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Lattice Biologics Ltd
Symbol LBL
Shares Issued 49,749,241
Close 2016-05-26 C$ 0.19
Market Cap C$ 9,452,356
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Lattice Biologics talks revenue, omits Q2 P&L in NR

2016-05-26 18:10 ET - News Release

Mr. Guy Cook reports

LATTICE BIOLOGICS LTD. REPORTS SECOND QUARTER 2016 HIGHLIGHTS

Lattice Biologics Ltd. is releasing its financial results for the second quarter ended March 31, 2016.

Second quarter financial results (all figures denoted in U.S. dollars)

With 50 new surgeons added to the company's user base during the first two quarters of 2016, the company is rapidly expanding into new markets and with cutting-edge new products. Revenue was $1,006,975 at gross margin of 27 per cent in the three months ended March 31, 2016, compared with $1,065,920 at gross margin of 18 per cent in the three months ended March 31, 2015. The company expects gross margins to continue to increase as it shifts the sales mix across the new, significantly higher-margin product lines.

Also during the first two quarters of 2016, Lattice Biologics increased its total number of direct hospital approvals from 18 to 27, with another approximate 200 hospital approvals currently pending.

The company continues to make significant improvements on the balance sheet, including an upsurge in cash from $50,000 to $518,000, a 90-per-cent increase. The previously disclosed commitments to convert $1.4-million of debt to equity have been increased to $1,733,000 of debt, which is expected to be converted to equity (at a weighted average price of 23 Canadian cents per share). This is in addition to the initial $500,000 (at a weighted average price of 21 Canadian cents share) converted at the time of going public, for a total of $2,233,000 of debt committed to be converted to equity during the first two quarters of 2016. The $1,733,000 being converted represents 42 per cent of the company's long-term debt as of March 31, 2016.

Lattice Biologics maintains its commitment to honouring the gift of donation by implementing a stronger quality control environment for the recovery and processing of donors. As the company's revenues are still largely concentrated in the musculoskeletal market (representing 84 per cent of the company's sales mix in the three months ended March 31, 2016, compared with 90 per cent in the three months ended March 31, 2015), revenue is highly dependent on the number of donors the company is able to recover and, in turn, process.

As indicated above, the company continues efforts to diversify the sales mix across the new product lines added in 2015 -- Lattice Biologics's acellular dermal matrix scaffold (AdMatrix) and demineralized bone matrix putty. As at March 31, 2016, the company had built adequate inventory levels of the new product lines in preparation for the growth in sales. Of the company's $2,232,390 inventory, 68 per cent comprises both finished and unfinished goods for the new product lines.

2016 business outlook

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 research and development (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, and also to launch new high-margin product lines. If Lattice Biologics is successful in its financing efforts, the company expects to be cash flow positive by the end of fiscal 2016.

Furthermore, Lattice Biologics is pro-actively working to complete all additions to its scientific advisory boards (SABs), which comprise 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 efforts to build out our SAB team, as well as our M&A and R&D efforts to further our growth trajectory," states chief executive officer Guy Cook. "EBITDA will be a key indicator of our positive growth position, while key surgeon recruitment will help make Lattice a leader in delivering top-notch care in precision medicine."

EBITDA is earnings before interest, taxes, depreciation and amortization.

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