Novadaq Technologies Inc.
TSX : NDQ

Novadaq Technologies Inc.

March 28, 2011 07:01 ET

Novadaq Reports Fiscal 2010 Full-Year and Fourth Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - March 28, 2011) - Novadaq® Technologies Inc. (TSX:NDQ), a developer of real-time medical imaging systems for use in the operating room, today announced its financial results for the fiscal year and fourth quarter ended December 31, 2010. Unless otherwise indicated, all dollar amounts in this press release are expressed in United States (U.S.) dollars.

"Fiscal 2010 was about achieving key milestones to continue to drive the adoption of SPY technology. Use of SPY in plastic reconstructive surgery continued to gain momentum during the first nine months of the year, which led to the signing of our sales and marketing agreement with LifeCell™ in September 2010. LifeCell™ is the market leader in plastic reconstruction and gastrointestinal surgery and, therefore, the partnership agreement significantly increased our distribution capabilities. In addition, we completed the integration of SPY technology into the Intuitive Surgical® da Vinci® robotic system. The integrated system is now FDA cleared and we are pleased that Intuitive has already initiated a limited U.S. market launch," said Dr. Arun Menawat, Novadaq's President and CEO.

Dr. Menawat continued, "We also invested in building manufacturing capacity in 2010 and today we believe that Novadaq has the technical resources, the capacity and capital required to meet the anticipated growing demand for our devices. Our priorities in 2011 include continuing to work closely with our industry leading partners to drive the deeper adoption of SPY technology amongst surgeons performing plastic reconstruction, head and neck, gastrointestinal, robotic and many other complex surgical procedures," concluded Menawat.

Corporate Highlights

  • Increased recurring revenues for the SPY Imaging System by 44% for the full fiscal year of 2010 and by 9% in Q-4 2010 compared to Q-4 2009 even after sharing revenues with LifeCell™ in Q-4 2010. The majority of the increase is attributed to the increasing adoption of SPY in plastic reconstructive surgery.
  • Completed the final milestone of the license and development agreement with Intuitive Surgical, Inc., in August of 2010 and recognized $5M in milestone payments. Subsequent to year-end, Intuitive received 510(k) clearance for the integrated visualization system from the U.S. Food and Drug Administration and began a U.S. limited launch for the product in key opinion leading centers. Novadaq has begun exclusive supply of the critical hardware and disposable products required to perform fluorescence imaging during robotic procedures.
  • Signed a five-year, exclusive North American sales and marketing agreement with LifeCell™ Corporation in September of 2010 for distribution of the SPY Imaging System in the plastic reconstructive, gastrointestinal and head and neck surgical markets. LifeCell™ is a leader in taking innovation from concept to full adoption and is recognized for delivering best-in-class professional education, conducting exemplary clinical studies and providing superior reimbursement support. At the time of signing, Novadaq transferred its core sales team to LifeCell™, resulting in a decrease in Novadaq's selling costs while positioning LifeCell™ to continue to effectively drive momentum for SPY. Following a pilot launch in Q4 2010, LifeCell™ trained its entire selling organization on Novadaq's latest generation SPY system designed specifically for LifeCell's markets, SPY Elite®, at the end of January 2011 and commenced full product launch in February 2011.
  • Continued to support our existing cardiac SPY and TMR business through a small, focused sales team. Subsequent to year-end, completed the acquisition of substantially all of the TMR assets from PLC Medical.
  • As at December 31, 2010, Novadaq had cash of $5,597,407. Subsequent to the year-end, the Company successfully raised gross proceeds of CDN $15,000,000 from a private placement, strengthening the balance sheet.

Conference Call

Novadaq is pleased to invite all interested parties to participate in a conference call today, March 28, at 10:00 AM Eastern Time during which these results will be discussed.

Those wishing to access the live conference call by telephone should dial 1-877-407-0778 (within Canada and the United States) or 1-201-689-8565 (international callers) several minutes prior to the beginning of the call. A telephonic replay of the conference call will be made available until midnight on April 28, 2011 and can be accessed by dialing 1-877-660-6853 (within Canada and the United States) or 1-201-612-7415 (international callers) and entering the account number 286 and the conference identification number 369378 when prompted.

The call will also be audio webcast live and archived for 365 days on the company's website at http://www.novadaq.com under the "Events" tab in the Investor's section. In addition, a replay of the call will be available for download to a portable audio player or computer, as an MP3 or podcast file, at the same location on Novadaq's website.

About Novadaq Technologies Inc.

Novadaq Technologies develops and markets real-time fluorescence imaging technologies for use in the operating room. The Company's core technology platform, SPY imaging, provides clinically relevant, anatomic and physiologic images during a wide variety of complex open and minimally invasive surgical ("MIS") procedures. SPY empowers surgeons treating life-threatening illnesses such as breast, colon and other cancers and cardiovascular disease to more effectively treat vascular blockages and assess tissue perfusion. More than 40 peer-reviewed publications demonstrate that SPY imaging leads to fewer post-operative complications and reduced hospital costs. The SPY imaging System is cleared by the United States Food and Drug Administration ("FDA") for real-time use during open and MIS surgical procedures. The endoscopic SPY System combines all of the capabilities of SPY imaging with state-of-the-art high definition ("HD") visible light visualization offered by conventional endoscopes. Novadaq announced its first alliance with Intuitive Surgical®, Inc., in January 2009, to integrate SPY Imaging into the 3-D HD imaging capabilities of the da Vinci® Surgical Robotic System. The integrated system received FDA 510(k) clearance to market in February 2011. In addition, in September 2010, Novadaq entered into an exclusive North American sales and marketing alliance with LifeCell™ Corporation, a Kinetic Concepts ("KCI"), Inc. Company, for SPY in open plastic and reconstructive, gastrointestinal and head and neck surgery. Novadaq's cardiac surgery products, including SPY imaging for cardiac applications and a Heart Laser™ System targeted at improving heart surgeries, are marketed through a direct sales team. For more information, please visit the Company's website at http://www.novadaq.com.

Forward Looking Statements

Certain statements included in this press release may be considered forward-looking. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on Novadaq's current beliefs as well as assumptions made by and information currently available to Novadaq and relate to, among other things, results of future clinical tests of PINPOINT, SPY endoscopic technology and the SPY Imaging System, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by Novadaq in its public securities filings actual events may differ materially from current expectations. Novadaq disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

         
Novadaq Technologies Inc.        
         
CONSOLIDATED BALANCE SHEETS  
[expressed in U.S. dollars]  
         
As at December 31        
  2010   2009  
  $   $  
ASSETS        
Current        
Cash and cash equivalents 5,597,407   2,524,958  
Accounts receivable 1,434,964   1,398,593  
Current portion of prepaid expenses and other receivables 1,193,423   2,003,681  
Inventory 778,984   1,017,268  
Total current assets 9,004,778   6,944,500  
Long-term investments   150,000  
Property and equipment, net 1,202,468   1,762,554  
Prepaid expenses and other receivables 144,456   189,148  
Deferred development costs 405,195   405,195  
Intangible assets, net 1,563,288   7,273,564  
  12,320,185   16,724,961  
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current        
Accounts payable and accrued liabilities 3,441,174   3,254,575  
Current portion of deferred warranty revenue 549,865   710,365  
Current portion of deferred sales and marketing revenue 800,000    
Current portion of deferred license and development revenue   3,000,000  
Total current liabilities 4,791,039   6,964,940  
Long-term debt 3,891,753   3,527,700  
Income taxes payable 24,066   48,979  
Deferred warranty revenue 190,609   238,158  
Deferred sales and marketing revenue 2,933,333    
Total liabilities 11,830,800   10,779,777  
         
Commitments and contingencies        
Shareholders' equity        
Share capital 87,947,441   81,188,324  
Contributed surplus 7,670,358   6,882,280  
Warrants 916,560    
Deficit (96,044,974 ) (82,125,420 )
Total shareholders' equity 489,385   5,945,184  
  12,320,185   16,724,961  
         
 
   
Novadaq Technologies Inc.  
   
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS  
[expressed in U.S. dollars]  
   
   
  2010   2009  
  3 mos. ended December 31   12 mos. ended December 31   3 mos. ended December 31   12 mos. ended December 31  
  $   $   $   $  
REVENUE                
Product sales 2,010,388   8,621,940   1,476,433   6,810,442  
Milestone revenue   5,000,000      
Service revenue 266,029   1,290,644   312,462   1,414,213  
Total revenue 2,276,417   14,912,584   1,788,895   8,224,655  
Cost of sales 1,250,278   6,575,350   1,053,234   4,609,652  
Gross profit 1,026,139   8,337,234   735,661   3,615,003  
   
OPERATING EXPENSES                
Sales and marketing 1,341,265   6,876,290   1,882,695   7,289,674  
Research and development 1,420,520   4,815,727   1,027,520   3,799,145  
General and administration 877,774   3,426,885   1,026,594   3,459,424  
Depreciation 39,653   237,381   96,342   398,493  
Amortization 330,056   881,671   271,694   1,196,434  
Write-down of inventory   426,600   158,571   424,950  
Write-down of intangible asset   4,828,605   1,327,774   1,327,774  
Loss (gain) on foreign exchange (1,183 ) 11,628   17,537   124,626  
Total operating expenses 4,008,085   21,504,787   5,808,727   18,020,520  
Loss before the following (2,981,946 ) (13,167,553 ) (5,073,066 ) (14,405,517 )
Interest expense (165,488 ) (643,100 ) (174,791 ) (534,264 )
Impairment of long-term investments   (125,000 )    
Interest income 4,650   16,099   1,796   11,676  
Loss before income taxes (3,142,784 ) (13,919,554 ) (5,246,061 ) (14,928,105 )
Income tax expense     (61,226 ) (61,226 )
Net loss and comprehensive loss for the year (3,142,784 ) (13,919,554 ) (5,307,287 ) (14,989,331 )
                 
Deficit, beginning of year (92,902,190 ) (82,125,420 ) (76,818,133 ) (67,136,089 )
Deficit, end of year (96,044,974 ) (96,044,974 ) (82,125,420 ) (82,125,420 )
   
Basic and diluted loss per share (0.11 ) ($0.51 ) (0.22 ) ($0.61 )
                 
   
Novadaq Technologies Inc.  
   
CONSOLIDATED STATEMENTS OF CASH FLOWS  
[expressed in U.S. dollars]  
   
   
  2010   2009  
  3 mos. Ended December 31   12 mos. Ended December 31   3 mos. Ended December 31   12 mos. Ended December 31  
  $   $   $   $  
                 
OPERATING ACTIVITIES                
Net loss for the year (3,142,784 ) (13,919,554 ) (5,307,287 ) (14,989,331 )
Add (deduct) items not involving cash                
  Depreciation and amortization 529,362   1,766,541   468,181   2,235,715  
  Write-down of inventory   426,600   158,571   424,950  
  Write-down of intangible assets   4,828,605   1,327,774   1,327,774  
  Leasehold improvement write-down     66,605   66,605  
  Non-cash interest expense     153,478   153,478  
  Imputed interest expense 94,404   364,053   83,629   280,208  
  Impairment of long-term investments   125,000      
  Stock-based compensation 205,307   813,633   192,957   648,594  
  (2,313,711 ) (5,595,122 ) (2,856,092 ) (9,852,007 )
Net change in deferred revenue and deferred charge (127,143 ) 1,649,279   1,974,528   1,974,528  
Net change in non-cash working capital balances related to operations (506,938 ) (438,883 ) (1,529,513 ) 1,618,248  
Cash used in operating activities (2,947,792 ) (4,384,726 ) (2,411,077 ) (6,259,231 )
                 
FINANCING ACTIVITIES                
Issuance of convertible debentures, net of transaction costs       5,062,409  
Issuance of common shares and warrants, net of transaction cost   7,610,157      
Issuance of common shares, net 4,880   39,964     4,989  
Cash provided by financing activities 4,880   7,650,121     5,067,398  
                 
INVESTING ACTIVITIES                
Purchase of property and equipment, net (194,848 ) (324,784 ) (122,221 ) (282,478 )
Redemption of long-term investments   25,000     50,000  
Cash used in investing activities (194,848 ) (299,784 ) (122,221 ) (232,478 )
Foreign exchange loss on cash held in foreign currency 64,580   106,838   (4,472 ) (42,564 )
Net increase (decrease) in cash and cash equivalents (3,073,180 ) 3,072,449   (2,537,770 ) (1,466,875 )
Cash and cash equivalents, beginning of year 8,670,587   2,524,958   5,062,728   3,991,833  
Cash and cash equivalents, end of year 5,597,407   5,597,407   2,524,958   2,524,958  
                 

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