EX-99.1 3 a92174exv99w1.htm EXHIBIT 99.1 Endologix, Inc.
 

Exhibit 99.1

     {ENDOLOGIX, INC. LOGO}

     PRESS RELEASE

     
     DATE:   August 7, 2003
     CONTACT:   David Richards, Chief Financial Officer, 949-595-7200
www.endologix.com

Endologix, Inc. Reports
2nd Quarter 2003 Results

Irvine, CA — August 7, 2003 — Endologix, Inc., (Nasdaq: ELGX) today announced financial results for the second quarter ended June 30, 2003. Total revenues for the second quarter of 2003 were 49% lower at $989,000, compared with $1,940,000 for the second quarter of 2002. Total revenues for the first six months of 2003 were 42% lower at $2,151,000, compared with $3,708,000 for the same period of 2002. Product revenue increased 111% to $295,000 for the second quarter ended June 30, 2003, from $140,000 for the second quarter of 2002. Product revenue increased 461% to $785,000 for the first six months of 2003, from $140,000 for the same period of 2002. Product revenue for 2002 includes one month of sales of PowerLink AAA products. License revenues for the quarter ended June 30, 2003 decreased 61% to $694,000 from $1,800,000 from the corresponding period of 2002. License revenues for the first six months of 2003 decreased 62% to $1,366,000 from $3,568,000 from the corresponding period of 2002. License revenues are primarily derived from royalties received from Guidant related to our licensed Focus technology. We believe that the decrease in Guidant license revenues is primarily due to the introduction by Guidant of non-licensed products in the U.S. in 2002 and competition from drug-eluting stent products. We anticipate that Guidant license revenues will continue to decline.

Net loss for the second quarter of 2003 was $(1,653,000), or $(0.07) per share, compared with net loss of $(4,862,000), or $(0.28) per share, for the same period of 2002. Net loss for the first six months of 2003 was $(2,843,000), or $(0.12) per share, compared with net loss of $(4,314,000), or $(0.29) per share, for the same period of 2002. The results for 2002 include a charge for acquired in-process research and development of $4,438,000 from the merger with the (former) private company Endologix; while the results for 2003 reflect expenses to commercialize the PowerLink AAA technology acquired at the end of May 2002.

Research, development and clinical expenses for the second quarter of fiscal 2003 were $1,715,000, compared with $1,699,000 for the second quarter of fiscal 2002. While the total expenditures were comparable, spending on radiation technology development dropped by $1,103,000 in the second quarter of 2003 but was offset by a comparable increase in spending on PowerLink AAA technology development. Research, development and clinical expenses increased 31% to $3,561,000 for the first six months of fiscal 2003 compared with $2,716,000 for the same period of 2002. The increase resulted primarily from an increase in PowerLink technology development expenses of $2,596,000, partially offset by a decrease of $1,751,000 in spending on radiation technology development as we are nearing the completion of the related clinical studies.

Marketing and sales expenses increased 16% to $154,000 for the second quarter of 2003, compared with $133,000 for the same period of 2002. Marketing and sales expenses increased 229% to $437,000 for the first six months of 2003, compared with $133,000 for the same period of 2002. Marketing and sales expense

 

 

for 2002 includes one month of expenses to support PowerLink marketing and sales.

General and administrative expenses totaled $697,000 for the second quarter of 2003, compared to $693,000 for the same period of 2002. General and administrative expenses for the second quarter of 2002 included severance pay and benefits expense for the former CEO and President of $253,000. General and administrative expenses decreased 23% to $835,000 for the first six months of 2003, compared to $1,091,000 for the same period of 2002. The decrease resulted primarily from a reimbursement to the Company of legal costs and expenses of $468,000, which were previously expensed as general and administrative expense, as part of a legal settlement with Jomed-Endosonics. The decrease was partially offset by increases in consulting costs, including strategic advisor fees, and payroll costs from the addition of general and administrative staff upon the merger with the former Endologix in May 2002.

Commenting on the activities of the quarter, Paul McCormick, President & CEO, said, “Our 2003 results to date reflect our continued emphasis on the development of the PowerLink AAA technology and commitment to meet our financial goals as we progress toward its regulatory approval in the U.S.”

Endologix, Inc. develops and manufactures minimally invasive treatments for vascular diseases. The Company’s PowerLink System is an endoluminal stent graft for treating AAA. AAA is a weakening of the wall of the aorta, the largest artery in the body, resulting in a balloon-like enlargement. Once AAA develops, it continues to enlarge and, if left untreated, becomes increasingly susceptible to rupture. The overall patient mortality rate for ruptured abdominal aortic aneurysms is approximately 75%, making it the 13th leading cause of death in the United States. Additional information can be found on the Company’s Web site at www.endologix.com.

Except for historical information contained herein, this news release contains forward-looking statements, the accuracy of which are necessarily subject to risks and uncertainties, including reduction of Company revenue resulting from declines in sales of Guidant’s royalty-bearing products, and the unpredictability of clinical trials and regulatory approval, changes in future economic, competitive and market conditions, uncertainty of acceptance in the marketplace and future business decisions, adequacy of financial resources to support operations after December 31, 2004 and our ability to raise capital, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Endologix, and the risk factors and other matters set forth in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2002.

 

 

     {ENDOLOGIX, INC. LOGO}

ENDOLOGIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

                                       
          Three Months Ended June 30,   Six Months Ended June 30,
         
 
          2003   2002   2003   2002
         
 
 
 
Revenue:
                                
 
Product sales
   $ 295     $ 140*     $ 785     $ 140  
 
License revenue
     694       1,800       1,366       3,568  
 
 
    
     
     
     
 
Total revenues
     989       1,940       2,151       3,708  
 
Cost of sales
     108       83       365       152  
 
 
    
     
     
     
 
Gross profit
     881       1,857       1,786       3,556  
Operating expenses:
                                
 
Research, development and clinical
     1,715       1,699       3,561       2,716  
 
Marketing and sales
     154       133       437       133  
 
General and administrative
     697       693       835       1,091  
 
Charge for acquired in-process research and development
     —       4,438       —       4,438  
 
Minority Interest
     1       (7 )     (16 )     (15 )
 
 
    
     
     
     
 
Total operating expenses
     2,567       6,956       4,817       8,363  
 
 
    
     
     
     
 
Loss from operations
     (1,686 )     (5,099 )     (3,031 )     (4,807 )
Other income (expense):
                                
 
Interest income
     46       185       200       411  
 
Gain (loss) on disposal of assets
     (11 )     58       (8 )     92  
 
Other expense
     (2 )     (6 )     (4 )     (10 )
 
 
    
     
     
     
 
     
Total other
     33       237       188       493  
 
 
    
     
     
     
 
Net loss
     ($1,653 )     ($4,862 )     ($2,843 )     ($4,314 )
 
 
    
     
     
     
 
Basic and diluted net loss per share
     ($0.07 )     ($0.28 )     ($0.12 )     ($0.29 )
 
 
    
     
     
     
 
Shares used in computing basic and diluted net loss per share
     23,915       17,081       23,981       15,133  
 
 
    
     
     
     
 

*    Note: As the merger with the former Endologix was completed at the end of May 2002, revenues for the second quarter of 2002 only include June PowerLink System product sales of $140,000.

 

 

    {ENDOLOGIX, INC. LOGO}

ENDOLOGIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

                     
        June 30,   December 31,
        2003   2002
       
 
ASSETS
                
 
Cash, cash equivalents and marketable securities
   $ 6,821     $ 7,659  
 
Accounts receivable, net
     193       622  
 
Other receivables
     726       1,004  
 
Inventories
     2,172       2,043  
 
Other current assets
     335       431  
 
 
    
     
 
   
Total current assets
     10,247       11,759  
Property and equipment, net
     141       185  
Marketable securities
     363       2,051  
Goodwill and other intangibles, net
     18,838       19,541  
Other assets
     375       371  
 
 
    
     
 
   
Total Assets
   $ 29,964     $ 33,907  
 
 
    
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
   $ 1,732     $ 2,348  
Minority interest
     —       83  
   
Total liabilities
     1,732       2,431  
 
 
    
     
 
Stockholders’ equity
     28,232       31,476  
 
 
    
     
 
   
Total Liabilities and Stockholders’ Equity
   $ 29,964     $ 33,907