Excerpt From
|
KERAVISION INC /CA/
Form: 10-Q Filing Date: 11/12/99 |
Results of Operations
Three Months Ended September 30, 1999 and 1998
Net revenue increased by $3.9 million to $4.2 million for the t
month period ended September 30, 1999 compared to $239,000 for the
three-month period ended September 30, 1998. Revenues in the quarter
were primarily driven by sales of Intacs start-up kits, which include
surgical instruments and a small initial supply of Intacs. The
predominant portion of the revenues received from the sale of the kits
was attributable to the proprietary instruments used in the procedure.
Growth and maintenance of our net sales will be dependent upon our
ability to sell Intacs in increasing volumes.
Cost of sales and manufacturing expenses totaled $2.9 million i
three-month period ended September 30, 1999 as compared to $1.2 million
in the comparable prior year period. The increase in cost of sales and
manufacturing expenses reflected higher fixed costs associated with the
establishment of our manufacturing operations and higher variable costs
as a result of higher net sales.
Research and development expenses, which include clinical and
regulatory expenses, for the three-month period ended September 30, 199
were $2.3 million, a decrease of $546,000 from the three-month period
ended September 30, 1998. The decrease is primarily due to reduced
clinical trial costs due to the completion of various studies, in
addition to the reduced legal expenses related to patents.
Selling, general and administrative expenses of $4.3 million we
incurred in the three-month period ended September 30, 1999, an increas
of $2.1 million from the $2.1 million incurred in the comparable prior
year period. The increase was primarily due to increased marketing
efforts related to market development in the U.S. and Canada.
Interest income and other; net was $555,000 for the three-month
period ended September 30, 1999, as compared to $196,000 in the
comparable prior year period. Interest income increased due to the
short-term investment of proceeds from the secondary public offering
completed on August 17, 1999. Interest expense increased $252,000 to
$227,000 for the three-month period ended September 30, 1999. The
increase was primarily due to short-term debt.
The net loss for the three-month period was $5.0 million versus
million for the same period in 1998. The net loss applicable to common
stockholders for the quarter ended September 30, 1999 was $5.3 million
versus $6.0 million for the comparable prior year period. The net loss
per share applicable to common stockholders for the quarter was 32 cent
as compared to 48 cents for the same period from the previous year.
This per share calculation included the effect of dividends, of $369,00
and $383,000 to preferred stockholders for the three-month periods ende
September 30, 1999 and 1998, respectively.
Nine months ended September 30, 1999 and 1998
Net sales for the nine-month period ended September 30, 1999 to
$8.6 million, an increase of $8.1 million from $503,000 for the nine-
month period ended September 30, 1998. The increase in net sales
primarily reflected the initial shipment of instrument kits to surgeons
subsequent to their completion of training in the Intacs procedure.
Each kit includes two sets of proprietary instruments to perform the
Intacs placement procedure and a supply of 18 Intacs. The predominant p
of the revenues received from the sale of the kits was attributable to
proprietary instruments. Significant growth of our net sales will be
dependent upon our ability to sell Intacs in increasing volumes.
Cost of sales and manufacturing expenses totaled $7.5 million i
1999 period as compared to $3.1 million in the 1998 period. The increas
in cost of sales and manufacturing expenses reflected higher fixed cost
associated with the establishment of our manufacturing operations and
higher variable costs as a result of higher net sales.
Research and development expenses, which include clinical and
regulatory expenses, for the 1999 period were $6.5 million, which
represented a decrease of $2.4 million from the 1998 period. The
decrease was primarily due to reduced clinical trial costs as a result
of the completion of various studies, in addition to reduced legal
expenses related to patents.
Selling, general and administrative expenses were $12.4 million
the 1999 period, which represented an increase of $6.6 million from the
1998 period, primarily due to increased marketing efforts related to
market development in the U.S. and Canada.
Interest income and other; net was $619,000 in the 1999 period,
compared to $387,000 in the 1998 period. The 1999 amount reflected an
increased due to short terms investments of proceeds from the secondary
public offering completed on August 17, 1999. Interest expense increase
$620,000 to $607,000 for the nine-month period ended September 30, 1999
The increase was primarily due to short-term debt.
The net loss for the nine-month period was $17.9 million versus
$16.8 million for the same period in 1998. The net loss applicable to
common stockholders for the year was $19.0 million versus $19.8 million
for the comparable prior year period. The net loss per share applicable
to common stockholders for the year was $1.34 as compared to $1.57 for
the same period from the previous year. This per share calculation
included the effect of dividends, of $1.1 million and $3.0 million to
preferred stockholders for the nine-month periods ended September 30,
1999 and 1998, respectively.
Liquidity and Capital Resources
KeraVision has financed its operations since incorporation prim
through public stock offerings, private sales of preferred stock,
interest income, equipment financing arrangements and the Transcend
acquisition described below. Cash used in operating activities for the
first nine months of 1999 increased to $17.6 million from $16.4 million
in the comparable period of the prior year, reflecting increased
selling, general and administrative and manufacturing expenses. Cash an
investments were $51.7 million at September 30, 1999. Capital
expenditures for the first nine months of 1999 and 1998 were $1.1
million and $616,000, respectively.
In March 1999, KeraVision entered into a loan agreement providi
for borrowings of $5.0 million. The loan bears interest at 12.6% per
annum until KeraVision repays the loan due on September 30, 2001.
KeraVision has the right to prepay the loan subject to a prepayment
penalty of 6.0% of the amount being prepaid on the prepayment date.
In May 1999, KeraVision completed the acquisition of Transcend
Therapeutics, Inc. and its net cash balance of $8.5 million. Transcend
has terminated its activities as a drug development company and now is
wholly owned subsidiary of KeraVision. No Transcend employees were
retained. Transcend stockholders received 978,498 shares of KeraVision'
common stock. This transaction was accounted for as an acquisition of
assets.
In August 1999, KeraVision completed a secondary public offerin
its Common Stock. The Company issued 4,600,000 shares at $13.00 per
share, from which it realized net proceeds (after under-writing
discounts and expenses) of approximately $55.8 million.
KeraVision's cash requirements may vary materially from those n
planned because of results of research, development and clinical
testing, establishment of relationships with strategic partners, change
in focus and direction of KeraVision's research and development
programs, changes in the scale, timing, or cost of KeraVision's
commercial manufacturing facility, competitive and technological
advances, the FDA or other regulatory processes, changes in KeraVision'
marketing and distribution strategy, and other factors.