MINRAD International, Inc. Announces 2007 Financial Results

ORCHARD PARK, N.Y., March 31 /PRNewswire-FirstCall/ -- MINRAD
International, Inc. (Amex: BUF) today announced its financial results for the
year and quarter ended December 31, 2007.

(in thousands,
except per share data) Year Ended Variance
December 31, December 31, $ %
2007 2006
Revenue $12,952 $16,341 $(3,389) (21)%
Cost of goods sold 13,518 10,754 2,764 26%
Gross profit (loss) (566) 5,587 (6,153) (110)%

Gross margin (4)% 34%

Operating Expenses
Sales & marketing 8,407 5,074 3,333 66%
Research & development 5,404 2,916 2,488 85%
Finance & administrative 4,375 4,636 (261) (6)%
Total Operating
Expenses 18,186 12,626 5,560 44%

Net loss available to
common shareholders $(18,798) $(7,272) $(11,526) 159%

Earnings per share
(basic and diluted) $(0.39) $( 0.20) $(0.19)

Revenue:

(in thousands) Year Ended Variance
December 31, December 31, $ %
2007 2006
Revenue
Sevoflurane $8,378 $10,538 $(2,160) (21)%
Other inhalants 4,107 5,712 (1,605) (28)%
Total Anesthesia &
Analgesia 12,485 16,250 (3,765) (23)%
Image Guidance 467 91
376 414%
Total Revenue $ 12,952 $ 16,341 $(3,389) (21)%

Revenue was $12,952 for 2007, a decrease of $3,389 or 21% compared to
$16,341 in 2006. This decrease is primarily attributable to a decline in
domestic sales due to disruptions in our manufacturing operations which
limited production output and sales in 2007 which resulted from the addition
and start-up of a new independent sevoflurane manufacturing line in December,
2007. International sales were relatively flat between the two periods.
Our anesthesia and analgesia product line generated 96% and 99% of revenue
for 2007 and 2006, respectively. Sevoflurane sales in 2007 were $8,378, a
decrease of $2,160 compared to 2006. Isoflurane sales in 2007 were $3,211, a
decrease of $1,068 when compared to 2006.
Sales to Original Equipment Manufacturers, or OEMs, which are included in
United States sales, increased by $188, or 15%, from $1,257 for 2006 compared
to $1,445 for 2007 due to the availability of sevoflurane as a product choice
in addition to isoflurane and enflurane. Sales to our primary North American
distributor decreased by $3,899 from $5,367 in 2006 to $1,468 for 2007.

(in thousands) Year Ended Variance
December 31, December 31, $ %
2007 2006
Revenue
United States $3,358 $7,061 $(3,703) (52)%
Europe 745 1,661 (916) (55)%
Western Hemisphere
(excluding U.S.) 6,851 6,125 726 12%
Pacific Rim 1,998 1,494 504 34%
Total Revenue $ 12,952 $ 16,341 $(3,389) (21)%

Gross Profit:
Gross profit or loss was $(566), a decrease of $6,153, or 110% compared to
$5,587 in 2006. The reduction in gross profit was driven by a decrease in
revenue and an increase in cost of goods sold, both of which are attributable
to the disruption in operations which limited production output and sales
resulting from the addition and start-up of a new independent sevoflurane
manufacturing line in 2007. A reduction in gross profit also resulted from a
charge to cost of goods sold of $2,510 to establish a reserve for
work-in-process inventory to cover supplier related issues that have
unfavorably affected product yield. It is the Company's intent to resolve
these issues in an expedited manner and recover some of the costs incurred
associated with the yield losses. Gross margin was (4.4)% in 2007 compared to
34.2% in 2006.
Operating Expenses:
Sales and marketing expenses for 2007 were $8,407 or 65% of revenue
compared to $5,074, or 31% of revenue in 2006. The $3,333 increase was
primarily driven by the expansion of our sales organization both domestically
and internationally to accommodate anticipated expanded sales growth.
Research and development expenses for 2007 were $5,404, or 42% of revenue
compared to $2,916 or 18% of revenue in 2006. The increase was primarily due
to an expansion of our research and development efforts related to our
anesthesia & analgesia, real-time image guidance, and conscious sedation
product lines.
Finance and administration expenses for 2007 were $4,375 or 34% of revenue
compared to $4,636 or 28% of revenue in 2006. Increases in deprecation and
office rental expenses in 2007 were offset by decreases in employment expenses
in 2007.
Net Loss:
For 2007, the Company experienced a loss of $(18,798), or $(0.39) per
common share. This compares with a loss of $(7,272), or $(0.20) per common
share the Company experienced in 2006. The increased operating loss for the
year is primarily due to decreases in gross margin and revenue combined with
increases in our overall operating expenses between the two periods.
Subsequent Events:
We estimate revenue for the first quarter of 2008, ending on March 31st,
2008, will be in the range of $11.5 to $12.0 million.
Fourth Quarter 2007 Results:

(in thousands, except
per share data) Quarter Ended Variance
December 31, December 31, $ %
2007 2006
Revenue $3,032 $5,892 $(2,860) (49)%
Cost of goods sold 4,710 4,633 77 2%
Gross profit (loss) (1,678) 1,259 (2,937) (233)%

Gross margin (55)% 21%

Operating Expenses
Sales & marketing 2,391 1,891 500 27%
Research & development 1,367 1,060 307 29%
Finance &
administrative 1,240 1,328 (88) (7)%
Total Operating
Expenses 4,998 4,279 719 17%

Net loss available
to common to common
shareholders $(6,764) $(3,011) $(3,753) 124%

Earnings per share
(basic and diluted) $(0.14) $( 0.08) $(0.06)

(in thousands) Quarter Ended Variance
December 31, December 31, $ %
2007 2006
Revenue
Sevoflurane $2,198 $4,261 $(2,063) (48)%
Other inhalants 679 1,606 (927) (58)%
Total Anesthesia &
Analgesia 2,877 5,867 (2,990) (51)%
Image Guidance 155 25 130 520%
Total Revenue $3,032 $5,892 $(2,860) (49)%

(in thousands) Quarter Ended Variance
December 31, December 31, $ %
2007 2006
Revenue
United States $451 $952 $(501) (53)%
Europe 134 423 (289) (68)%
Western Hemisphere
(excluding U.S.) 1,631 4,089 (2,458) (60)%
Pacific Rim 816 428 388 91%
Total Revenue $3,032 $5,892 $(2,860) (49)%

Contact: Charles R. Trego, Jr., Chief Financial Officer
ctrego@minrad.com
(716) 855-1068
http://www.minrad.com

About the Company
MINRAD International, Inc. is an interventional pain management company
with real-time image guidance, anesthesia and analgesia, conscious sedation
product lines. The real-time image guidance products facilitate minimally
invasive surgery especially for pain management and have broad applications in
orthopedics, neurosurgery, and interventional radiology. These devices enable
medical professionals to improve the accuracy of interventional procedures and
reduce radiation exposure. MINRAD International also manufactures and markets
generic inhalation anesthetics for use in connection with human and veterinary
surgical procedures. The company is developing a drug/drug delivery system for
conscious sedation, which, similar to nitrous oxide in dental surgery,
provides a patient with pain relief without loss of consciousness. Additional
information can be found at the company's website, http://www.minrad.com.
The information contained in this news release, other than historical
information, consists of forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements may involve
risks and uncertainties that could cause actual results to differ materially
from those described in such statements. Factors that may cause actual results
to differ materially from those expressed or implied by its forward-looking
statements include, but are not limited to, Minrad International's limited
operating history and business development associated with being a growth
stage company; its dependence on key personnel; its need to attract and retain
technical and managerial personnel; its ability to execute its business
strategy; the intense competition it faces; its ability to protect its
intellectual property and proprietary technologies; its exposure to product
liability claims resulting from the use of its products; general economic and
capital market conditions; financial conditions of its customers and their
perception of its financial condition relative to that of its competitors; as
well as those risks described under the heading "Risk Factors" of Minrad
International's Form 10-KSB, filed with the Securities and Exchange Commission
on March 29, 2007. Although Minrad International, Inc. believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.

MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)

December December
31, 31,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $ 238 $ 4,664
Investments - 7,249
Accounts receivable 3,310 10,473
License agreement receivable 1,000 -
Inventories, net 12,402 4,360
Prepaid expenses and other 1,121 1,563
Total current assets 18,071 28,309
Property and equipment:
Machinery and equipment 15,169 2,420
Computer equipment and software 1,471 571
Furniture and fixtures 815 662
Leasehold improvements 385 385
Construction in progress 7,692 4,177
25,532 8,215
Less accumulated depreciation 2,247 1,234
Net property and equipment 23,285 6,981
Other assets, net 639 439
$ 41,995 $ 35,729
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Demand notes payable $ 6,000 $ -
Accounts payable 12,983 965
Accrued expenses 1,004 1,262
Current portion of long term debt 206 -
Current portion of deferred income 103 -
Total current liabilities 20,296 2,227
Long-term liabilities
Long-term debt 1,725 -
Long-term deferred income 897 -
Total long-term liabilities 2,622 -

Commitments and contingencies - -
Stockholders' equity:
Series A convertible preferred stock - -
Common stock 487 470
Additional paid in capital 80,869 76,513
Accumulated deficit (62,279) (43,481)
Total stockholders' equity 19,077 33,502
$ 41,995 $ 35,729

MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

Years Ended
December December
31, 31,
2007 2006

Revenue $12,952 $16,341
Cost of goods sold 13,518 10,754
Gross profit (566) 5,587
Operating expenses:
Sales and marketing 8,407 5,074
Research and development 5,404 2,916
Finance and administrative 4,375 4,636
Total operating expenses 18,186 12,626
Operating loss (18,752) (7,039)
Non-operating income (expenses):
Interest expense (2) (155)
Interest income 162 642
Warrant inducement (206) -
Loss on disposal of property and equipment - (51)
Total non-operating income (expenses) (46) 436
Net loss (18,798) (6,603)
Less preferred stock dividends:
Cash dividends - (486)
Non cash dividends - (183)
Net loss available for common stockholders $(18,798) $(7,272)
Net loss per share, basic and diluted $(0.39) $(0.20)
Weighted average common shares outstanding,
basic and diluted 47,676,454 36,639,348

MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Years Ended
December 31, December 31,
2007 2006

Cash flows from operating activities:
Net loss $(18,798) $(6,603)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 1,043 590
Stock based compensation 1,134 841
Loss on disposal of property and equipment - 51
Amortization of bond discount - (43)
Warrant inducement 206 -
(Increase) decrease in assets:
Accounts receivable 7,163 (7,013)
License agreement receivable (1,000) -
Inventories (10,552) (499)
Inventory reserve 2,510 -
Prepaid expenses and other 442 (751)
Increase (decrease) in liabilities:
Accounts payable 6,660 (2,450)
Accrued expenses (258) 856
Deferred income 1,000 -
Net cash used by operating activities (10,450) (15,021)
Cash flows from investing activities:
Purchases of investments - (12,424)
Sales of investments 7,249 5,217
Purchases of property and equipment (11,960) (5,496)
Acquisition of other assets (230) (309)
Net cash used by investing activities (4,941) (13,012)
Cash flows from financing activities:
Borrowings under demand notes payable 6,000 400
Repayments under demand notes payable - (3,120)
Borrowings under long-term debt 2,015 -
Principal payments on long-term debt (83) -
Proceeds from warrants exercised 2,066 475
Proceeds from sale of common stock, net of costs - 34,512
Preferred cash dividends - (656)
Proceeds from options exercised 967 417
Net cash provided by financing activities 10,965 32,028
Net (decrease) increase in cash and cash
equivalents (4,426) 3,995
Cash and cash equivalents - beginning of year 4,664 669
Cash and cash equivalents - end of year $238 $4,664

MINRAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except number of shares)

Series A Addi-
Convertible tional Accum-
Preferred Stock Common Stock Paid-in ulated
Shares Amount Shares Amount Capital Deficit Total
Balance at
December
31, 2005 11,200 $3 29,058,431 $290 $40,262 $(36,209) $4,346
Sale of
common
stock,
net of
costs - - 11,500,000 115 34,397 - 34,512
Conversion
of
preferred
stock and
accrued
dividends
to common
stock
(11,200) (3) 5,677,666 57 129 - 183
Preferred
stock
dividends - - - - - (669) (669)
Stock
warrants
exercised - - 564,213 6 469 - 475
Stock
options
exercised - - 247,930 2 415 - 417
Stock
based
compen-
sation - - - - 841 - 841
Net loss - - - - - (6,603) (6,603)
Balance at
December
31, 2006 - $ - 47,048,240 $470 $76,513 $(43,481) $33,502
Stock
warrants
exercised - - 1,121,047 12 2,260 - 2,272
Stock
options
exercised - - 519,515 5 962 - 967
Stock based
compen-
sation - - - - 1,134 - 1,134
Net loss - - - - - (18,798) (18,798)
Balance at
December
31, 2007 - $ - 48,688,802 $487 $80,869 $(62,279) $19,077

SOURCE MINRAD International, Inc.

Charles R. Trego, Jr., Chief Financial Officer of MINRAD International, Inc.,
+1-716-855-1068, ctrego@minrad.com