NMT Medical, Inc. (NMTI) Q2 2010 Earnings Conference Call July 29, 2010 9:30 AM ET Executives Rick Davis – COO Frank Martin – President and CEO Analysts Larry Biegelsen – Wells Fargo Vivian Cervantes – Maxim Group Presentation Operator
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Factors that may cause such a difference include, but are not limited to, the company’s ability to develop and commercialize new products, a potential delay in the regulatory process with FDA, and foreign regulatory agencies, as well as risk factors discussed under the heading Risk Factors included in the company’s Annual Report on Form 10-K for the year ended December 31, 2009, Form 10-Q for the quarter ended March 31, 2010, and subsequent filings with the US Securities and Exchange Commission. These filings can be accessed in the Investors section of NMT’s website at www.nmtmedical.com. NMT undertakes no obligation to update the forward-looking statements made on this conference call today.I will begin with a review of our second quarter 2010 results and then turn the call over the our President and Chief Executive Officer, Frank Martin. For the three months ended June 30, 2010 NMT reported total revenues of approximately $2.6 million compared with $3.2 million in the second quarter of 2009. Cardiac septal repair implant in North America in the second quarter of 2010 were approximately $1.9 million compared with $2.4 million in the second quarter of 2009 Implant sales for the second quarter of 2010 outside of North America which includes countries in Western Europe and the rest of world were approximately $700,000 compared with $800,000 in the corresponding period of 2009. Our sale this quarter reflect a shortfall to expectations in some of our larger European markets including the UK and Germany. In general we have experienced an increase in competition in some non US markets. That competition is from foreign manufacturers that despite our technological advantages and benefits are able to price their products lower than NMT. Over the past several quarters we have implemented a strategy to help boost unit sales of BioSTAR by developing new distribution partnerships.
This strategy has worked better in some markets than in others, for examples we now believe that a more direct sales strategy especially in Germany similar to the one we have in place in the UK offers us the best potential for improving European implant unit sales. In addition, as we noted in today’s press release, we believe the anticipation in the medical community for the result of CLOSURE I may have temporarily slowed the referral pattern of patients both in the United States and abroad.Our cost of product sales on a percentage basis in the second quarter of 2010 was approximately 54% compared with 45% in the second quarter in 2009. The increase is due to the impact of our fixed manufacturing expenses and royalty expenses on the lower sales volumes. Q2 2010 R&D expenses were reduced by $1.8 million or approximately 71% of total revenue compared with $2.4 million or approximately 76% of total revenue in the same quarter of 2009. We expect R&D expenses in 2010 will continue to be lower than 2009 primarily due to the reduced cost associated with the CLOSURE I trial. General and administrative expenses were approximately $2 million or 79% of total revenues in the second quarter of 2010, compared with $1.7 million or 53% of total revenues in the same quarter of the prior year. Last year’s Q2 expenses were reduced by the receipt of $375,000 as part of the settlement that was negotiated with Cardia Inc. Second quarter selling and marketing expenses were approximately $1.3 million or 50% of total revenues compared with $1.5 million or 48% of revenues for the same period in 2009. Our sales and marketing expenses on a dollar basis were lower year-over-year primarily as a result of our sales levels. In February 2010, we executed a private placement of our common stock with warrants to purchase approximately $2.1 million additional shares. The warrants will recorded at fair market value and are revalued each reporting period using the Black-Scholes method. We recorded a non-cash gain of $6.4 million in the second quarter due to the decrease in our stock price during that period. Read the rest of this transcript for free on seekingalpha.com