Conceptus Second Quarter Results Feature Net Sales up 77% From First Quarter; Affirmative Recommendation to Cover Essure Procedure Issued by National Blue Cross/Blue Shield Association.Business Editors/Health/Medical Writers SAN CARLOS San Carlos (săn kär`lōs), residential city (1990 pop. 26,167), San Mateo co., W Calif.; inc. 1925. The chief manufactures are plastic products, hardware, and machine parts. , Calif.--(BUSINESS WIRE)--July 29, 2003 Conceptus conceptus /con·cep·tus/ (-tus) the product of the union of oocyte and spermatozoon at any stage of development from fertilization until birth, including extraembryonic membranes as well as the embryo or fetus. , Inc. (Nasdaq:CPTS CPTS Certified Penetration Testing Specialist (network security) CPTS Comptroller Squadron CPTS Computer Program Test Specifications CPTS Catastrophe Personnel Tracking System CPTS Claims Procedure Training Specialist ), developer of the non-incisional permanent birth control procedure Essure(TM), today reported financial results for the three and six months ended June 30, 2003. Highlights of the second quarter of 2003 and subsequent weeks include: -- Sequential-quarter revenue increase of 77% to $2.0 million -- Recommendation to cover Essure procedure issued by national Blue Cross/Blue Shield Association -- Favorable reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. progress for Essure among private payers, including coverage by local Blue Cross/Blue Shield plans totaling nearly 43 million covered lives -- Introduction of a new coil catheter catheter /cath·e·ter/ (kath´e-ter) 1. a tubular, flexible surgical instrument that is inserted into a cavity of the body to withdraw or introduce fluid. 2. urethral c. designed to improve Essure placement rates -- Commencement of initial phases of manufacturing outsourcing effort Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter of 2003 were $2.0 million, an increase of 77% from $1.2 million in the first quarter of 2003 and sharply higher compared with net sales of $406,000 for the second quarter of 2002. The increase was attributable to rising commercial sales of Essure in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The net loss for the 2003 second quarter was $10.5 million, or $0.49 per share, compared with a net loss of $11.0 million, or $0.52 per share in the immediately preceding quarter and a net loss of $6.7 million, or $0.40 per share, in the comparable period last year. Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold for the three months ended June 30, 2003 was $1.8 million, which resulted in a gross profit of $274,000. The modest gross profit, which reflects early stage product manufacturing and limited production volumes, compares with a gross profit of $4,000 in the first quarter of this year, and a negative gross margin for the second quarter of last year. Research and development expenses were $1.7 million for the 2003 second quarter, in line with R&D expenses for the 2003 first quarter of $1.6 million and down from R&D expenses of $2.3 million in the prior-year second quarter. The year-over-year decline was a result of decreased clinical and regulatory affairs Regulatory Affairs (RA), also called Government Affairs, is a profession within regulated industries, such as pharmaceuticals, medical devices, energy, and banking. Regulatory Affairs professionals usually have responsibility for the following general areas: abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) approval in November 2002 of the Company's Pre-market Approval application for Essure. Selling, general and administrative expenses were $9.3 million for the second quarter of 2003, compared with $9.6 million in the immediately preceding quarter and $4.0 million in the prior-year's second quarter. The year-over-year increase was primarily related to the build out of the Company's U.S. sales, marketing and professional education infrastructure and one-time costs related to the recruitment and hiring of a new chief executive officer. Cash, cash equivalents, short-term investments and restricted cash were $50.5 million as of June 30, 2003, compared with $70.7 million as of December 31, 2002. For the six months ended June 30, 2003, net sales were $3.2 million, compared with $682,000 for the six months ended June 30, 2002. The first-half 2003 net loss was $21.6 million, or $1.01 per share, compared with a net loss of $12.5 million, or $0.75 per share, in the comparable period of last year. Commenting on the second quarter, Mark Sieczkarek, president and chief executive officer, said, "We have made exceptional progress along many fronts -- in reimbursement, physician training, U.S. sales and marketing and manufacturing -- and this progress bodes well for our future performance. We have worked successfully to expand insurance coverage for the Essure procedure, and during the quarter local Blue Cross/Blue Shield plans across the country, now totaling 43 million covered lives, have agreed to reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. the Essure procedure. More importantly, the national Blue Cross/Blue Shield Association has issued a positive recommendation to its local members to cover the Essure procedure. To date, we have had positive coverage decisions from insurance companies covering more than 136 million lives. We are well on the way to reaching our goal of 200 million covered lives in the U.S. by the end of 2003." Mr. Sieczkarek continued, "We have begun testing various direct-to-consumer marketing programs, including regional advertisements in publications such as Parents magazine. We have also embarked on a direct mail campaign to pre-identified target patient groups in certain geographic areas where we now have a critical mass of trained physicians. "As of the end of the quarter, we had over 350 physicians performing Essure procedures in the U.S., either independently or in the course of their preceptorships preceptorships an appointment as a preceptor. ," he continued. "In order to accelerate the certification process and to control training costs, we are now giving one-on-one training sessions to new physicians who have pre-scheduled Essure cases. We continue to be comfortable that we will reach our goal of having 700 U.S. physicians performing Essure procedures by the end of the year." In recent weeks, Conceptus introduced a new delivery catheter, the coil catheter, which was shown to improve bilateral placement rates in a study in Australia among experienced physicians. The improved placement rate claim has been introduced in Australia and Canada, and is expected to be introduced in Europe shortly. A new placement rate claim in the U.S. will require FDA approval after additional clinical data on the coil catheter are obtained through the Company's existing Post Approval Study. The Company also noted that as part of its manufacturing outsourcing effort, it has begun engaging third-party contract manufacturers. The Company expects this effort to lower manufacturing costs and increase production capacity. Conceptus has scheduled an investor conference call to discuss this announcement beginning at 4:30 p.m. Eastern Time today. Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Company's Website, www.conceptus.com. A replay will be available on the Website for 14 days. About Essure The Essure procedure deploys a soft micro-insert into the fallopian tube fallopian tube (fəlō`pēən), either of a pair of tubes extending from the uterus to the paired ovaries in the human female, also called oviducts, technically known as the uterine tube. through the cervix cervix /cer·vix/ (ser´viks) pl. cer´vices [L.] 1. neck. 2. the front portion of the neck. 3. cervix uteri. using a minimally invasive transcervical tubal Tubal (t  `bəl), in the Bible, son of Japheth. access catheter. Once in place, the device is designed to elicit tissue
growth in and around the micro-insert to form an occlusion occlusion /oc·clu·sion/ (o-kloo´zhun)1. obstruction. 2. the trapping of a liquid or gas within cavities in a solid or on its surface. 3. or blockage blockage of intestine, urethra, etc. See obstruction under anatomical location, e.g. intestinal, urethral. blockage Wax, see there in the fallopian tube. An Essure procedure does not require cutting or penetrating the abdomen abdomen, in humans and other vertebrates, portion of the trunk between the diaphragm and lower pelvis. In humans the wall of the abdomen is a muscular structure covered by fascia, fat, and skin. and can be performed in a less costly procedure setting without general anesthesia Anesthesia, General Definition General anesthesia is the induction of a state of unconsciousness with the absence of pain sensation over the entire body, through the administration of anesthetic drugs. . A woman is expected to return home about 45 minutes after the procedure is completed. About Conceptus Conceptus, Inc. manufactures and markets Essure, which is designed to provide a non-incisional alternative to tubal ligation ligation /li·ga·tion/ (li-ga´shun) the application of a ligature. tubal ligation sterilization of the female by constricting, severing, or crushing the uterine tubes. , the leading form of birth control worldwide. The availability of Essure in the U.S. is expected to open up a market currently occupied by tubal ligation and vasectomy vasectomy, male sterilization by surgical excision of the vas deferens, the thin duct that carries sperm cells from the testicles to the prostate and the penis. , which combined account for over 1 million procedures annually in the United States. Additional information about the Essure procedure is available at www.Essure.com or by calling the Essure Information line at 1-877-ESSURE1. Additional information about Conceptus is available at www.conceptus.com or by calling 1-877-ESSURE2. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , the accuracy of which is necessarily subject to risks and uncertainties. Clinical efficacy of and market demand for our product, the results of our marketing programs, adoption of the Essure procedure by physicians, insurance coverage decisions and improvements in manufacturing capacity and efficiency, among other matters discussed in this release, may differ significantly from the discussion of such matters in the forward-looking statements. Such differences may be based upon factors within the Company's control, such as strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. decisions by management and re-allocation of internal resources, or on factors outside of the Company's control, such as decisions by regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , insurance carriers and physicians, scientific advances by third parties and introduction of competitive products, as well as those factors set forth in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2002, the Company's Quarterly Report on Form 10Q for the quarter ended March 31, 2003 and other filings with the Securities and Exchange Commission.
Conceptus, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Net sales $2,040 $406 $3,194 $682
Cost of goods sold 1,766 893 2,916 1,639
Gross profit (loss) 274 (487) 278 (957)
Operating expenses:
Research and development 1,656 2,348 3,267 4,330
Selling, general and
administrative 9,331 3,999 18,949 7,213
Total operating expenses 10,987 6,347 22,216 11,543
Operating loss (10,713) (6,834) (21,938) (12,500)
Interest and other income
(expense), net 167 177 367 (12)
Net loss $(10,546) $(6,657) $(21,571) $(12,512)
Basic and diluted net loss per
share $(0.49) $(0.40) $(1.01) $(0.75)
Shares used in computing basic
and diluted net loss per share 21,499 16,806 21,441 16,640
Conceptus, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
June 30, December 31,
2003 2002
Cash, cash equivalents, short-term investments
and restricted cash $50,455 $70,734
Accounts receivable, net 1,350 581
Inventories, net 2,157 2,524
Other current assets 1,057 797
Total current assets 55,019 74,636
Property and equipment, net 2,220 2,474
Other assets 139 185
Total assets $57,378 $77,295
Total liabilities $7,441 $6,581
Total stockholders' equity 49,937 70,714
Total liabilities and stockholders' equity $57,378 $77,295
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