AxoGen, Inc. Announces Third Quarter 2012 Financial Results

AxoGen, Inc. (OTCBB: AXGN), a leading regenerative medicine company dedicated to advancing the science and commercialization of peripheral nerve repair solutions, today announced revenues for the third quarter ended September 30, 2012 of $1.98 million, a 74% increase over revenues of $1.14 million in the third quarter 2011.

“Compared to last year, we delivered solid top-line growth during the quarter despite cash constraints and the distraction of raising capital,” commented Karen Zaderej, Chief Executive Officer of AxoGen. “In addition, to remain in compliance with covenants imposed by our former lender, we carefully managed cash and chose to defer certain sales force growth and marketing activities.”

Ms. Zaderej continued, “As a result of the recent financing with PDL, we paid off all bank debt and eliminated the restrictive lender requirements. This will allow us the flexibility to develop and expand our sales force and invest in significant marketing efforts.”


Revenues for the period were $1.98 million, a 74% increase, compared to $1.14 million for the same period in 2011. These results were due to expansion of sales and marketing efforts versus third quarter 2011 and focused on the development of new accounts as well as penetration into key accounts.

Revenues decreased 1.5% compared to second quarter 2012 revenues of $2.01 million. This is the second year in which the third quarter has been relatively flat compared to the second quarter. While this may suggest seasonality in peripheral nerve surgery, it is important to note that in both of these quarters there were material corporate transactions that may have distracted operations. In addition, during the period, the Company made personnel changes in certain sales territories, but did not increase the size of its direct sales force.

Gross Profit

Gross profit for the period increased to $1.44 million from the reported third quarter 2011 results of $10,000. The favorable results reflect increased revenues and lower manufacturing cost in 2012 and exclude an inventory write-off of $0.83, which occurred during the third quarter 2011.

The gross profit margin for the period increased to 73% compared to 0.9% for the same quarter last year.

Sales and Marketing Expenses

During the period sales and marketing expenses increased to $1.70 million from $1.11 million reported during the same period last year. The increase was the result of the Company’s increased support for its sales force and an increase in the number of direct sales persons. As of October 31, 2012, the Company had 17 direct and 24 independent sales representatives and distributors.

Research and Development Expenses

Research and development expenses increased to $0.39 million during the quarter, compared to $0.23 million reported during the same period last year. Substantially all of the research and development expenses relate to expenditures for clinical activity.

General and Administrative Expenses

General and administrative expenses increased to $1.39 million for the period, compared to $1.30 million reported in the same quarter last year. These expenses were principally an increase in payroll and benefits as the Company hired additional personnel to support its sales growth.

Loss From Operations and Net Loss

The Company reported loss from operations for third quarter of 2012 of $2.04 million, compared to the reported loss from operations of $2.63 million during the same period in 2011.

The net loss for the period decreased to $2.24 million, or $0.20 per common share, from a net loss of $3.11 million, or $2.60 per common share, reported during the third quarter of 2011.

Financial Liquidity

At September 30, 2012, the Company had $4.4 million in cash and cash equivalents, with approximately $6.6 million in debt outstanding.

On October 5, 2012, the Company entered into a Revenue Interests Purchase Agreement with PDL BioPharma Inc., under which the Company received $20.8 million in cash. Certain proceeds of which were used to repay existing debt and expenses related to the transaction.

As of November 1, 2012, the Company had $15.8 million in cash and equivalents and no bank debt outstanding.

Earnings Call Information

As previously announced, AxoGen, Inc. management will review third quarter 2012 financials during a conference call scheduled for November 8, 2012 at 11:00 AM Eastern Time. The conference call information is as follows:
Conference dial-in:       877-709-8150
International dial-in: 201-689-8354

A webcast replay of the conference call will be available under the “Investor” tab on the Company's website,

About AxoGen, Inc.

AxoGen (OTCBB: AXGN) is a leading regenerative medicine company dedicated to advancing the science and commercialization of peripheral nerve repair solutions. AxoGen’s products offer a full suite of surgical nerve reconstruction solutions including Avance® Nerve Graft, the only commercially available processed nerve allograft for bridging severed nerves, AxoGuard® Nerve Connector, a coaptation aid allowing for close approximation of severed nerves, and AxoGuard® Nerve Protector, a bioscaffold used to reinforce a coaptation site, wrap a partially severed nerve or isolate and protect nerve tissue. For more information, visit our website at

AxoGen is the parent of its wholly owned operating subsidiary, AxoGen Corporation. AxoGen’s principal executive office and operations are located in Alachua, FL.

Cautionary Statements Concerning Forward-Looking Statements

This Press Release contains “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or predictions of future conditions, events or results based on various assumptions and management’s estimates of trends and economic factors in the markets in which we are active, as well as our business plans. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, “forecasts”, “may”, “should”, variations of such words and similar expressions are intended to identify such forward-looking statements. The forward-looking statements may include, without limitation, statements regarding product development, product potential or financial performance. The forward-looking statements are subject to risks and uncertainties, which may cause results to differ materially from those set forth in the statements. Forward-looking statements in this release should be evaluated together with the many uncertainties that affect AxoGen’s business and its market, particularly those discussed in the risk factors and cautionary statements in AxoGen’s filings with the Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those projected. The forward-looking statements are representative only as of the date they are made, and AxoGen assumes no responsibility to update any forward-looking statements, whether as a result of new information, future events or otherwise.
AxoGen, Inc.
Condensed Consolidated Balance Sheets
September 30, December 31,
2012 2011
Current assets:
Cash and cash equivalents $ 4,445,099 $ 8,190,781
Accounts receivable 925,544 797,654
Inventory 2,722,670 1,760,540
Prepaid expenses and other   89,835     133,500  
Total current assets   8,183,148     10,882,475  
Property and equipment, net 139,362 247,824
Goodwill 169,987 169,987
Intangible assets 736,772 899,480
Deferred Financing Costs 345,611 295,276
Other assets   118,891     --  
Total Assets $ 9,693,771   $ 12,495,042  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses $ 1,863,494 $ 1,585,100
Current portion of long-term debt   1,885,972     434,734  
Total current liabilities 3,749,466 2,019,834
Long-term debt   4,739,305     4,403,737  
Total liabilities 8,488,771 6,423,571
Commitments and contingencies   --     --  
Stockholders’ equity:


Common stock, $.01 par value; 50,000,000 shares authorized; 11,104,596 and 11,062,188 shares issued and outstanding


Additional paid-in capital 54,900,742 54,391,784
Accumulated deficit   (53,806,788 )   (48,430,935

Total stockholders’ equity   1,205,000     6,071,471  
Total liabilities and stockholders’ equity $ 9,693,771   $ 12,495,042  
AxoGen, Inc.
Consolidated Statements of Operations
Three Months Ended
September 30, September 30,
2012 2011
Revenues $ 1,980,849 $ 1,140,768
Cost of goods sold   542,235         1,130,332  
Gross profit 1,438,614 10,436
Costs and expenses:
Sales and marketing 1,697,317 1,106,942
Research and development 390,395 229,709
General and administrative   1,393,890         1,300,219  
Total costs and expenses   3,481,602         2,636,870  
Loss from operations   (2,042,988 )       (2,626,434 )
Other income (expense):
Interest expense (145,426 ) (318,110 )
Interest expense—deferred financing costs (60,013 ) (169,007 )
Change in fair value of warrant liability -- --
Other income (expense)   11,618         381  
Total other (expense)   (193,821 )       (486,736 )
Loss before income taxes (2,236,809 ) (3,113,170 )
Income tax benefit   --         --  
Net loss $(2,236,809 ) $(3,113,170 )
Preferred stock dividends (assumes all paid)   --         329,832  
Net loss available to common shareholders   (2,236,809 )       (3,443,002 )
Weighted Average Common Shares outstanding – basic and diluted   11,104,353         1,324,967  
Loss Per Common share - basic and diluted   $(0.20 )       $(2.60 )
AxoGen, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended
September 30, September 30,
2012 2011
Cash flows from operating activities:
Net loss $ (5,375,853 ) $ (7,082,234 )
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation 145,891 214,919
Amortization of intangible assets 295,002 36,265
Amortization of deferred financing costs 68,141 1,200,413
Amortization of debt discount 36,806 11,436
Stock-based compensation 478,701 97,499
Change in fair value of warrant liability -- (62,305 )
Interest added to note payable -- 55,562
Change in assets and liabilities:
Accounts receivable (127,890 ) (109,409 )
Inventory (962,130 ) 240,446
Prepaid expenses and other (75,228 ) (66,276 )
Accounts payable and accrued expenses   278,394       572,833  
Net cash used for operating activities (5,288,166 ) (4,890,851 )
Cash flows from investing activities:
Purchase of property and equipment (37,429 ) (7,858 )
Acquisition of intangible assets (82,294 ) (45,454 )
Cash acquired with Merger   --       7,201,638  
Net cash (used for) provided by investing activities (119,723 ) 7,148,326
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,750,000 10,500,000
Proceeds from issuance of common stock -- 1,000,000
Repayments of long-term debt -- (4,732,857 )
Debt issuance costs (118,476 ) (301,778 )
Proceeds from exercise of stock options 30,741 3,649
Payment of fractional shares from Merger (58 )     --  
Net cash provided by financing activities   1,662,207       6,469,014  
Net increase (decrease) in cash and cash equivalents (3,745,682 ) 8,726,489
Cash and cash equivalents, beginning of year   8,190,781       1,799,048  
Cash and cash equivalents, end of period $ 4,445,099     $ 10,525,537  
Supplemental disclosures of cash flow activity:
Cash paid for interest $447,144 $611,501
Supplemental disclosure of non-cash investing and financing activities:
Conversion of preferred stock convertible debt and accrued interest into common stock $ -- $ 21,497,955
Accretion of dividends of Series B preferred stock -- 292,330
Accretion of dividends of Series C preferred stock -- 515,577
Accretion of dividends of Series D preferred stock -- 220,444
Preferred stock dividend payable forfeited with the Merger -- 7,076,729
Warrant Liability forfeited with the Merger -- 2,607,510
Debt discount related to warrants issued with debt -- 173,736
Net assets acquired on Merger -- 11,847,916
Note and accrued interest retired with the Merger -- 4,555,562
Reclassification from common stock to additional paid in capital for change in par value -- 11,639

Copyright Business Wire 2010

If you liked this article you might like

Exelon, Valley National Bancorp, Skyworks Solutions: 'Mad Money' Lightning Round

Exelon, Valley National Bancorp, Skyworks Solutions: 'Mad Money' Lightning Round

The Real Trump Trade May Be Gold: Cramer's 'Mad Money' Recap (Tuesday 4/11/17)

The Real Trump Trade May Be Gold: Cramer's 'Mad Money' Recap (Tuesday 4/11/17)

3 Stocks Under $10 to Trade for Breakouts

3 Stocks Under $10 to Trade for Breakouts

3 Stocks Advancing The Health Services Industry

3 Stocks Advancing The Health Services Industry

3 Stocks Pushing The Health Services Industry Lower

3 Stocks Pushing The Health Services Industry Lower