MELA Sciences, a Leader in the Fight Against Melanoma, Announces Second Quarter 2013 Financial Results; Announces Restructuring IRVINGTON, N.Y., Aug. 7, 2013 (GLOBE NEWSWIRE) -- MELA Sciences, Inc. (Nasdaq:MELA), the medical device company that has developed and is commercializing MelaFind^®, the first and only FDA approved optical diagnostic device for melanoma detection used by dermatologists in their fight against melanoma, today announced financial results for the second quarter ended June 30, 2013. The company also announced a restructuring of operations. Second Quarter 2013 and Recent Performance Highlights: -- Achieved revenue of $144,400 for second quarter 2013. *Ended the second quarter with an installed base of 145 MelaFind systems and continue to work with dermatology customers to successfully incorporate MelaFind into their practices; *Ended the second quarter with signed user agreements for 168 MelaFind systems in the US and Germany, of which 23 were pending installation. -- Successful summer dermatology meetings: *8th World Congress of Melanoma meeting in Hamburg, Germany *MELA Sciences held a symposium with over 100 attendees, many of whom are considered leaders within dermatology. *Summer American Academy of Dermatology (AAD) meeting in New York *Hosted several meetings with leading experts in dermatology to formalize our Key Opinion Leader (KOL) and User Advisory Boards MELA Sciences is effecting a restructuring of its operations to focus on improving commercial execution and to position the company to support sustainable revenue growth and eventual profitability. Through the restructuring, management is establishing a cost structure that is more commensurate with the current and projected level of revenues, and will reallocate resources within commercial sales and marketing initiatives intended to improve business processes and support accelerated revenue growth. The restructuring is expected to reduce headcount by approximately 25% percent. As a result of the restructuring, MELA Sciences expects to take a non-recurring charge of approximately $100,000 in the third quarter of 2013. The company expects payroll and related cost savings of approximately $2.7 million per year compared to fiscal 2012, with initial impact benefitting third quarter 2013 results. Additional operating savings will also be realized starting immediately. "While we are not pleased with the commercial traction that MelaFind has gained to date, we have embarked on the restructuring announced today along with several strategic initiatives to build a successful and profitable business. Based on continued strong clinician feedback, the significant market opportunity and meaningful advantages MelaFind offers to the dermatologist, along with cost-improving activities that are underway, we are more enthusiastic about our long term prospects than ever before," said Robert Coradini, Interim Chief Executive Officer of MELA Sciences. "We are developing a strategic plan to increase utilization and drive adoption. The bottom line is that the technology is robust and the cost improvements are clear. We are striving to achieve commercial success of MelaFind, drive meaningful revenue acceleration and manage expenses thoughtfully and with discipline, all with an eye toward eventual profitability." MelaFind is the Company's breakthrough non-invasive and objective automated point of care system for use when a dermatologist chooses to obtain additional information for a decision to biopsy clinically atypical pigmented skin lesions with one or more clinical or historical characteristics of melanoma. Second Quarter 2013 Financial Results Revenues for the three months ended June 30, 2013 were $144,400 compared to $75,760 reported for the same period in 2012. Deferred revenues reported as of June 30, 2013 were $434,030 versus deferred revenues of $87,980 reported as of June 30, 2012. Revenues for the second quarter 2013 were based on 145 installed MelaFind systems, 19 of which were placed in the second quarter. Reported revenues do not account for 23 additional user agreements that were signed in the quarter that are pending installation and training of staff. Deferred revenues reflect the timed recognition of the installation fee revenue over the term of the user agreement, which is generally two years. The Company's net loss for the three months ended June 30, 2013 was $7.4 million, or $0.17 per diluted share, compared to a net loss of $5.5 million, or $0.18 per diluted share, for the same period in 2012. The increase in the net loss was primarily attributable to Selling, General and Administrative expenses related to the expansion of the Company's sales force and the Company's incremental marketing costs as well as the increase in direct costs associated with the placement of MelaFind systems in dermatologists' offices. As of June 30, 2013, the Company's cash and cash equivalents were $15.2 million. Year to Date 2013 Financial Results Revenues for the six months ended June 30, 2013 were $288,500 compared to $87,000 reported for the same period in 2012. The Company's net loss for the six months ended June 30, 2013 was $13.9 million, or $0.34 per diluted share, compared to a net loss of $11.2 million, or $0.37 per diluted share, for the same period in 2012. The increase in the net loss was primarily attributable to Selling, General and Administrative expenses related to the expansion of the Company's sales force and the Company's incremental marketing costs as well as the increase in direct costs associated with the placement of MelaFind systems in dermatologists' offices. Conference Call MELA Sciences will host a conference call today at 4:30 PM EDT to discuss second quarter 2013 quarterly results. To participate in the call, dial 1-877-303-9205 approximately 10 minutes before the conference call is scheduled to begin. To listen via live webcast, please go to the investor relations section of the MELA Sciences website at http://www.melasciences.com approximately 10 minutes prior to the teleconference start time. If you are unable to participate during the live conference call and webcast, the conference call audio cast will be archived and available for replay for approximately 90 days. About MELA Sciences, Inc. MELA Sciences is a medical device company focused on the commercialization of its flagship product, MelaFind^®, and its further design and development. MelaFind is a non-invasive tool to provide additional information to dermatologists during melanoma skin examinations. The device uses light from visible to near-infrared wavelengths to evaluate skin lesions up to 2.5 mm beneath the skin. The device provides information on a lesion's level of morphologic disorganization to provide additional objective information that may be used by dermatologists in the biopsy decision-making process. MelaFind has been approved by the US Food and Drug Administration for use in the US. In addition, MelaFind has received CE Mark approval and is approved for use in the European Union. For more information on MELA Sciences, visit www.melasciences.com. Safe Harbor This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to our plans, objectives, expectations and intentions and other statements that contain words such as "expects," "contemplates," "anticipates," "plans," "intends," "believes," "assumes," "predicts" and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters. These statements are based on our current beliefs or expectations and are inherently subject to significant known and unknown uncertainties and changes in circumstances, many of which are beyond our control. There can be no assurance that our beliefs or expectations will be achieved. Actual results may differ materially from our beliefs or expectations due to financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the company and the medical device industry in general, as well as more specific risks and uncertainties facing the company such as those set forth in its reports on Forms 10-Q and 10-K filed with the US Securities and Exchange Commission (the "SEC"). Factors that might cause such a difference include whether MelaFind^® achieves market acceptance. Given the uncertainties affecting companies in the medical device industry such as the Company, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. The Company urges you to carefully review and consider the disclosures found in its filings with the SEC which are available at www.sec.gov and www.melasciences.com. MELA SCIENCES, INC. CONDENSED BALANCE SHEETS June30, December31, 2013 2012 (unaudited) * ASSETS Current Assets: Cash and cash equivalents $15,152,498 $7,861,524 Accounts receivable, net 208,259 179,956 Inventory, net 276,502 675,602 Prepaid expenses and other current assets 747,420 965,624 Total Current Assets 16,384,679 9,682,706 Property and equipment, net 10,011,761 7,349,531 Patents and trademarks, net 44,333 47,308 Deferred financing costs 71,364 106,141 Other assets 87,627 84,127 Total Assets $26,599,764 $17,269,813 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $1,809,242 $1,850,102 Accrued expenses 1,222,359 956,541 Loan payable 353,283 — Deferred placement revenue 290,740 171,726 Other current liabilities 53,792 40,811 Total Current Liabilities 3,729,416 3,019,180 Long Term Liabilities: Deferred placement revenue 143,290 131,651 Loan payable 5,008,846 — Long-term interest payable 51,922 — Deferred rent 131,946 143,772 Total Long Term Liabilities 5,336,004 275,423 Total Liabilities 9,065,420 3,294,603 Stockholders' Equity Preferred stock — $.10 par value; authorized 10,000,000 shares; issued and outstanding: none Common stock — $.001 par value; authorized 95,000,000 shares; issued and outstanding 43,112 32,205 43,112,144 shares at June30, 2013 and 32,204,720 at December31, 2012 Additional paid-in capital 173,624,471 156,142,873 Accumulated deficit (156,133,239) (142,199,868) Stockholders' Equity 17,534,344 13,975,210 Total Liabilities and Stockholders' Equity $26,599,764 $17,269,813 * Derived from the audited balance sheet as of December31, 2012 MELA SCIENCES, INC. CONDENSED STATEMENTS OF OPERATIONS (unaudited) Threemonths ended June30, Six months ended June30, 2013 2012 2013 2012 Revenue $144,399 $75,757 $288,499 $87,007 Cost of revenue 1,381,447 372,048 2,461,710 502,458 (1,237,048) (296,291) (2,173,211) (415,451) Operating expenses: Research and 1,122,962 1,673,338 2,384,963 4,108,096 development Selling, general and 4,672,540 3,528,575 8,959,768 6,746,066 administrative Operating loss (7,032,550) (5,498,204) (13,517,942) (11,269,613) Interest income 2,710 9,021 4,815 22,405 Interest (291,622) (340,385) expense Change in fair value of warrant (105,292) (89,859) liability Other income 5,000 4,996 10,000 9,996 Net loss: $(7,421,754) $(5,484,187) $(13,933,371) $(11,237,212) Basic and diluted net loss $(0.17) $(0.18) $(0.34) $(0.37) per common share Basic and diluted weighted average number 43,086,595 30,332,217 41,170,911 30,323,061 of common shares outstanding MELA SCIENCES, INC. CONDENSED STATEMENTS OF CASH FLOWS (unaudited) SixMonthsEndedJune 30, 2013 2012 Cash flows from operating activities: Net loss $(13,933,371) $(11,237,212) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,107,009 330,395 Allowance for uncollectible accounts 40,290 — Inventory reserve 325,000 — Non-cash interest expense 98,706 — Change in fair value of warrant liability 89,859 — Write-off of unamortized financing costs 41,166 62,391 Non-cash equity compensation 1,097,106 774,493 Changes in operating assets and liabilities: Increase in accounts receivable (68,593) (68,360) Decrease (increase) in inventory 74,100 (383,181) Decrease in prepaid expenses and other current 218,204 306,814 assets Increase in other assets (3,500) (6,751) Increase in accounts payable and accrued 224,958 888,813 expenses (Decrease) increase in deferred rent (11,826) 2,778 Increase in deferred revenue 130,653 87,974 Increase in long-term interest payable 51,922 — Increase in other current liabilities 12,981 12,277 Net cash used in operating activities (10,505,336) (9,229,569) Cash flows from investing activities: Purchases of property and equipment (3,766,264) (1,390,572) Net cash used in investing activities (3,766,264) (1,390,572) Cash flows from financing activities: Proceeds from borrowings and issuance of 6,000,000 — warrant Expenses related to borrowings and issuance of (245,358) — warrant Expenses related to public offering 0 (198,942) Proceeds from exercise of stock options 18,059 33,310 Net proceeds from public offerings 15,789,873 — Net cash provided by (used in) financing 21,562,574 (165,632) activities Net increase (decrease) in cash and cash 7,290,974 (10,785,773) equivalents Cash and cash equivalents at beginning of 7,861,524 27,996,871 period Cash and cash equivalents at end of period $15,152,498 $17,211,098 Supplemental disclosure of cash flow information: Non-cash investing and financing activity: Reclassification of warrant liability to $652,442 $— stockholders' equity Reclassification of MelaFind^® components from $ — $522,014 other assets to property and equipment CONTACT: For further information contact: For Investors Lynn Pieper Westwicke Partners 415-202-5678 For Media Diana Garcia Redruello PR@melasciences.com
MELA Sciences, a Leader in the Fight Against Melanoma, Announces Second Quarter 2013 Financial Results; Announces Restructuring
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