IRVINGTON, N.Y., May 14, 2015 (GLOBE NEWSWIRE) -- MELA Sciences, Inc. (Nasdaq:MELA), developer of the MelaFind® System, a non-invasive software-driven image analysis device intended to provide a dermatologist with objective data of clinically irregular pigmented moles when they choose to obtain additional information to help them decide whether or not to biopsy (at the most curable and cost-effective stage), today reported financial results for the quarter ended March 31, 2015.
First Quarter 2015 Financial Results Compared with First Quarter 2014 Results:
- Revenue totaled approximately $0.1 million, unchanged compared with a year ago. The Company has taken steps to obtain medical reimbursement and on March 9, 2015, the CPT® Editorial Panel assigned additional Category III codes that apply to the MelaFind System, which should become effective January 1, 2016. These codes provide the basis for pursuing third party and CMS insurance coverage for MelaFind. Efforts to obtain reimbursement from private insurers are underway and until reimbursement is in place, sales of MelaFind systems will be limited to select institutions and are expected to be minimal.
- Cost of revenue was $0.7 million, compared with $0.9 million in the first quarter of 2014. The decrease was primarily the result of lower depreciation and other expenses, partially offset by the cost of sold MelaFind systems.
- Selling, general and administrative expenses totaled $2.8 million, compared with $3.2 million for the first quarter of 2014. The decrease is the result of the continuing cost reduction initiatives being implemented by the Company.
- Interest expense was $2.3 million, compared with $1,000 a year ago. Interest expense was related to the 4% Convertible Debentures and substantially consisted of $2.2 million of non-cash charges related to amortization of debt discount and deferred financing fees. Approximately $1.7 million of interest expense was recognized as a result of the conversion of $2.3 million of Debentures into common stock during the quarter. The change in fair value of the Company's warrant liability, which is marked to market quarterly, resulted in an expense of $1.3 million during the first quarter of 2015, compared with a benefit of $0.1 million for the first quarter of 2014.
Michael R. Stewart, President and CEO of MELA Sciences, stated, "Our efforts aimed at establishing reimbursement for the MelaFind system will continue to accelerate over the coming months in anticipation of the issuance of the level III CPT codes in early 2016. And, we will continue working with major skin cancer institutions in an effort to establish MelaFind as an integral tool in the clinical management of melanoma."
At March 31, 2015, the Company had working capital totaling $10.0 million and cash and equivalents totaling $8.2 million. Cash and equivalents totaled $11.4 million at December 31, 2014.
About MELA Sciences, Inc. (www.melasciences.com)
MELA Sciences is a medical technology company dedicated to designing and developing innovative software-driven technology for the early detection of skin cancer. MELA Sciences conducted the largest, positive prospective study ever done on the melanoma disease, and is the first and only medical technology company to receive both FDA Pre-Market Approval for the United States, and CE Marking certification for the European Union for their flagship product MelaFind.
About MelaFind (www.melafind.com)
The MelaFind System utilizes innovative software-driven technology and state-of-the-art 3-D imaging to non-invasively extract data 2.5 mm below the skin surface from patient's clinically irregular pigmented moles and objectively analyzes them with proprietary algorithms. MelaFind provides important additional perspective to physicians to help them better understand the structural disorganization of a patient's pigmented irregular moles (before cutting the skin) during the evaluation and diagnosis process for melanoma.
Safe Harbor
This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company's plans, objectives, expectations and intentions and may contain words such as "will," "may," "seeks," and "expects," that suggest future events or trends. These statements, including the effective date of the CPT codes for physicians' use of the MelaFind system, the Company's ability to gain Medicare Part B reimbursement from CMS and reimbursement from private insurance companies, study results, acceptance of MelaFind by practitioners and key opinion leaders and institutions, the Company's ability to expand MelaFind's use domestically and internationally and increase its visibility, the Company's ability to develop, launch and improve its products, and the Company's effectiveness in mitigating or preventing significant deficiencies or material weaknesses in its internal control over financial reporting in the future, are based on the Company's current expectations and are inherently subject to significant uncertainties and changes in circumstances. Actual results may differ materially from the Company's expectations due to financial, economic, business, competitive, market, regulatory and political factors or conditions affecting the Company and the medical device industry in general, as well as more specific risks and uncertainties set forth in the Company's SEC reports on Forms 10-Q and 10-K. Given such uncertainties, any or all of these forward-looking statements may prove to be incorrect or unreliable. The Company assumes no duty to update its forward-looking statements and urges investors to carefully review its SEC disclosures available at www.sec.gov and www.melasciences.com.
| MELA SCIENCES, INC. | ||
| BALANCE SHEETS | ||
|
March 31, 2015 |
December 31, 2014 |
|
| (unaudited) | * | |
| ASSETS | ||
| Current Assets: | ||
| Cash and cash equivalents | $ 8,233,044 | $ 11,433,579 |
| Restricted cash | 100,000 | -- |
| Accounts receivable (net of allowance of $95,477 and $94,838 as of March 31, 2015 and December 31, 2014, respectively) | 5,845 | 220,534 |
| Inventory (net of reserves of $1,408,453 as of March 31, 2015 and December 31, 2014) | 5,187,926 | 5,274,803 |
| Prepaid expenses and other current assets | 350,165 | 274,031 |
| Total Current Assets | 13,876,980 | 17,202,947 |
| Property and equipment, net | 1,620,365 | 1,961,376 |
| Patents and trademarks, net | 35,450 | 36,719 |
| Deferred financing costs | 640,981 | 820,775 |
| Other assets | 48,000 | 48,000 |
| Total Assets | $ 16,221,776 | $ 20,069,817 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Accounts payable (includes related parties of $67,500 and $73,792 as of March 31, 2015 and December 31, 2014, respectively) | $ 1,320,274 | $ 1,239,919 |
| Accrued expenses | 651,186 | 841,918 |
| Deferred revenue | 25,391 | 42,843 |
| Warrant liability | 1,833,638 | 499,089 |
| Other current liabilities | 54,434 | 61,829 |
| Total Current Liabilities | 3,884,923 | 2,685,598 |
| Long Term Liabilities: | ||
| Deferred revenue | 16,420 | 26,500 |
| Deferred rent | 70,075 | 80,084 |
| Senior secured convertible debentures (net of discount of $6,395,105 and $8,410,187 at March 31, 2015 and December 31, 2014, respectively) | 4,707,410 | 5,000,826 |
| Total Long Term Liabilities | 4,793,905 | 5,107,410 |
| Total Liabilities | 8,678,828 | 7,793,008 |
| COMMITMENTS AND CONTINGENCIES | ||
| Stockholders' Equity: | ||
| Preferred stock -- $0.10 par value; authorized 10,000,000 shares: issued and outstanding: 10,279 at March 31, 2015 and 11,787 at December 31, 2014 | 1,028 | 1,179 |
| Common stock -- $0.001 par value; authorized 50,000,000 shares: | ||
| Issued and outstanding 7,525,146 shares at March 31, 2015 and 6,037,232 at December 31, 2014 | 7,525 | 6,037 |
| Additional paid-in capital | 197,100,186 | 194,562,963 |
| Accumulated deficit | (189,565,791) | (182,293,370) |
| Total Stockholders' Equity | 7,542,948 | 12,276,809 |
| Total Liabilities and Stockholders' Equity | $ 16,221,776 | $ 20,069,817 |
| * Derived from the audited balance sheet as of December 31, 2014 | ||
| MELA SCIENCES, INC. | ||
| STATEMENTS OF OPERATIONS | ||
| (unaudited) | ||
| Three months ended March 31, | ||
| 2015 | 2014 | |
| Net revenues | $ 81,200 | $ 97,638 |
| Cost of revenue | 710,880 | 918,523 |
| Gross profit | (629,680) | (820,885) |
| Operating expenses: | ||
| Research and development | 238,874 | 707,824 |
| Selling, general and administrative | 2,762,991 | 3,203,533 |
| Total operating expenses | 3,001,865 | 3,911,357 |
| Operating loss | (3,631,545) | (4,732,242) |
| Other income (expenses): | ||
| Interest income | 1,126 | 618 |
| Interest expense | (2,324,963) | (1,199) |
| Change in fair value of warrant liability | (1,334,549) | 137,142 |
| Registration rights liquidating damages | -- | (3,389,940) |
| Other income, net | 17,510 | 5,025 |
| (3,640,876) | (3,248,354) | |
| Net loss | $ (7,272,421) | $ (7,980,596) |
| Basic and diluted net loss per common share | $ (1.12) | $ (1.63) |
| Basic and diluted weighted average number of common shares outstanding | 6,471,906 | 4,892,641 |
| MELA SCIENCES, INC. | ||
| STATEMENTS OF CASH FLOWS | ||
| (unaudited) | ||
| Three Months Ended March 31, | ||
| 2015 | 2014 | |
| Cash flows from operating activities: | ||
| Net loss | $ (7,272,421) | $ (7,980,596) |
| Adjustments to reconcile net loss: | ||
| Depreciation and amortization | 316,243 | 696,800 |
| Bad debt expense | 639 | 700 |
| Share-based compensation | 230,062 | 164,168 |
| Amortization of debt discount | 2,015,082 | -- |
| Amortization of deferred financing costs | 179,794 | -- |
| Change in fair value of warrant liability | 1,334,549 | (137,142) |
| Changes in operating assets and liabilities: | ||
| Restricted cash | (100,000) | -- |
| Accounts receivable | 214,050 | 22,330 |
| Inventory | 112,914 | (16,815) |
| Prepaid expenses and other current assets | (76,134) | 414,558 |
| Accounts payable and accrued expenses | (110,377) | (192,101) |
| Other current liabilities | (7,395) | (6,119) |
| Deferred rent | (10,009) | (10,009) |
| Deferred revenue | (27,532) | (76,661) |
| Net cash used in operating activities | (3,200,535) | (7,120,887) |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | -- | -- |
| Net cash used in investing activities | -- | -- |
| Cash flows from financing activities: | ||
| Net proceeds from private placements/public offerings | -- | 11,460,715 |
| Net cash provided by financing activities | -- | 11,460,715 |
| Net (decrease)/increase in cash and cash equivalents | (3,200,535) | 4,339,828 |
| Cash and cash equivalents at beginning of period | 11,433,579 | 3,782,881 |
| Cash and cash equivalents at end of period | $ 8,233,044 | $ 8,122,709 |
| Supplemental Disclosure of Cash Flow Information: | ||
| Cash paid for interest | $ 139,000 | $ -- |
| Supplemental Disclosure of Non-cash Investing and Financing Activities: | ||
| Conversion of convertible preferred stock into common stock | $ 1,508,000 | $ -- |
| Conversion of senior secured convertible debentures into common stock | $ 2,308,498 | $ -- |
| Reclassification of MelaFind components from property and equipment to inventory, net | $ 26,037 | $ -- |