Cardiovascular Systems Reports Fiscal First-Quarter 2010 Financial Results

Cardiovascular Systems, Inc. (CSI) (Nasdaq: CSII), a medical device company developing and commercializing innovative interventional treatment systems for vascular disease, reported financial results for its fiscal first quarter ended September 30, 2009.

CSI’s revenue in the first quarter of fiscal 2010 rose to $15.2 million, a 30-percent increase over revenue of $11.6 million in the first quarter of last fiscal year. The net loss improved 55 percent to $(6.2) million, or $(0.43) per basic and diluted share, in the first quarter of fiscal 2010, from $(13.7) million, or $(2.75) per basic and diluted share, in the year-ago period. The number of weighted average common shares outstanding increased to 14.5 million from 5.0 million in the first quarter of fiscal 2009, primarily due to new shares issued in conjunction with the February 2009 reverse merger with Replidyne, Inc., including the conversion of all preferred stock of the company to common stock. Adjusted EBITDA, calculated as loss from operations, less depreciation and amortization and stock-based compensation expense, improved by 70 percent to a loss of $(3.6) million versus a loss of $(11.8) million in the year-ago period. Cash and cash equivalents remained strong at $30.8 million and included $3.0 million of net funding received in conjunction with signing an agreement to establish a second production facility in Pearland, Texas.

The number of hospitals using the Diamondback 360 PAD System rose to 611 by the end of the fiscal 2010 first quarter, a nearly 90-percent increase over a year ago and 55 more than the end of the fourth quarter of fiscal 2009. Sales of disposable device units totaled 4,541 units in the first quarter of fiscal 2010 versus 3,636 units in the first quarter of last fiscal year, a 25-percent increase. Revenue generated from customer reorders continued to grow, increasing to 92 percent of total revenue for the fiscal 2010 first quarter from 72 percent in last year’s first quarter.

The fiscal first-quarter 2010 gross margin increased to 77 percent from 67 percent in the same period last year, driven by higher disposable volumes, manufacturing efficiencies, product cost reductions and shipment of fewer controller units. Operating expenses decreased 18 percent, due to effective expense management, the year-earlier write-off of $1.7 million in IPO costs, and completion and timing of development projects and clinical studies.

Providing Comprehensive Clinical Data and Tools to Treat PAD

CSI is committed to providing physicians with clinical data and endovascular tools to treat PAD. Toward that end, this quarter the company continued to expand its product portfolio through an exclusive distribution agreement with Asahi Intecc Co., Ltd., to market its peripheral guide wire line in the United States. Asahi peripheral guide wires are especially suited for addressing long, complex lesions in the leg and complement the plaque removal capabilities of the Diamondback 360°.

CSI also continued to make progress providing clinical data. At the Transcatheter Cardiovascular Therapeutics (TCT) conference in September, Dr. Barry Weinstock, an interventional cardiologist at Orlando Regional Medical Center, reported data from a retrospective study evaluating the long-term results of 64 patients from the pivotal OASIS trial. Outcomes were analyzed out to a mean of 29 months and included maintaining a 100-percent limb salvage rate, an 86-percent freedom from target lesion revascularization (TLR) and significantly improved ankle-brachial index (ABI) scores by an average of 0.29 over the baseline.

Also at TCT, Dr. Ragu Patlola, of Regional Acadiana in Lafayette, Louisiana, presented an abstract on a 150-patient, randomized, single-center study comparing treatment using the Diamondback 360˚ with angioplasty in infrapopliteal arteries. The three-month follow-up results were favorable for the Diamondback 360˚, showing much lower rates for adjunctive stenting (5 percent vs. 45 percent) and restenosis (15 percent vs. 62.5 percent).

CSI is advancing several clinical studies. COMPLIANCE 360° and CALCIUM 360˚ are prospective, randomized, multi-center studies that will evaluate the clinical benefit of modifying plaque and lesion compliance in leg arteries with the Diamondback 360° (supplemented by low-pressure balloon inflation, if desired, in CALCIUM 360˚) to high-pressure balloon inflation. Both studies call for enrolling 50 patients at five U.S. medical centers. CSI also continues working with the FDA on an IDE application for ORBIT II, a pivotal trial in the United States to evaluate the safety and effectiveness of the Diamondback 360° in treating severely calcified coronary lesions.