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MELA Sciences, a Leader in Melanoma Diagnostics, Reports Third Quarter 2013 Results and Launch of New Strategic Plan



MELA Sciences, a Leader in Melanoma Diagnostics, Reports Third Quarter 2013
Results and Launch of New Strategic Plan

IRVINGTON, N.Y., Nov. 6, 2013 (GLOBE NEWSWIRE) -- MELA Sciences, Inc.
(Nasdaq:MELA), the medical device company that has developed and is
commercializing MelaFind^®, an optical diagnostic device using proprietary
technology that enables dermatologists to "see" below the surface of a
patient's skin to aid in the diagnosis of melanoma, today announced financial
results for the third quarter ended September 30, 2013. The company will host
a conference call today at 4:30 PM ET to review its results.

Conference Call Details:  
Live Webcast/Replay:     melasciences.com/investors/home
Conference Call Number:  1-877-303-9205

Third Quarter 2013 Highlights and Recent Events

  * Third Quarter 2013 revenue rose 56% to $107,707 compared to the same
    period in 2012
     
  * Launched new strategic marketing plan to drive MelaFind adoption by key
    opinion leaders (KOLs)

    * Initiated clinical advisory meeting at Annual Fall Clinical Dermatology
      Conference in Las Vegas
       
    * Planning for four additional programs through 2014

  * Strengthened Leadership

    * Appointed former senior Johnson & Johnson healthcare executive, Rose
      Crane, as President and CEO and Board member effective November 11, 2013
       
    * Added medical device commercialization expert, Frank DeBernardis, as a
      consultant to lead sales/marketing and business development Frank has
      over 35 years' experience in medical devices
       
    * Appointed medical device entrepreneur and former Vital Signs CFO, Tony
      Dimun, to the Board
       
    * Appointed MELA director and Interim CEO, Robert Coradini, as Chairman of
      MELA Science's Board effective November 11, 2013
       
    * Appointed Dr. Darrell Rigel, Clinical Professor of Dermatology at New
      York University, as Chief Medical Advisor to MELA Science's Board

  * Raised net proceeds of approximately $5.5 million in a registered offering

MELA Science's Launch of New Strategy

MELA Sciences is revising its market strategy to target larger, multicenter
facilities and leading researchers based on data and science. The Company is
also redirecting its focus to the high-risk melanoma patient group and
exploring possible applications linking dermatology and pathology. MELA
Sciences is also announcing that through its technology review and discussions
with numerous experts, the company is exploring the potential to leverage
MelaFind's fundamental technology, including spectral imaging (Ultra-Optics)
that "sees" up to 2.5 mms under the skin surface. Key researchers working with
the company are exploring the knowledge and potential of the Company's imaging
technology platform. MELA Sciences is evaluating the use of optical imaging to
enter the field of image guided diagnosis following well established business
models proven by ultrasound, CT, x-ray and MRI. These efforts are in addition
to MELA Science's strategic repositioning of MelaFind to leading KOLs and
Medical Institutions.

Building Awareness & Engagement Through Data

    * Presented clinical findings of MelaFind in four poster presentations
      attended by over 700 leading dermatologists at the 32nd Annual Fall
      Clinical Dermatology Conference in Las Vegas, Nevada (October)
       
    * Showcased MelaFind at American Society of Dermatologic Surgery Annual
      Meeting in Chicago (October)
       
    * Participated in symposium with approximately 100 specialists at
      Washington D.C. Dermatological Society's Fall Clinical Conference in
      Falls Church, Virginia (October)
       
    * Exhibited MelaFind at German Skin Cancer Congress (ADO) in Essen,
      Germany (September)
       
    * Participated in the Melanoma Research Foundation skin cancer screening
      at the 2013 Ironman Championships in Kona, HI (October) during which Dr.
      Monica Scheel, a dermatologist who routinely uses MelaFind for exams in
      her office, led free skin cancer exams and MelaFind screenings of
      participants of the event

"The MELA Sciences' story continues to evolve. We believe we are making
meaningful progress, and we are continuing to strive toward making advances
with our strategic initiatives in the upcoming quarters," said Robert
Coradini, Interim Chief Executive Officer of MELA Sciences. "Insights gained
from working with leading researchers in dermatology and pathology are
enabling us to expand our understanding of the value of the information
content our technology provides. We are developing a strategic plan to unlock
MelaFind's full potential. Based on these insights, we are adjusting our
customer targeting, expanding our messaging and enhancing our pricing models.
We plan to accelerate adoption of MelaFind by providing data showing the many
ways in which MelaFind can contribute in the fight against melanoma," Mr.
Coradini continued.

Third Quarter 2013 Financial Results

Revenues for the three months ended September 30, 2013 were $107,707 compared
to $69,127 reported for the same period in 2012. Deferred revenues reported as
of September 30, 2013 were $372,741 versus deferred revenues of $150,876
reported as of September 30, 2012. Deferred revenues reflect the timed
recognition of the installation fee revenue over the term of a MelaFind user
agreement, which is generally two years.

The Company's net loss for the three months ended September 30, 2013 was $7.4
million, or $0.17 per diluted share, compared to a net loss of $5.4 million,
or $0.17 per diluted share, for the same period in 2012. The increase in net
loss was primarily attributable to cost of revenue which includes a non-cash
impairment charge of $1 million against MelaFind systems placed in
underutilized locations and an approximately $1 million charge to retire its
venture debt. Net of these two one-time charges, the company's net loss would
have been approximately $5.4 million, consistent with the year ago period.

As of September 30, 2013, the Company's cash and cash equivalents were $2.6
million. This excludes net proceeds of approximately $5.5 million from the
registered offering that was consummated on October 31, 2013.

Year to Date 2013 Financial Results

Revenues for the nine months ended September 30, 2013 were $396,206 compared
to $156,134 reported for the same period in 2012. The Company's net loss for
the nine months ended September 30, 2013 was $21.3 million, or $0.51 per
diluted share, compared to a net loss of $16.6 million, or $0.55 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 during the first half of the year,
incremental marketing costs during the same period, increase in direct costs
associated with the placement of MelaFind systems in dermatologists' offices,
and a $1 million impairment charge against MelaFind systems placed in
locations that do not fit the profile of our strategic marketing shift and a
$1 million charge to retire our venture debt.

Conference Call

MELA Sciences will host a conference call today at 4:30 PM EDT. 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.

MelaFind is the first and only FDA approved automatic (algorithm-based)
optical diagnostic device for melanoma detection used by dermatologists.

MELA Sciences is an optical imaging medical device company focused on
dermatology diagnostics. Our first and flagship product is MelaFind, though we
plan to explore new uses and embodiments of the Company's innovative
technology. MelaFind is a non-invasive diagnostic tool to provide additional
information to dermatologists during melanoma skin examinations. The device
uses multispectral 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
                                                                 
                                                 September 30,  December 31,
                                                 2013           2012  
                                                 (unaudited)    *
ASSETS                                                           
Current Assets:                                                  
Cash and cash equivalents                        $ 2,620,291    $ 7,861,524
Accounts receivable, net                          50,915         179,956
Inventory, net                                    271,588        675,602
Prepaid expenses and other current assets         665,096        965,624
                                                                 
Total Current Assets                              3,607,890      9,682,706
Property and equipment, net                       9,418,384      7,349,531
Patents and trademarks, net                       43,064         47,308
Deferred financing costs                          --             106,141
Other assets                                      80,127         84,127
                                                                 
Total Assets                                     $ 13,149,465   $ 17,269,813
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                             
Current Liabilities:                                             
Accounts payable                                 $ 1,424,795    $ 1,850,102
Accrued expenses                                  878,503        956,541
Deferred placement revenue                        267,451        171,726
Other current liabilities                         57,828         40,811
                                                                 
Total Current Liabilities                         2,628,577      3,019,180
                                                                 
Long Term Liabilities:                                           
Deferred placement revenue                        105,290        131,651
Deferred rent                                     126,033        143,772
                                                                 
Total Long Term Liabilities                       231,323        275,423
                                                                 
Total Liabilities                                 2,859,900      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         43,139         32,205
43,139,027 shares at September 30, 2013 and
32,204,720 at December 31, 2012
Additional paid-in capital                        173,784,092    156,142,873
Accumulated deficit                               (163,537,666)  (142,199,868)
                                                                 
Stockholders' Equity                              10,289,565     13,975,210
                                                                 
Total Liabilities and Stockholders' Equity       $ 13,149,465   $ 17,269,813
                                                                 
* Derived from the audited balance sheet as of                   
December 31, 2012

                                                                 
 
 
MELA SCIENCES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
                                                  
                     Three months ended          Nine months ended
                     September 30,               September 30,  
                     2013          2012          2013           2012  
Revenue              $ 107,707     $ 69,127      $ 396,206      $ 156,134
Cost of revenue       1,976,501     568,899       4,438,211      1,071,357
                                                                 
                      (1,868,794)   (499,772)     (4,042,005)    (915,223)
                                                                 
Operating expenses:                                              
Research and          856,764       1,398,500     3,241,727      5,506,596
development
Selling, general and  3,480,689     3,469,435     12,440,457     10,215,501
administrative
                                                                 
Operating loss        (6,206,247)   (5,367,707)   (19,724,189)   (16,637,320)
                                                                 
Interest income       2,508         5,875         7,323          28,280
Interest expense      (222,758)                   (563,143)      
Benefit (change) in
fair value of                                     (89,859)       
warrant liability.
Write-off of
unamortized loan      (983,330)                   (983,330)      
costs
Other income          5,400         4,954         15,400         14,950
                                                                 
Net loss:            $ (7,404,427) $ (5,356,878) $ (21,337,798) $ (16,594,090)
                                                                 
Basic and diluted
net loss per common  $ (0.17)      $ (0.17)      $ (0.51)       $ (0.55)
share
                                                                 
Basic and diluted
weighted average      43,121,179    30,667,371    41,828,144     30,438,669
number of common
shares outstanding

                                                               
 
 
MELA SCIENCES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
                                              
                                             Nine Months Ended September 30,  
                                             2013             2012  
Cash flows from operating activities:                          
Net loss                                     $ (21,337,798)   $ (16,594,090)
Adjustments to reconcile net loss to net                       
cash used in operating activities:
Write-off of unamortized loan costs           983,330          --
Depreciation and amortization                 1,790,037        583,058
Impairment of long-lived assets               1,010,712        -- 
Allowance for uncollectible accounts          52,097           -- 
Inventory reserve                             325,000          -- 
Non-cash interest expense                     163,569          -- 
Change in fair value of warrant liability     89,859           -- 
Write-off of unamortized financing costs      41,166           62,391
Issuance of shares to non-employees for       99,283           --
services rendered
Non-cash equity compensation                  1,157,471        1,106,296
Changes in operating assets and liabilities:                   
Decrease (increase) in accounts receivable    76,944           (100,578)
Decrease (increase) in inventory              79,014           (566,287)
Decrease in prepaid expenses and other        300,528          351,782
current assets
Decrease (increase) in other assets           4,000            (7,501)
(Decrease) increase in accounts payable and   (503,345)        773,946
accrued expenses
(Decrease) increase in deferred rent          (17,739)         4,167
Increase in deferred revenue                  69,364           150,876
Increase in long-term interest payable        86,042           -- 
Increase in other current liabilities         17,017           50,904
                                                               
Net cash used in operating activities         (15,513,449)     (14,185,036)
                                                               
Cash flows from investing activities:                          
Purchases of property and equipment           (4,865,358)      (3,668,410)
                                                               
Net cash used in investing activities         (4,865,358)      (3,668,410)
                                                               
Cash flows from financing activities:                          
Proceeds from borrowings and issuance of      6,000,000        -- 
warrant
Expenses related to borrowings and issuance   (245,358)        -- 
of warrant
Repayment of long-term debt                   (6,425,000)      --
Proceeds from exercise of stock options       18,059           38,585
Net proceeds from public offerings            15,789,873       3,093,839
                                                               
Net cash provided by financing activities     15,137,574       3,132,424
                                                               
Net decrease in cash and cash equivalents     (5,241,233)      (14,721,022)
Cash and cash equivalents at beginning of     7,861,524        27,996,871
period
                                                               
Cash and cash equivalents at end of period   $ 2,620,291      $ 13,275,849
                                                               
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    $ —              $ 522,014
from other assets to property and equipment

CONTACT: For Investors
         Lynn Pieper
         Westwicke Partners
         415-202-5678
        
         For Media
         Diana Garcia Redruello
         PR@melasciences.com
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