Full Press Release Details
Oculus Innovative Sciences Announces Fiscal Fourth Quarter and Full
Year 2008 Financial Results and Corporate Update
| o | Filed patent on wound care device | ||
| o | Announced market assessment of near-term commercialization opportunities for 510k cleared Dermacyn Wound Care in United States | ||
| o | Presented positive Phase II Microcyn data in mildly infected diabetic foot ulcers at DFCon 08 | ||
| o | Received Chinese SFDA regulatory approval of Microcyn in various acute and chronic wounds | ||
| o | Announced initial Chinese commercialization plan for Microcyn Technology | ||
| o | Appointed Michelle Carpenter, JD, RAC, as vice president of regulatory affairs and quality | ||
| o | Raised $13.9 million (gross) in registered direct offering of common stock and warrants to institutional investors | ||
| o | Reduced international operating expenses by $4 million | ||
| o | Mexico operation reached breakeven for the month of March 2008 |
PETALUMA, CA. (June 11, 2008) Oculus Innovative Sciences, Inc. (NASDAQ: OCLS) today announced
quarterly results for its fiscal fourth quarter and full year ended March 31, 2008.
Hoji Alimi, CEO and founder, stated, Our full-year financials reflect Oculus strategic goal to
focus primarily on the successful completion of our Phase II clinical trial in the U.S. while
simultaneously reducing expenses outside-the-United States as part of our plan to fund this
successful clinical program. The day-24 results of the Phase II trial demonstrated a 93% cure and
improvement rate in the Microcyn-only arm in the treatment of mildly infected diabetic ulcers
versus a 56% cure and improvement rate in the control group using saline and levofloxacin, an
antibiotic with $2.4 billion in annual sales last year. And looking forward, unlike a year ago, we
now have an increased level of market awareness in the United States for Dermacyn Wound Care as
well as clinical data demonstrating Dermacyn s pharmacoeconomic benefits versus saline in the
treatment of wounds. As a result we feel we may have an opportunity to establish an effective
commercialization strategy within the existing regulatory label claims.
The first step in this process will be to confirm the company s assumptions through a market
assessment initiative announced last week. This will provide the company with a better
understanding of how to optimally discuss Dermacyn Wound Care with clinicians while remaining
compliant with the regulatory limitations of the 510k-cleared label claims. In addition
U.S. market assessment, the company also announced this past week that it had filed a patent with
the U.S. Patent and Trademark office on an advanced wound treatment device that delivers a
Microcyn-based solution to the wound and transports organic load away from it via a vacuum process.
The device has the capability to monitor the wound environment and deliver
additional Microcyn solution to the wound when required. The device s innovative sponge-free
dressing avoids contact with the wound, thereby eliminating the common practice of repeatedly
debriding otherwise healthy fibroblast as dressings are changed. Unnecessary trauma to the wound
bed can hamper or delay wound healing.
Alimi continued, With the highest level of confidence in the Microcyn Technology s efficacy and
safety, we begin fiscal year 2009 by focusing on multiple opportunities. First and foremost, we
recently requested an End-of-Phase II meeting with the FDA so as to continue to the next step in
our U.S. clinical program and our efforts to secure a drug approval. Secondly, we are evaluating
the U.S. market for near-term commercialization potential for our 510k-cleared product. This
initiative is based on positive feedback over the past year from U.S. physicians and medical
practitioners at many hospitals and clinics who have been treating wounds with the Microcyn
Technology. As we have test marketed our technology in the U.S., we have received significant
clinical data as well as encouraging pharmacoeconomic results related to the use of Microcyn
Technology versus saline in managing multiple wound types. The subsequent plan following this U.S.
market assessment will address differentiation of the 510k product and its branding while
maintaining the integrity of the drug opportunity.
In addition to a steady stream of accomplishments related to Oculus U.S. clinical development
program and partnering, the Microcyn Technology also achieved positive gains abroad. In March,
China s State Food and Drug Administration (SFDA) granted marketing authorization to Microcyn as a
treatment for various acute and chronic wounds. For the first time in China, Microcyn-based
products will be available and marketed by Oculus partner China Bao Tai and its various
sub-distributors including Sinopharm, which is the largest pharmaceutical group in China, and
Lianhua Supermarket Holdings Co., Ltd. In April, the Oculus development team visited Beijing and
met with the Chinese partner where they reviewed their multi-tier strategy proposed for the launch
of Microcyn in China. This will initially target key opinion leaders via trials at multiple medical
centers for the purpose of securing both post-market clinical data and reimbursement.
We are delighted to have secured a foothold in Asia s fastest growing territory to deliver an
effective topical wound care treatment through China s largest pharmaceutical group, said Alimi.
We look forward to an eventful fiscal year 2009 and thank all of our shareholders for their
continuing support as we continue to move forward in our U.S. clinical program, further examine
U.S. 510k commercialization opportunities and continue our business development initiatives
Fiscal Fourth Quarter and Full Year 2008 Results (Period ended March 31, 2008)
Last year, the company made a strategic decision to focus its resources on the clinical drug
development process in the United States since it is the largest addressable market in the world
for Microcyn, and to dramatically reduce international expenses.
The primary objectives for the fiscal year 2008 in Mexico were to reduce operating expenses and
break even by the end of the year. Both objectives were achieved. Mexico broke even in the last
month of the year and reduced operating expenses by $2.6 million for the year. As a result of
reducing the Mexican sales force from over 70 to approximately 30, the company decided to focus its
sales efforts on growing the more profitable pharmacy sector and de-emphasizing sales coverage in
the less-profitable public hospital sector. To provide a sense of the relative profitability, the
revenue per liter in the pharmacy sector is about seven times that of the public
hospitals in Mexico. As a result of this shift in focus and a smaller sales force, the company had
lower sales in Mexico for the quarter and the year due to lower sales to the hospital sector.
But overall, the Mexican operation improved its cash flow, the primary objective for Mexico in
fiscal year 2008, enabling it to break even by the end of the year. The sales to the pharmacies
grew 37% for the full fiscal year compared to last year and 29% for
the fourth quarter. With 6% of
the pharmacy topical antiseptic market share in Mexico, selling on average 25,000 240ml units per
month in the fourth quarter, Oculus will use this distribution channel, which includes Wal-Mart,
Grupo Casa Saba, S.A. de C.V. and NADRO, S.A. de C.V., as the platform for growth in Mexico.
As a result of Oculus experience internationally, the strategy for expanding is that of
affiliation with strong partners, as the company has done in India and China. This allows revenues
to be grown without investing internal resources in the marketing and sales effort. As a part of
this strategy Oculus partners control the specific marketing and sales tactics customized for
their particular market. The sales to India were down for the full fiscal year compared
to last year s large initial stocking orders of $606,000, which was used to broadly distribute
samples during the product launch in fiscal year 2007, and for sales of the product from Alkem to
their customers in fiscal year 2008.
Actual sales of Microcyn-based product by Alkem Laboratories to their customers have continued to
show steady unit growth since the product launch in September 2007 to monthly sales of
33,000 100 ml units during the fourth quarter. Oculus expects continued growth in units delivered
to the India market by Alkem.
Additionally, clinical results of Microcyn use in India and Mexico continue to demonstrate
consistent safety, potency in curing infection and efficacy in wound healing. For example, a
randomized Indian trial involving the Microcyn Technology in 100 patients was presented at DFCon 08
in Hollywood this March. The trial data demonstrated faster wound healing and increased reduction
of bioburden in the Microcyn arm, consistent with the results in more than 25 other clinical trials
Total revenues for the fiscal year ended March 31, 2008 were $3.8 million, compared to $4.5 million
in the prior year primarily due to lower bulk sales to Oculus India-based distribution partner,
Alkem Laboratories Limited, as previously explained. This 2008 revenue does not include $615,000
of deferred revenue related to upfront cash payments from the partnership transactions with China
Bao Tai and Union Springs Pharmaceuticals. Service revenues for the full fiscal year were up 10%
due to a higher volume of testing.
Total revenues for the fiscal fourth quarter of 2008 were $926,000, compared to $1.2 million in the
fiscal fourth quarter 2007, mainly due to international sales force reductions and cost cutting