SCOTTSDALE, ARIZONA–(Marketwired – May 30, 2017) – Lattice Biologics Ltd. (TSX VENTURE:LBL) (OTCQB:LBLTF) (“Lattice Biologics” or the “Company“) announces financial results for the second quarter ended March 31, 2017:
Highlights:
- New sales team focused on high growth markets with immediate impact.
- Increased gross margins from 19.9% to 33.7% for six months ended 2016 over 2017.
- Higher gross profit for three months ended March 31, 2017 than any quarter in fiscal 2016.
- Entered into agreements to restructure $4.5 million in debt.
- Granted approval from American Association of Tissue Banks (AATB) through 9/29/19.
- Acellular Dermal Products sales growth 340% Q2 2017over Q2 2016.
- High margin amnion based products now account for 10% of all sales.
- G&A expenses reduced to 14% of sales vs 21% of sales on higher margins.
Q2 2017 Business Update:
The Company remains focused on raising additional capital to: assist with its working capital constraint; fulfill open purchase orders; launch the Company’s new product lines; and support R&D efforts. Appropriate working capital conditions will allow the Company to expand current operations by accepting and processing a greater number of donors each month, launch new higher-margin product lines, and to create a direct sales force to attain our growth objectives.
Furthermore, Lattice Biologics is proactively working to complete key additions to its Scientific Advisory Boards (SABs) which are comprised of strategic Key Opinion Leaders (KOLs) in each of the Company’s targeted surgical specialties. These professionals play a significant role in influencing industry perception and opinion and can be instrumental in the recruitment of new surgeon partners and generation of critical clinical data.
“I am extremely pleased with our new sales team efforts to secure national and international accounts that will provide an immediate impact to our sales revenues. Their dedicated efforts over the last few months have allowed us to achieve a higher gross margin than previous quarters, while decreasing G&A and salary expenses. We are a much leaner and more efficient organization,” states CEO Guy Cook.
Lattice Biologics maintains its commitment to honoring the gift of donation by implementing a strong quality control environment for the recovery and processing of donors, which has resulted in a multi-year American Association of Tissue Banks (AATB) re-accreditation.
As indicated above, the Company continues efforts to diversify the sales mix across the new higher margin product lines added in 2016 and expected new products in 2017.
Second Quarter 2017 Financial Results (all figures denoted in USD):
The product launches have been well received by surgeons and the Company continues to replace unprofitable legacy contracts and focus on the newer higher margin products. Lattice Biologics’ total revenue was $765,357 in the three months ended March 31, 2017 compared to $1,006,975 for the three months ended March 31, 2016, a decrease of 24%, however gross margin increased 23% over the same period, as shown in the following quarter tables:
| Mar-31 | Dec-31 | Sep-30 | Jun-30 | Mar-31 | Dec-31 | Sep-30 | Jun-30 | ||||||||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||
| ADM dermis | $ | 212,740 | 28% | $ | 208,912 | 23% | $ | 130,575 | 18% | $ | 220,365 | 23% | $ | 48,336 | 5% | $ | 51,430 | 5% | $ | 92,659 | 9% | $ | 53,544 |
| DBM putty | 62,964 | 8% | 58,110 | 7% | 151,071 | 21% | 246,235 | 25% | 104,856 | 10% | 50,856 | 5% | 21,175 | 2% | 8,984 | ||||||||
| Bone scaffold | 403,027 | 53% | 567,841 | 64% | 411,131 | 56% | 505,603 | 52% | 847,326 | 84% | 954,496 | 89% | 918,983 | 89% | 840,033 | ||||||||
| Other | 86,626 | 11% | 56,588 | 6% | 40,128 | 5% | 117 | 0% | 6,457 | 1% | 8,872 | 1% | 4,348 | 0% | 11,995 | ||||||||
| Total revenue | $ | 765,357 | 100% | $ | 891,451 | 100% | $ | 732,905 | 100% | $ | 972,320 | 100% | $ | 1,006,975 | 100% | $ | 1,065,654 | 100% | $ | 1,037,165 | 100% | $ | 914,556 |
The following table sets out selected unaudited financial information, prepared in accordance with IFRS. The information contained herein is drawn from interim financial statements of the Company for each of the following quarterly periods ending:
| Mar-31 | Dec-31 | Sep-30 | Jun-30 | Mar-31 | Dec-31 | Sep-30 | Jun-30 | |||||||||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 | 2015 | |||||||||||||||||
| Revenue | $ | 765,357 | $ | 891,451 | $ | 732,905 | $ | 972,320 | $ | 1,006,975 | $ | 1,065,654 | $ | 1,037,165 | $ | 914,556 | ||||||||
| Cost of sales | 533,957 | 564,831 | 558,396 | 744,094 | 818,884 | 839,787 | 800,669 | 743,300 | ||||||||||||||||
| Gross profit | 231,400 | 326,620 | 174,509 | 228,226 | 188,091 | 225,867 | 236,496 | 171,256 | ||||||||||||||||
| Operating costs (i) | 950,833 | 917,809 | 1,267,507 | 836,955 | 965,394 | 798,166 | 859,641 | 722,889 | ||||||||||||||||
| EBITDA (ii) | (699,652 | ) | (571,408 | ) | (1,072,009 | ) | (577,075 | ) | (763,988 | ) | (558,984 | ) | (604,732 | ) | (533,221 | ) |
Certain adjustments have been made to the quarterly information for the first two quarters of the fiscal year ended March 31, 2017, as compared to data contained in the quarterly filings for such quarters. These changes relate to certain adjustments for cost of sales and operating costs that were not recognized until the fourth quarter of such fiscal year.
- Operating costs are defined as all general and administrative costs, professional fees, rent, salaries and benefits, sales and marketing, and utilities expenses.
- EBITDA is defined as gross profit less operating costs (as defined above).
Lattice Biologics Ltd.
Guy Cook, Chief Executive Officer
Telephone No: (480) 563-0800
About Lattice Biologics Ltd.:
Lattice Biologics Ltd. is an emerging precision medicine leader in the field of cellular therapies and tissue engineering, with an emphasis on bone, skin, and cartilage regeneration. As a manufacturer of the highest quality allografts, Lattice is focused on next generation products to improve surgical outcomes.
Versatile allografts for a variety of surgical applications:
- Enhancing fusion in spine surgery
- Enhancing breast reconstruction post mastectomy for breast cancer patients
- Sports medicine indications, including ACL repair
- Promotion of bone regeneration in foot and ankle surgery
- Promotion of cranial healing following neurosurgery
- Enhancing wound repair in burn victims
- Subchondral bone defect repair in knee and other joint surgeries
The Company is currently exploring new technologies in regenerative and personalized medicine:
- All natural amniotic fluid supplement for arthritic joints
- Personalized Cancer Diagnostics – revolutionary high-throughput precision chemotherapy screening
Lattice Biologics operates headquarters, laboratory and manufacturing facilities in Scottsdale, Arizona as well as offices in Toronto Ontario. The Company maintains all necessary licensures to process and sell its tissue engineered products within the U.S. and internationally. This includes Certificates to Foreign Governments from the U.S. Food and Drug Administration (FDA) and registrations for 29 countries, which allow the export of bone, tendon, meniscus, ligament, soft tissue, and cartilage products outside of the U.S.
Lattice Biologics (TSX VENTURE:LBL) (OTCQB:LBLTF) became a publicly traded company on January 4, 2016.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statement on Forward-Looking Information:
Certain information contained in this news release constitutes “forward-looking statements” within the meaning of the ‘safe harbour’ provisions of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws. All statements herein, other than statements of historical fact, are to be considered forward looking. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “planned”, “potential”, “future”, “expected”, “could”, “possible”, “goal”, “intends”, “will” or similar expressions. Forward-looking statements in this news release include, without limitation: information pertaining to the Company’s strategy, plans, or future financial performance, such as statements with respect to future revenues or products, and other statements that express management’s expectations or estimates of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Lattice to be materially different from those expressed or implied by such forward-looking statements. Such risks include but are not limited to: the risk that the Company may not be able to generate sufficient cash to service its indebtedness and uncertainty regarding the ability to consummate the debt restructuring transaction.
Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management as of the date such statements are made, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions that could prove to be incorrect, include, but are not limited to: that market prices will be consistent with expectations, the continued availability of capital and financing, and that general economic, market and business conditions will be consistent with expectations. The forward-looking statements are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.
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Cheryl Farmer
CFO
Lattice Biologics Ltd.
16701 N 90th Street, Suite#101
Scottsdale, AZ 85260
480-563-0800 Office
[email protected]
www.LatticeBiologics.com
