RIVER EDGE, N.J., March 31 /PRNewswire-FirstCall/ -- Nephros, Inc. (OTC Bulletin Board: NEPH) announced today financial results for the twelve month period ended December 31, 2008.
"2008 was a productive year for Nephros," said Ernest A. Elgin, President and CEO of Nephros. "The Company filed 510(k) applications for U.S. FDA approval of three medical devices. In addition, the Company recorded its initial sales of DSU filters for institutional infection control while significantly reducing its overhead expenses."
Financial Performance for the Year Ended December 31, 2008
Product revenues for the twelve months ended December 31, 2008 were approximately $1,473,000 compared to approximately $1,196,000 in the corresponding period of 2007, an increase of approximately 23%. The Company's net loss was approximately $6,337,000 or $0.17 per basic and diluted common share for the twelve months ended December 31, 2008 compared with approximately $26,356,000 or $1.68 per basic and diluted common share for the corresponding period of 2007. Included in the Company's 2007 net loss is approximately $17,985,000 of non-cash expenses related to the conversion of approximately $18 million principal amount of the Company's notes and accrued interest thereon into shares of Nephros common stock on November 14, 2007. Such non-cash expenses included approximately $13,429,000 for the amortization of beneficial conversion features and approximately $4,556,000 for the amortization of debt discount. The 2007 net loss was reduced by approximately $330,000 in gain from exchange of debt related to the conversion of the Company's notes into shares of Nephros common stock on November 14, 2007.
Loss from operations for the twelve months ended December 31, 2008 was approximately $6,717,000 compared to approximately $7,479,000 in the corresponding period of 2007. The $762,000 reduction in operating loss resulted from an increase of $89,000 in gross profit due to increased revenue and a reduction in selling, general and administrative expenses of $673,000.
As of December 31, 2008, Nephros had cash and cash equivalents of approximately $2,306,000. The Company had approximately $7,000 invested in a certificate of deposit. The Company's independent registered public accountants, Rothstein, Kass & Company, P.C. included a going concern explanatory paragraph in its audit report covering the Company's financial statements for the year ended December 31, 2008. For information regarding the going concern qualification and management's response, please see Nephros' Annual Report on Form 10-K for the year ended December 31, 2008, which is available on the Securities and Exchange Commission's web site at www.sec.gov.
Financial Performance for the Fourth Quarter Ended December 31, 2008 (Unaudited)
For the quarter ended December 31, 2008, Nephros reported net product revenues of approximately $440,000 compared with $441,000 in the corresponding period of 2007, a decrease of $1,000 or 0.2%. The decrease is primarily attributable to an approximate $95,000 decrease in revenue related to sales of the OLpur(TM) MD190 and MD220 products in Europe offset by approximately $93,000 of additional revenue in the fourth quarter of 2008 from its U.S. Defense Department project, which began in 2008.
Operating expenses for the three months ended December 31, 2008 were approximately $969,000 compared with $2,747,000 in the corresponding period of 2007. The decrease of approximately $1,778,000 or 65% is primarily related to the incurrence of accounting, legal and other professional fees associated with the raising of funds in the fourth quarter of 2007 that did not repeat in the comparable period in 2008.
Nephros' net loss was approximately $907,000 or $0.03 per basic and diluted common share for the fourth quarter of 2008 versus a net loss of approximately $21,693,000 or $0.85 per basic and diluted common share in the fourth quarter of 2007. Nephros' net loss decreased $20,786,000 or 96% in the current quarter primarily due to the expenses recognized in 2007 related to the conversion of the Company's notes into Company common stock on November 14, 2007, which did not occur in the comparable 2008 period. Nephros' decrease in net loss per basic and diluted common share during the current quarter was primarily due to the decrease in the net loss compared to the comparable 2007 period as well as the increase in the weighted-average number of shares outstanding from 15,646,286 in the fourth quarter of 2007 to 38,165,380 in the comparable period of 2008.
End-Stage Renal Disease (ESRD) Products
Nephros completed the patient treatment phase of the U.S. clinical trial evaluation of the OLpur(TM) H2H(TM) module and OLpur MD 220 filter during the second quarter of 2008. The Company submitted the clinical data to the FDA with the 510(k) application for U.S. marketing approval of these products in November 2008. Following its review of the application, the FDA has requested additional information from us. Nephros replied to the FDA inquiries on March 13, 2009. Per FDA guidelines, the FDA has 90 days to review the additional information provided by the Company. Nephros believes that, if approved, its technology would be the first FDA-approved on-line HDF therapy available in the U.S.
Water Ultrafiltration Products
On October 7, 2008, Nephros filed a 510(k) application for approval to market DSU filters to dialysis clinics for in-line purification of dialysate water. Following its review of the application, the FDA has requested additional information from us. On February 24, 2009, we provided a formal response to the FDA. Per FDA guidelines, the FDA has 90 days to review the additional information provided by us.
Nephros is investigating a range of commercial, industrial and retail opportunities for its DSU technology. The Company has completed an in-hospital study to demonstrate the efficacy of the DSU and will seek to publish this study in a relevant publication of substantial distribution.
Military Product Development
Nephros has contracted with the Office of Naval Research to develop an advanced water purification system for military field use. Nephros' proprietary dual stage cold sterilization ultrafilter will form the basis of the portable system. Nephros is continuing the development of its dual stage ultra reliable personal water filtration system under support from its U.S. Department of Defense (DOD) appropriation and has completed initial concept development. Initial prototypes are anticipated to be completed in the first half of 2009. With the additional appropriation from the DOD, Nephros will expand the program and plans to conclude development and to conduct limited field testing in 2009. Nephros has introduced the DSU to various government agencies as a solution for providing potable water in certain emergency response situations.
Outlook for 2009
In 2009, Nephros plans to continue its efforts on commercialization activities. Primary goals for Nephros in 2009 include expansion of DSU product sales for institutional infection control and preparation for the anticipated launch of Nephros' OLpur(TM) MD 220 Hemodiafilter, OLpur(TM) H2H(TM) Hemodiafiltration Module, and DSU products for dialysis centers in the U.S. With over 5,000 registered hospitals in the United States alone, Nephros believes the hospital shower and faucet market represents a valuable opportunity in water filtration. The Company has established a goal in 2009 to gain a foothold at U.S. and European facilities that seek to become centers of excellence in infection control through the use of our DSU products.
About Nephros, Inc.
Nephros, Inc., headquartered in New Jersey, is a medical device company developing and marketing filtration products for therapeutic applications, infection control, and water purification.
The Nephros hemodiafiltration (HDF) system is designed to improve the quality of life for the End-Stage Renal Disease (ESRD) patient while addressing the critical financial and clinical needs of the care provider. ESRD is a disease state characterized by the irreversible loss of kidney function. The Nephros HDF system removes a range of harmful substances more effectively, and with greater capacity, than existing ESRD treatment methods, particularly with respect to substances known collectively as "middle molecules." These molecules have been found to contribute to such conditions as dialysis-related amyloidosis, carpal tunnel syndrome, degenerative bone disease and, ultimately, mortality in the ESRD patient. Nephros ESRD products are sold and distributed throughout Europe and are currently being used in over fifty clinics in Europe.
The Nephros Dual Stage Ultra-filter (DSU) is the basis for Nephros' line of water filtration products. The patented dual stage cold sterilization ultrafilter has the capability to filter out bacteria and, due to its exceptional filtration levels, filter out many viruses, parasites and biotoxins. Sale of the DSU has begun at several major U.S. medical centers for infection control and has been selected for further development by the U.S. Marine Corps for purification of drinking water by soldiers in the field.
For more information on Nephros, please visit its website at http://www.nephros.com/
Statements in this news release that are not historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such statements may be preceded by words such as "may," "plans," "expects," "believes," "hopes," "potential" or similar words. For such statements, Nephros claims the protection of the PSLRA.
Forward-looking statements are not guarantees of future performance, are based on assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond Nephros' control. Actual results may differ materially from the expectations contained in the forward-looking statements. Factors that may cause such differences include the risks that Nephros may not be able: (i) to obtain funding when needed or on favorable terms; (ii) to continue as a going concern; (iii) to demonstrate in pre-clinical or clinical trials the anticipated efficacy, safety or cost savings of products that appeared promising to Nephros in research or clinical trials; (iv) to obtain appropriate or necessary governmental approvals to achieve its business plan or effectively market its products; (v) to have its technologies and products accepted in current or future target markets; or (vi) to secure or enforce adequate legal protection, including patent protection, for its products. More detailed information about Nephros and the risk factors that may affect the realization of forward-looking statements is set forth in Nephros' filings with the SEC, including Nephros' Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Investors and security holders are encouraged to read these documents on the SEC's website at http://www.sec.gov/. Nephros does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
|SOURCE Nephros, Inc.|
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