Hansen Medical Reports Third Quarter and Nine-Month 2012 Results

Wed Nov 7, 2012 4:01pm EST

* Reuters is not responsible for the content in this press release.

  MOUNTAIN VIEW, CA, Nov 07 (Marketwire) -- 
Hansen Medical, Inc. (NASDAQ: HNSN), a global leader in intravascular
robotics, today reported recent business highlights and financial results
for the third quarter and nine months ended September 30, 2012. 

    Third Quarter Summary and Recent Business Highlights 


--  Company recently announced an expanded agreement with Intuitive
    Surgical (NASDAQ: ISRG) whereby Hansen Medical received a total of $30
    million through a $20 million fee for an expanded license agreement
    and a $10 million private placement of approximately 5.3 million
    shares of Hansen Medical common stock
    
    
    --  Shares purchased at a premium and subject to 18 month lock-up
        
        
    --  Intuitive Surgical becomes Hansen Medical's third largest
        shareholder
        
        
--  Shipped five systems during the quarter (four Magellan(TM) Robotic
    Systems and one Sensei(R) X Robotic Catheter System)
    
    
    --  Magellan Systems installed and generating procedures at the
        Methodist DeBakey Heart and Vascular Center at The Methodist
        Hospital, Houston, TX; UC Davis Medical Center, Sacramento, CA;
        and Baptist Hospital of Miami, Miami, FL
        
        
--  Initiated a new limited commercial evaluation program to allow certain
    strategic accounts to install and utilize Hansen systems for a trial
    period while the purchase contract is being evaluated by the hospital
    
    
    --  Of the five systems shipped in the third quarter, three Magellan
        systems were part of the commercial evaluation program
        
        
--  Generated total revenue of $5.1 million in the third quarter
    
    
--  Recognized revenue on five systems during the third quarter, including
    one Magellan system and one Sensei system shipped in the quarter, and
    three Sensei systems from deferred revenue which were shipped in
    previous periods
    
    
--  Physicians performed an estimated 659 Hansen robotic procedures in the
    third quarter, up 3.5% sequentially and 9.3% year over year. This is
    the fifth consecutive quarter of procedure growth.
    
    
    --  Sold 689 catheters in the third quarter, down 2.1% sequentially
        and down 1.3% year over year
        
        
--  Exhibited Magellan system at two recent conferences: the Vascular
    InterVentional Advances (VIVA) Conference in Las Vegas, and the
    Transcatheter Cardiovascular Therapeutics (TCT) Conference in Miami
    
    
    --  The Magellan system was featured in two successful live cases at
        the TCT conference by Dr. Barry Katzen, founder and Medical
        Director of Baptist Cardiac & Vascular Institute (Baptist
        Hospital of Miami)
        
        
--  Hansen will be further exhibiting its Magellan system at the 39th
    Annual Symposium on Vascular and Endovascular Issues
    (VEITHsymposium(TM)), which takes place from November 14-18, 2012 in
    New York, NY, and the International Symposium on Endovascular Therapy
    (ISET 25) from January 19-23, 2013 in Miami, FL
    
    
--  The first clinical cases were performed in the U.S. with the recently
    launched Artisan(R) Extend Control Catheter, which is designed to
    work with the Sensei system. The Artisan Extend Catheter includes a
    simplified flush design that can improve physician workflow during
    complex electrophysiology procedures, and allows for lower
    manufacturing costs.
    
    
--  Held cash, cash equivalents and short-term investments of $21.6
    million at September 30, 2012, representing a quarterly cash burn of
    $7.8 million and includes receipt of $1.5 million of insurance
    reimbursement proceeds in the quarter
    


    

Nine Months 2012 Financial Summary 


--  Shipped 9 robotic systems (4 Sensei systems and 5 Magellan systems);
    recognized revenue on 11 robotic systems (8 Sensei systems and 3
    Magellan systems)
    
    
--  Sold 1,967 catheters year to date, essentially flat year over year
    
    
--  Physicians performed an estimated 1,932 Hansen robotic procedures year
    to date, up 3.6% year over year
    
    
--  Generated year to date total revenue of $13.3 million, down 16.7% year
    over year
    


    

"To have our Magellan Robotic System installed in multiple
prestigious centers only four months after receiving U.S. clearance is a
significant accomplishment for the Company," said Bruce Barclay, Hansen
Medical's President and Chief Executive Officer. "We believe our recently
initiated limited commercial evaluation program will help accelerate the
ramp of clinical cases, allowing us to close system sales more
efficiently, and further grow our pipeline of potential transactions. Our
improved procedure rate in the third quarter, driven primarily by our
base electrophysiology business, is indicative of the significant value
we believe physicians and hospitals can derive from our systems." 

    "Additionally, our recent agreement with Intuitive Surgical is a
significant validation of our technology from the global pioneer and
leader in medical robotics. Importantly, the capital received as part of
this agreement will further strengthen our balance sheet, with a
significant portion of the new capital being non-dilutive to our current
shareholders. In fact, in the last few years, we have brought in more
than $80 million of new, non-dilutive capital. Given our strategic focus
on intravascular robotics, a large and growing market with a significant
unmet clinical need, this capital will further support our product
development efforts and global launch of the Magellan(TM) Robotic
System." 

    Mr. Barclay continued, "In recent weeks, both Dr. John Laird of the UC
Davis Medical Center and Professor Nick Cheshire of St Mary's Hospital,
of Imperial College London, presented their experiences with the Magellan
system at the VIVA conference, and Dr. Katzen presented two live case
demonstrations to attendees at TCT. These were valuable opportunities to
highlight the benefits of our Magellan system by key opinion leaders at
large conferences and we look forward to further highlighting our
technology with our significant presence at the VEITHsymposium next week
in New York City, and the ISET 25 conference in January in Miami." 

    Commenting on his live case presentations at TCT, Dr. Katzen noted, "We
were excited to present two live cases at TCT using the Magellan system.
This technology has the potential to significantly enhance endovascular
procedures. We view the Magellan system as an important potential
strategic investment that can help enhance and grow our practice by
improving procedure predictability and utilization, while possibly
lowering radiation exposure." 

    Hansen Medical's new limited commercial evaluation program allows certain
strategic accounts to install and utilize its systems for a trial period
while the purchase contract is being evaluated by the hospital. Hospitals
participating in the commercial evaluation program are not obligated to
purchase the system upon completion of the trial period, however,
participating hospitals must purchase the catheters used in the
evaluation process.

    2012 Third Quarter Financial Results 

    Total revenue for the third quarter ended September 30, 2012 was $5.1
million compared to revenue of $5.4 million in the same period in 2011.
During the third quarter, the Company shipped five systems (four Magellan
systems and one Sensei system) and recognized revenue on five systems
(one Magellan system and four Sensei systems), as well as shipment of 689
catheters. Catheter sales were down 1.3% compared to the third quarter of
2011 and down 2.1% sequentially. Further, an estimated 659 Hansen robotic
procedures were performed in the period, an increase of 9.3% compared to
the same quarter of the prior year, and up 3.5% sequentially. As of
September 30, 2012, the Company had a total deferred revenue balance of
$2.9 million, all of which is related to deferred revenue on service
contracts. 

    Cost of revenues for the third quarter was $3.8 million. As a result,
gross profit for the quarter was $1.3 million, or 24.6% of revenue,
compared to gross profit of $1.1 million, or 20.2% of revenue for the
same period in 2011. The increase in gross profit in the current quarter
is primarily the result of improved productivity, which lowered the cost
of products sold. 

    Research and development expenses for the third quarter were $3.8
million, compared to $3.5 million for the same period in 2011. The 2011
amount included $2.1 million of funded research and development credits
(recorded as a reduction of expense) from our now completed work under
our joint development agreement with Philips. Excluding these research
and development credits in the third quarter of 2011, prior year research
and development expenses were higher primarily due to additional
development costs associated with the Company's Magellan System and
higher employee related costs. 

    Selling, general and administrative expenses for the third quarter were
$5.1 million, compared to $7.6 million for the same period of 2011. The
net decrease in the current quarter is primarily due to a $1.5 million
insurance reimbursement received in the third quarter or 2012 related to
prior litigation costs in addition to lower non-cash stock compensation
and employee-related expenses.

    Net loss for the third quarter was $8.4 million, or $0.14 loss per share,
based on average shares outstanding of 61.5 million. This compares with a
net loss for the third quarter of 2011 of $10.1 million or $0.18 per
share, based on average shares outstanding of 55.1 million. Net loss for
the third quarter of 2012 included total non-cash stock compensation
expenses of $1.0 million compared to $1.8 million in the third quarter of
2011. The reduction is primarily the result of lower equity awards in the
quarter compared to the prior year. 

    Cash burn in the quarter improved to $7.8 million compared to $9.1
million in the second quarter of 2012. The current quarter cash burn was
positively impacted by the receipt of a $1.5 million insurance
reimbursement. Cash, cash equivalents and short-term investments as of
September 30, 2012 were $21.6 million, compared to $29.4 million as of
June 30, 2012, and $52.2 million as of December 31, 2011. 

    Hansen Medical Conference Call 

    Company management will hold a conference call to discuss its full 2012
third quarter results today, November 7, 2012 at 5:00 p.m. ET (2:00 p.m.
PT). Investors are invited to listen to the call live via the Internet
using the link available within the "Investor Relations" section of
Hansen Medical's website at www.hansenmedical.com. Additionally,
participants can dial into the live conference call by calling
888-846-5003 or 480-629-9856 (international callers). An audio replay of
the webcast will be available approximately one hour after the completion
of the conference call through November 14, 2012, by calling 877-870-5176
or 858-384-5517 (international callers), and entering access code
4572018. 

    About Hansen Medical, Inc. 

    Hansen Medical, Inc., based in Mountain View, California, is the global
leader in intravascular robotics, developing products and technology
designed to enable the accurate positioning, manipulation and control of
catheters and catheter-based technologies. The Company's Magellan(TM)
Robotic System, NorthStar(TM) Robotic Catheter and related accessories,
which are intended to facilitate navigation to anatomical targets in the
peripheral vasculature and subsequently provide a conduit for manual
placement of therapeutic devices, have undergone both CE marking and
510(k) clearance and are commercially available in the European Union,
and the U.S. In the European Union, the Company's Sensei(R) X Robotic
Catheter System and Artisan Control Catheter are cleared for use during
electrophysiology (EP) procedures, such as guiding catheters in the
treatment of atrial fibrillation (AF), and the Lynx(R) Robotic Ablation
Catheter is cleared for the treatment of AF. This robotic catheter system
is compatible with fluoroscopy, ultrasound, 3D surface map and patient
electrocardiogram data. In the U.S. the Company's Sensei X Robotic
Catheter System and Artisan Control Catheter were cleared by the U.S.
Food and Drug Administration for manipulation and control of certain
mapping catheters in EP procedures. In the United States, the Sensei
System is not approved for use in guiding ablation procedures; this use
remains experimental. The U.S. product labeling therefore provides that
the safety and effectiveness of the Sensei X System and Artisan Control
Catheter for use with cardiac ablation catheters in the treatment of
cardiac arrhythmias, including AF, have not been established. Additional
information can be found at www.hansenmedical.com. Additional information
can be found at www.hansenmedical.com. 

    Forward-Looking Statements 

    This press release contains forward-looking statements regarding, among
other things, statements relating to goals, plans, objectives, milestones
and future events. All statements, other than statements of historical
fact, are statements that could be deemed forward-looking statements,
including statements containing the words "plan," "expects," "potential,"
"believes," "goal," "estimate," "anticipates," and similar words. These
statements are based on the current estimates and assumptions of our
management as of the date of this press release and are subject to risks,
uncertainties, changes in circumstances and other factors that may cause
actual results to differ materially from the information expressed or
implied by forward-looking statements made in this press release.
Examples of such statements include statements about the potential
benefits of our Magellan Robotic System for hospitals, patients and
physicians, expectations of shipments of our Magellan Robotic System, the
potential benefits of our technology and the value of our intellectual
property portfolio and the sufficiency of the company's cash resources
for supporting the initial launch of the Magellan Robotic System.
Important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements include, among
others: engineering, regulatory, manufacturing, sales and customer
service challenges in developing new products and entering new markets;
the commercial viability of our products in the vascular markets;
potential safety and regulatory issues that could slow or suspend our
sales; the effect of credit, financial and economic conditions on capital
spending by our potential customers; the uncertain timelines for the
sales cycle for newly introduced products; the rate of adoption of our
systems and the rate of use of our catheters; the scope and validity of
intellectual property rights applicable to our products; competition from
other companies; our ability to recruit and retain key personnel; our
ability to maintain our remedial actions over previously reported
material weaknesses in internal controls over financial reporting; our
ability to manage expenses and cash flow, and obtain additional
financing; and other risks more fully described in the "Risk Factors"
section of our Quarterly Report on Form 10-Q for the quarter ended June
30, 2012 filed with the SEC on August 9, 2012 and the risks discussed in
our other reports filed with the SEC. Given these uncertainties, you
should not place undue reliance on the forward-looking statements in this
press release. We undertake no obligation to revise or update information
herein to reflect events or circumstances in the future, even if new
information becomes available. 

    Hansen Medical, Heart Design (Logo), Hansen Medical (with Heart Design),
Sensei and Lynx are registered trademarks, and Magellan and NorthStar are
trademarks of Hansen Medical, Inc. in the United States and other
countries.



Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)

                                  Three months ended    Nine months ended
                                     September 30,         September 30,
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  --------- 
Revenues                         $   5,103  $   5,360  $  13,292  $  15,959 
Cost of goods sold                   3,846      4,278     10,550     12,685 
                                 ---------  ---------  ---------  --------- 
Gross profit                         1,257      1,082      2,742      3,274 
                                 ---------  ---------  ---------  --------- 
Operating expenses:
  Research and development           3,772      3,458     12,632     10,258 
  Selling, general and
   administrative                    5,058      7,621     19,186     22,816 
                                 ---------  ---------  ---------  --------- 
Total operating expenses             8,830     11,079     31,818     33,074 
Gain on sale of intellectual
 property                               --         --         --     23,000 
                                 ---------  ---------  ---------  --------- 
Loss from operations                (7,573)    (9,997)   (29,076)    (6,800)
Other income, net                     (858)      (148)    (2,642)      (426)
                                 ---------  ---------  ---------  --------- 
Net loss                         $  (8,431) $ (10,145) $ (23,269) $  (7,226)
                                 =========  =========  =========  ========= 

Basic and diluted net loss per
 share:                          $   (0.14) $   (0.18) $   (0.52) $   (0.13)
                                 =========  =========  =========  ========= 
Shares used to computed basic
 and diluted net loss per share:    61,457     55,094     61,057     54,626 
                                 =========  =========  =========  ========= 

Condensed Consolidated Balance Sheets (unaudited)
(in thousands)

                                                 September 30,  December 31,
                                                      2012          2011
                                                 ------------- -------------
                                   Assets
  Cash, cash equivalents and short-term
   investments                                   $      21,649 $      52,210
  Accounts receivable                                    4,579         5,493
  Inventories, net                                       8,387         6,617
  Deferred cost of revenues                                 73         1,573
  Prepaids and other current assets                      1,402         1,829
  Property and equipment, net                            6,616         8,300
  Other assets                                             632           737
                                                 ------------- -------------

Total assets                                     $      43,338 $      76,759
                                                 ============= =============

                    Liabilities and Stockholders' Equity
Liabilities
  Accounts payable                               $       2,265 $       2,944
  Deferred revenues                                      2,858         6,438
  Debt                                                  29,347        29,147
  Other liabilities                                      3,952         4,749
                                                 ------------- -------------

Total liabilities                                       38,422        43,278
                                                 ------------- -------------

Stockholders' equity                                     4,916        33,481
                                                 ------------- -------------

Total Liabilities and Stockholders' Equity       $      43,338 $      76,759
                                                 ============= =============


    


Investor Contacts:
Peter J. Mariani
Chief Financial Officer
Hansen Medical, Inc.
650.404.5800

FTI Consulting, Inc.
Brian Ritchie
212.850.5683
brian.ritchie@fticonsulting.com 

John Capodanno
212.850.5705
John.capodanno@fticonsulting.com 

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