Cardica halves Q4 net losses despite 64 percent sales slide

January 28, 2010 by MassDevice staff

Cardica Inc. (NSDQ:CRDC) posted second-quarter sales of $1.1 million for the three months ended Dec. 31, 2009, down 63.9 percent compared with $2.9 million during the same period in 2008. Net losses for the quarter were $2.2 million, compared with net losses of $4.7 million during Q2 2008:

Press Release

Cardica Announces Fiscal 2010 Second Quarter Financial Results

REDWOOD CITY, Calif., Jan. 28 /PRNewswire-FirstCall/ -- Cardica, Inc. (Nasdaq: CRDC) today announced financial results for its fiscal second quarter and six months ended December 31, 2009. Cardica's management will host a conference call at 4:30 p.m. Eastern Time to discuss the financial results and provide an update on the company's business.

"This quarter, as we continued to transition the sales model for our cardiac anastomosis products from a direct sales force to a team driven largely by independent distributors and manufacturers' representatives, we saw sequential growth in sales of our automated anastomosis products, which is a trend that we expect to continue moving forward," said Bernard A. Hausen, M.D., Ph.D., president and chief executive officer of Cardica.

"We are advancing development of our Cardica Microcutter ES8, the first potential product in our anticipated line of endolinear stapler/cutters, and we expect to initiate testing in animals during our fiscal third quarter.  Subject to FDA clearance under a 510(k) process, we anticipate launching this product in the United States in early calendar 2011. We believe the opportunity to apply our proprietary technology and development capabilities to this $2 billion market could provide the company with exceptional growth opportunities in the years ahead," continued Dr. Hausen.

Recent Highlights and Accomplishments

• Increased cumulative worldwide shipments of PAS-Port® Proximal Anastomosis Systems to over 17,000 units, with 1,120 units shipped in the fiscal 2010 second quarter;
• Increased cumulative worldwide shipments of C-Port® Distal Anastomosis Systems to over 10,000 units, with 458 units shipped in the fiscal 2010 second quarter;
• Increased our independent distributors and manufacturers' representatives to nine organizations with the addition of Corazon Medical, Innovative Surgical Products, and White Medical Devices;
• Announced that the Departments of Precision Engineering and Cardiothoracic Surgery at University of Tokyo, with funding from the New Energy and Industrial Technology Organizations and industrial support from Olympus and Terumo Corporations, will include Cardica's C-Port® Flex-A® Anastomosis System in the development of a new cardiac surgery robot, also known as an Intelligent Surgical Instrument;
• Continued development of the Cardica Microcutter ES8, with animal trials expected to begin in the fiscal 2010 third quarter; and
• Added Brian E. Farley, former president and chief executive officer of VNUS Medical Technologies, as a strategic, financial and business consultant to the company.

Fiscal 2010 Second Quarter and Six Months Ended December 31, 2009, Financial Results

Total product sales were approximately $1.0 million for the fiscal 2010 second quarter compared to $2.0 million for the same period of fiscal 2009. Net product sales decreased as a result of Cardica's smaller direct sales force and the transition period necessary to train our new independent distributors and manufacturers' representatives. Development revenue was $19,000 for the fiscal 2010 second quarter compared to $928,000 for the same period of fiscal 2009 as Cardica and Cook Medical mutually agreed to temporarily suspend development work on the patent foramen ovale (PFO) closure project and the Cook Vascular Closure Device project ended in fiscal 2009. Total net revenue was approximately $1.1 million for the fiscal 2010 second quarter compared to $2.9 million for the fiscal 2009 second quarter. Cost of product sales was approximately $0.7 million for the fiscal 2010 second quarter, representing a 32 percent product gross margin, compared to $1.5 million for the fiscal 2009 second quarter, which represented a 27 percent product gross margin.

Research and development expenses were approximately $1.2 million for the fiscal 2010 second quarter compared to $2.1 million for the fiscal 2009 second quarter. Selling, general and administrative expenses for the fiscal 2010 second quarter were approximately $1.4 million compared to $4.1 million for the comparable quarter of 2009. The lower expenses are primarily due to the actions taken in fiscal 2009 to change our sales approach to a more variable cost model and to lower our headcount.

The net loss for the fiscal 2010 second quarter was approximately $2.2 million, or $0.09 per share, compared with a net loss of approximately $4.7 million, or $0.30 per share, for the fiscal 2009 second quarter.

Total net revenue for the six months ended December 31, 2009, was approximately $2.0 million compared with approximately $5.1 million for the same period of fiscal 2009.  Total operating costs and expenses for the six months ended December 31, 2009 were approximately $6.9 million compared with approximately $15.0 million for the same period of 2009. The net loss for the first six months of fiscal 2010 was approximately $4.9 million, or $0.25 per share, compared to $9.9 million, or $0.63 per share, for the same period of fiscal 2009.

Cash and cash equivalents at December 31, 2009 were approximately $11.1 million compared with $13.3 million at September 30, 2009 and $5.3 million at June 30, 2009.  As of December 31, 2009, there were approximately 24 million shares of common stock outstanding.

Financial Guidance for Fiscal 2010

Cardica continues to be in a transition period for its cardiac surgery business and is not able to provide product sales guidance for fiscal 2010. For fiscal 2010, Cardica continues to expect that research and development and selling, general and administrative expenses will total between $11 million and $13 million, including non-cash stock-based compensation expense of approximately $1.5 million. Cardica continues to expect its cash and cash equivalents to decline by approximately $2.5 million per quarter in fiscal 2010, without giving effect to any additional financing transactions that may occur.

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