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Lombard Medical Reports 2016 First Quarter Financial Results

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    
               

 

For further information:

Lombard Medical, Inc.
Simon Hubbert,
Chief Executive Officer
Tel:+1 949 379 3750 / +44 (0)1235 750 800
William J. Kullback,
Chief Financial Officer
Tel: +1 949 748 6764

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Lombard Medical, Inc.