissory
notes and warrant
valuation -- -- -- (990,875)
----------- ----------- ----------- -----------
Adjusted net loss $ (907,790) $(1,035,493) $(2,681,077) $(5,403,225)
=========== =========== =========== ===========