Endologix, Inc. (Nasdaq:ELGX), developer and manufacturer of the
Powerlink(R) System endoluminal stent graft (ELG) for the minimally
invasive treatment of abdominal aortic aneurysms (AAA), today
announced financial results for the three months ended March 31,
2006. "Quarterly domestic product sales of $2.1 million increased
more than three-fold compared with the first quarter of 2005, which
was the first full quarter the Powerlink System was available in
the U.S., and were up 23% compared with the fourth quarter of
2005," said Endologix President and Chief Executive Officer Paul
McCormick. "Based on initial product acceptance and the knowledge
gained from our focused launch strategy, we are stepping up
domestic commercial activities to support accelerated growth. Among
actions aimed at strengthening our sales team, we promoted one of
our regional managers to the position of national sales manager and
we added one highly qualified regional manager. In keeping with our
recruiting profile of hiring sales representatives with prior AAA
experience, we added seven sales representatives in the past two
months, bringing the expected number of field representatives to 30
as of May 1st. This is ahead of the 25 sales representatives we had
anticipated by mid-year. We now anticipate having approximately 40
to 50 sales representatives by the end of the year," he added. "We
are planning near-term introductions of Powerlink System product
enhancements and line extensions, which are intended to increase
the addressable patient population and simplify the procedure,"
said Mr. McCormick. "We just obtained FDA marketing approval of a
short body/short limb variant of the Powerlink System device, and
expect to begin testing a device with large diameter limbs
specifically suited to patients with concomitant abdominal and
iliac aneurysms. Further, we have already successfully performed
Powerlink System procedures with our next-generation VISIFLEX(TM)
Delivery Catheter in Europe, with anticipated domestic
commercialization later this year. Also, we have identified what
may be a significant opportunity in the treatment of thoracic
aortic pathologies, and look to begin a feasibility trial with a
modified Powerlink System device for that indication later this
year." First Quarter Financial Results Product revenue for the
first quarter of 2006 was $2.7 million, up from $1.4 million in the
first quarter of 2005 and $1.9 million in the fourth quarter of
2005. Domestic product revenue was $2.1 million, compared with
$621,000 in the 2005 first quarter and $1.7 million in the 2005
fourth quarter. International product revenue of $559,000 for the
first quarter of 2006 compares with $733,000 during the comparable
quarter last year and $176,000 in the fourth quarter of 2005. The
company reported that domestic product revenue for all periods
predominantly represents product usage. As consignment of product
is customary in the medical device industry for recently introduced
products, the Company believes that domestic product revenue will
approximate product usage for the foreseeable future. Gross profit
of $1.6 million was 59% of revenue in the first quarter of 2006.
This compares with $771,000 and 55%, respectively, in the first
quarter of 2005. Margin improvement was due primarily to higher
average selling prices driven by the mix of direct U.S. commercial
sales, which have a higher average selling price compared with
international sales to distributors. Total operating expenses were
$5.9 million in the first quarter of 2006, compared with $4.2
million in the first quarter of 2005. The increase primarily
reflects the ongoing build out and training of the domestic sales
force. Marketing and sales expenses increased to $2.6 million in
the first quarter of 2006 from $1.4 million in the comparable
quarter last year. Research, development and clinical expenses for
the first three months of 2006 were $1.7 million, versus $1.4
million last year, and general and administrative expenses were
$1.6 million versus $1.4 million last year. Operating expenses in
the 2006 period included $348,000 as a result of adopting SFAS No.
123(R), Accounting for Stock Based Compensation, on January 1,
2006. Endologix reported a net loss for the first quarter of 2006
of $4.1 million, or $0.11 per share, which compares with a net loss
of $3.3 million, or $0.10 per share, for the first quarter of 2005.
The net loss for the first quarter of 2006 included $348,000, or
$0.01 per share for stock based compensation expense. Total cash
and marketable securities as of March 31, 2006 was $13.2 million,
compared with total cash and marketable securities as of December
31, 2005 of $17.7 million. Conference Call Information Endologix
management will host a conference call to discuss these topics
today beginning at 5:00 p.m. Eastern time (2:00 p.m. Pacific time).
To participate via telephone please call (888) 463-4487 from the
U.S. or (706) 634-5615 from outside the U.S. A telephone replay
will be available for two days following the completion of the call
by dialing (800) 642-1687 from the U.S. or (706) 645-9291 from
outside the U.S., and entering reservation number 8009879. The
conference call will be broadcast live over the Internet at
www.endologix.com and will be available for 14 days. About
Endologix Endologix, Inc. develops and manufactures minimally
invasive treatments for vascular diseases. Endologix Powerlink
System is an endoluminal stent graft (ELG) for treating abdominal
aortic aneurysms (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 AAA is approximately
75%, making it the thirteenth leading cause of death in the U.S. In
October 2004, Endologix received approval to market the Powerlink
System in the U.S. Additional information can be found on
Endologix'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, all of which are difficult or
impossible to predict accurately and many of which are beyond the
control of Endologix. Many factors may cause actual results to
differ materially from anticipated results including sales efforts,
product development efforts, and other economic, business,
competitive and regulatory factors. The Company undertakes no
obligation to update its forward looking statements. Please refer
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2005, and the Company's other filings with the
Securities and Exchange Commission, for more detailed information
regarding these risks and other factors that may cause actual
results to differ materially from those expressed or implied. -0-
*T ENDOLOGIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts) (Unaudited) Three Months
Ended March 31, 2006 2005 ----------- -------- Revenue: Domestic
Product Revenue $2,116 $621 Non - U.S. Product Revenue 559 733
----------- -------- Total Product Revenue 2,675 1,354 License
Revenue 58 60 ----------- -------- Total revenue 2,733 1,414 Cost
of product revenue 1,119 643 ----------- -------- Gross profit
1,614 771 ----------- -------- Operating expenses: Research,
development and clinical 1,687 1,359 Marketing and sales 2,598
1,378 General and administrative 1,601 1,439 ----------- --------
Total operating expenses 5,886 4,176 ----------- -------- Loss from
operations (4,272) (3,405) ----------- -------- Other income
(expense): Interest income 160 109 ----------- -------- Total other
income 160 109 ----------- -------- Net loss ($4,112) ($3,296)
=========== ======== Basic and diluted net loss per share ($.11)
($0.10) =========== ======== Shares used in computing basic and
diluted net loss per share 36,971 31,896 =========== ========
ENDOLOGIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except per share amounts) (Unaudited) March December 31,
31, 2006 2005 --------- -------- ASSETS Current assets: Cash and
cash equivalents $7,162 $8,191 Restricted cash equivalents 500 500
Marketable securities available-for-sale 5,277 8,959 Accounts
receivable, net 2,062 1,248 Other receivables 119 175 Inventories
7,407 7,372 Other current assets 453 576 --------- -------- Total
current assets 22,980 27,021 Property and equipment, net 4,786
4,490 Marketable securities available-for-sale 301 --- Goodwill
4,631 4,631 Other intangibles, net of accumulated amortization of
$5,386 and $5,034, respectively 11,373 11,724 Other assets 78 78
--------- -------- Total Assets $44,149 $47,944 ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable and accrued expenses $3,334 $4,501 --------- --------
Current liabilities 3,323 4,501 Long-term liabilities 1,220 1,236
--------- -------- Total liabilities 4,554 5,737 --------- --------
Stockholders' equity: Common stock, $.001 par value; 50,000 shares
authorized, and 37,033 and 36,679 shares issued and outstanding at
March 31, 2006 and December 31, 2005, respectively 37 37 Additional
paid-in capital 143,398 141,903 Accumulated deficit (103,232)
(99,120) Treasury stock, at cost, 495 shares at March 31, 2006 and
December 31, 2005 (661) (661) Accumulated other comprehensive
income 53 48 --------- -------- Total stockholders' equity 39,595
42,207 --------- -------- Total Liabilities and Stockholders'
Equity $44,149 $47,944 ========= ======== *T
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