Full Press Release Details
A. Hurwitz, Chief Financial Officer
MRI INTERVENTIONS, INC. ANNOUNCES 2016
AND NINE MONTH RESULTS
Highlights Include: Record Revenues
of $1.6 Million; Record Number of ClearPoint Procedures;
and Continued Improvement in Operating
Loss and Cash Utilization
IRVINE, CA, November 4, 2016 - MRI Interventions,
Inc. (OTCQB: MRIC) today announced financial results for the quarter and nine months ended September 30, 2016.
Quarter Ended September 30, 2016 -
in disposable product sales this quarter, including strong orders from our drug delivery partners. As we look toward the end of
the year, we expect we will achieve more than 500 procedures for the first time in a twelve-month period, with a growing presence
in laser ablation, biopsy, and other procedures contributing to our growth. On the capital side, two systems sales contributed
to our overall revenue, and we look forward to a strong fourth quarter," said Frank Grillo, Chief Executive Officer, MRI
Interventions, Inc. "We were pleased with the execution of the PIPE financing we completed in the third quarter, the support
of two large debt holders who converted into equity, and the participation of Voyager Therapeutics and their purchase of $2 million
in equity. Companies in the neurological drug delivery space continue to show strong interest in our technology, and we believe
in the growth and potential in this area."
Quarter Ended September 30, 2016 -
Revenues were $1.6 million
for the three months ended September 30, 2016, and $1.2 million for the same period in 2015, an increase of $370,000, or 30%, primarily
attributable to increases in the Company's ClearPoint System disposable and reusable products.
ClearPoint disposable product
sales for the three months ended September 30, 2016 were $1.3 million, compared with $970,000 for the same period in 2015, representing
an increase of $309,000, or 32%. This increase was due primarily to an increased volume of procedures performed using the Company's
ClearPoint System within a larger installed base for ClearPoint during the three months ended September 30, 2016, relative to the
same period in 2015.
ClearPoint System reusable
product sales for the three months ended September 30, 2016 were $309,000, compared with $239,000 for the same period in 2015,
representing an increase of $70,000, or 29%. This increase was due primarily to differences in the equipment configuration of ClearPoint
systems sold during the three-month periods ended September 30, 2016 and 2015. Reusable products consist primarily of computer
hardware and software bearing sales prices that are appreciably higher than those for disposable products and historically have
fluctuated, sometimes significantly, from quarter to quarter.
Gross margin on product
revenues was 53% for the three months ended September 30, 2016, compared to 54% for the same period in 2015. The decrease in gross
margin was due primarily to increases in: (a) the cost of disposable and reusable product components the Company purchased from
third-party manufacturers; and (b) the allocation of indirect costs to manufacturing in connection with the Company's transition
from a focus on research and development to commercial activities; partially offset by: (c) an improvement in direct labor productivity;
and (d) a decrease in the cost of scrapped product.
Research and development
costs were $691,000 for the three months ended September 30, 2016, compared to $480,000 for the same period in 2015, an increase
of $211,000, or 44%. The increase was due primarily to increases in: (a) compensation primarily related to an increase in headcount
in January 2016; (b) intellectual property costs allocated to research and development; and (c) costs incurred in connection with
the Company's development of the next generation of the ClearPoint operating system; partially offset by (d) an increase
in the allocation of costs to manufacturing in connection with the Company's transition from a focus on research and development
to commercial activities; and (e) decreases in other product development costs and regulatory fees.
Selling, general and administrative
expenses were $1.9 million for the three months ended September 30, 2016 as compared with $2.1 million for the same period in 2015,
a decrease of $247,000, or 12%. This decrease was attributable primarily to: (a) decreases in personnel costs, including share-based
compensation and travel costs, professional fees, marketing costs and medical device excise taxes; and (b) an increase in the allocation
of costs to manufacturing in connection with the Company's transition from a focus on research and development to commercial
activities; partially offset by an increase in public company and investor relations costs.
The Company's operating
loss for the three months ended September 30, 2016 was $1.7 million, as compared with $1.9 million for the same period in 2015,
an improvement of $217,000, or 11%.
During the three months
ended September 30, 2016 and 2015, the Company recorded non-cash gains of $324,000 and $2.0 million, respectively, resulting from
additions to, and changes in the fair value of, its derivative liabilities. For the three months ended September 30, 2016, such
derivative liabilities related to: (a) the issuance of warrants in connection with 2012 and 2013 private placement transactions;
and (b) the amendments, in June and August 2016, of certain notes to add contingent conversion terms and potential down round pricing
protection of warrants issued in connection with such notes. For the three months ended September 30, 2015, derivative liabilities
were limited to the issuance of warrants in connection with the 2012 and 2013 private placement transactions.
On August 31, 2016, the
Company entered into second amendments with holders of certain notes that provided, in the event the Company closes a private equity
offering, for: (a) the conversion to equity of an aggregate of $1.75 million of principal based on the private offering price;
and (b) a reduction in the exercise price for shares of common stock that may be purchased upon exercise of warrants issued in
connection with the issuance of such notes based the private offering's terms for warrant exercise pricing. Execution of
the second amendments constituted a debt extinguishment under generally accepted accounting principles, necessitating the Company
to record a non-cash loss from debt restructuring of approximately $933,000, representing the aggregate difference in the fair
value of the derivative liabilities between the points in time (i) immediately preceding, and (ii) immediately subsequent to, the
execution of the second amendments.
Net interest expense for
the three months ended September 30, 2016 was $240,000, compared with $314,000 for the same period in 2015. The decrease was due
primarily to the reduced principal balance of the note payable to Brainlab AG resulting from the restructuring of that note in
Reflecting the effects
of these non-cash items, net loss for the three months ended September 30, 2016 was $2.6 million, as compared with $245,000 for
the same period in 2015.
Nine Months Ended September 30, 2016
Revenues were $4.1 million
for the nine months ended September 30, 2016, and $3.1 million for the same period in 2015, an increase of $1.0 million, or 33%,
attributable primarily to increases in the Company's ClearPoint system disposable and reusable products.
ClearPoint disposable product
sales for the nine months ended September 30, 2016 were $3.4 million, compared with $2.5 million for the same period in 2015, representing
an increase of $922,000, or 37%, substantially due to a greater volume of procedures performed using our ClearPoint system within
a larger installed base for ClearPoint in the nine months ended September 30, 2016, relative to the same period in 2015.
ClearPoint reusable product
sales for the nine months ended September 30, 2016 were $610,000, compared with $469,000 of such sales for the same period in 2015,
representing an increase of $141,000, or 30%. This increase was due primarily to a greater number of ClearPoint systems sold during
the nine-month period ended September 30, 2016, relative to the same period in 2015. Sales of the Company's reusable products,
which consist primarily of computer hardware and software bearing sales prices that are appreciably higher than those for disposable
products, may vary, sometimes significantly, from quarter to quarter.
Gross margin on product
revenues was 51% for the nine months ended September 30, 2016, compared to 55% for the same period in 2015. The decrease in gross
margin was due primarily to: (a) increases in the cost of disposable and reusable product components we purchased from third-party
manufacturers, production scrap and write-offs of expired product, and the allocation of indirect costs to manufacturing in connection
with the Company's transition from a focus on research and development to commercial activities; partially offset by: (b)
decreases in production variances, inventory adjustments and the provision for excess and obsolete inventory.
Research and development
costs were $2.1 million for the nine months September 30, 2016, compared to $1.4 million for the same period in 2015, an increase
of $664,000, or 46%. The increase was due primarily to increases in: (a) software development costs incurred in connection with