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MRI Interventions, Inc. Reports 26% Year-Over-Year Increase in Third Quarter Procedures

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Gross Margin Increases to 60%

Record 469 ClearPoint Procedures Performed Year-to-Date

IRVINE, Calif., Nov. 06, 2017 (GLOBE NEWSWIRE) -- MRI Interventions, Inc. (OTCQB:MRIC) (the “Company”) today announced financial results for the third quarter ended September 30, 2017.

2017 Third Quarter and Recent Highlights

  • Total revenue increased 6% to $1.7 million, from $1.6 million in the same period of 2016, reflecting a 12% increase in disposable sales, offset by lower capital equipment sales;
  • Revenue year-to-date increased 39% to $5.7 million, from $4.1 million in the same period of 2016;
  • Gross margin increased to 60%, compared with 54% in the same period of 2016;
  • Net loss declined 44% year-over-year to $1.4 million, as compared with $2.6 million for the same period in 2016;
  • Completed 161 procedures using the ClearPoint® Neuro Navigational System, a quarterly increase of 26%, and completed a record 469 procedures year-to-date;
  • Sold one ClearPoint system, and initiated two new system evaluations;
  • Grew the installed base of ClearPoint Systems to 52 centers in the U.S., including the Company’s seventh top-ten children’s hospital;
  • Furthered research and development efforts with partners toward the development of new therapeutic applications for intra-cranial hemorrhage and pancreatic cancer;
  • Participated in a One Room-One Procedure laser ablation Practical Clinic during the Congress of Neurological Surgeons; and
  • Announced the appointment of Joseph Burnett as President and Chief Executive Officer effective November 7, 2017.

Frank Grillo, current President and Chief Executive Officer of MRI Interventions, Inc., said: “ClearPoint treatments increased 26% year over year in the third quarter, demonstrating increased market adoption of our platform. Treatment volume was slower at the beginning of the quarter in what we believe was a seasonal effect, and then accelerated at the end of the quarter, an increased pace that has continued into October and November. We remain focused on expanding utilization at our clinical sites across the U.S., as well as securing additional centers to further our neurosurgical market share. Several evaluation sites have successfully adopted ClearPoint, and we are focused on converting these locations into sales in the 2017 fourth quarter and beyond. Neurosurgeons are increasingly recognizing the value of real-time intraoperative MRI guidance in high-growth areas such as deep brain stimulation and laser ablation, as well as the compelling safety and patient comfort benefits inherent to the ClearPoint platform. Our hospital partners benefit as well, since patients are more comfortable with ClearPoint procedures than traditional approaches which may require the patient to be awake during surgery.”

Joe Burnett, incoming President and Chief Executive Officer of MRI Interventions, Inc., remarked: “I look forward to capitalizing on the existing installed base of ClearPoint Systems to further increase procedure growth, as well as converting our large and growing pipeline of prospective sites into ClearPoint centers of excellence. During Frank’s tenure as CEO, the Company has successfully commercialized its platform, brought ClearPoint into the mainstream of neurosurgery procedures and obtained funding to allow it to set its sights on strategic objectives. This is an exciting time at the Company, and I look forward to working closely with our team to create further shareholder value through continued growth.” 

Financial Results – Quarter Ended September 30, 2017

Total revenues were $1.7 million for the three months ended September 30, 2017, an increase of $101,000, or 6%, compared with $1.6 million for the same period in 2016.

ClearPoint disposable product sales increased $149,000, or 12%, to $1.4 million for the three months ended September 30, 2017, compared with $1.3 million for the same period in 2016. This growth in disposable sales reflected 161 ClearPoint procedures performed in the 2017 third quarter.

ClearPoint reusable product sales were $208,000 for the three months ended September 30, 2017, compared with $309,000 for the same period in 2016. Reusable products consist primarily of computer hardware and software bearing sales prices that are appreciably higher than those for disposable products and fluctuate from quarter to quarter.

Gross margin for the three months ended September 30, 2017 was 60%, compared to gross margin of 54% for the same period in 2016. The increase in gross margin primarily reflected decreased charges for inventory obsolescence and a favorable mix of product sold, comprised of a greater share of disposable products during the three months ended September 30, 2017, relative to the same period in 2016.

Research and development costs were $590,000 during the three months ended September 30, 2017, compared to $691,000 during the same period in 2016, a decrease of $101,000, or 15%. The decrease was due primarily to reductions in software development and intellectual property costs, partially offset by an increase in new product development costs.

Selling, general and administrative expenses were $1.8 million for the three months ended September 30, 2017, as compared to $1.9 million for the same period in 2016, a decrease of $120,000, or 6%. The decrease was due primarily to reduced financing costs and stock compensation expense, which were partially offset by increased recruiting expenses during the three months ended September 30, 2017, relative to the same period in 2016.

The Company’s operating loss for the three months ended September 30, 2017 declined $382,000, or 22%, to $1.3 million, as compared with $1.7 million for the same period in 2016.

In August 2016, the Company recorded a debt restructuring loss of $933,000 resulting from amendments entered into with two holders of the 2014 junior secured notes payable (the “2014 Note Holders”) who then converted $1.75 million of aggregate principal balance of their notes into equity in connection with the Company’s private placement of equity securities in September 2016.

During the three months ended September 30, 2017 and 2016, the Company recorded gains of $110,000 and $324,000, respectively, resulting from changes in the fair value of derivative liabilities. For the three months ended September 30, 2017, such derivative liabilities related to: (a) the issuance of warrants in connection with a 2013 private placement transaction; (b) a note amendment entered into with Brainlab AG (“Brainlab”) in June 2016; and (c) the amendments entered into with the 2014 Note Holders discussed above. For the three months ended September 30, 2016, derivative liabilities included the foregoing and warrants issued with down-round price protection provisions in connection with a 2012 private placement transaction.

Net interest expense during the three months ended September 30, 2017 and 2016 was $211,000 and $240,000, respectively, a decrease of $29,000, or 12%. This decrease was due to the reduction of principal balances resulting from the conversion into equity of an aggregate $1.75 million principal balance of the notes discussed above.

Reflecting the effects of these non-operational items, net loss for the three months ended September 30, 2017 was $1.4 million, as compared with $2.6 million for the same period in 2016.

Cash used in operating activities for the three months ended September 30, 2017 was $1.7 million, as compared with $1.4 million of for the same period in 2016. The increase was due primarily to growth in accounts receivable, consistent with growth in total revenues during the three months ended September 30, 2017, relative to the same period in 2016, and to a planned increase in inventory safety stock levels during the three months ended September 30, 2017.

Financial Results – Nine Months Ended September 30, 2017

Total revenues were $5.7 million for the nine months ended September 30, 2017, an increase of $1.6 million, or 39%, compared with $4.1 million for the same period in 2016. This increase was due primarily to an increase in the Company’s disposable and reusable product sales.

ClearPoint disposable product sales increased $1.1 million, or 33%, to $4.5 million for the nine months ended September 30, 2017, compared with $3.4 million for the same period in 2016. This growth in disposable sales reflected a record 469 ClearPoint procedures performed during the nine months ended September 30, 2017. ClearPoint reusable product sales were $923,000 for the nine months ended September 30, 2017, compared with $608,000 for the same period in 2016.

Gross margin for the nine months ended September 30, 2017 was 61%, compared to gross margin of 52% for the same period in 2016.

Research and development costs were $2.2 million during the nine months ended September 30, 2017, compared to $2.1 million during the same period in 2016, an increase of $133,000, or 6%. The increase was due to the upfront payments required under the previously announced development agreements entered into in April 2017 with the Mayo Clinic and Acoustic MedSystems, Inc., which were partially offset by reductions in software development and intellectual property costs, and compensation expenses.

Selling, general and administrative expenses were $5.7 million during each of the nine months ended September 30, 2017 and 2016. Increases in personnel-related costs due to headcount increases in the Company’s commercial team were offset by decreases in professional fees and stock-based compensation costs.

The Company’s operating loss for the nine months ended September 30, 2017 declined $1.2 million, or 21%, to $4.5 million, as compared with $5.7 million for the same period in 2016.

During the nine months ended September 30, 2016, the Company recorded a net loss from debt restructuring of $812,000, the components of which were: (a) a gain of $941,000 resulting from the restructuring of the note payable to Brainlab in April 2016; (b) a loss of $820,000 resulting from amendments made in June 2016 to: (i) the note payable to Brainlab; and (ii) the notes held by the 2014 Note Holders; and (c) a loss of $933,000 resulting from amendments entered into with the 2014 Note Holders in August 2016 as described above.

During the nine months ended September 30, 2017 and 2016, the Company recorded gains of $48,000 and $748,000, respectively, resulting from changes in the fair value of the derivative liabilities existing at those respective dates as described above.

During the nine months ended September 30, 2017, the Company recorded other income of $7,000, as compared with other income of $210,000 recorded during the same period in 2016, representing a decrease of $203,000, or 97%. This decrease was due primarily to grant income from a U.S. federal agency related to a project in process during the nine months ended September 30, 2016, which was discontinued by the agency later in 2016. The Company has not since undertaken any additional such projects.

Net interest expense during the nine months ended September 30, 2017 and 2016 was $637,000 and $836,000, respectively, a decrease of $199,000, or 24%. This decrease was due to the reduction of principal balances as described above.

Reflecting the effects of these non-operational items, net loss for the nine months ended September 30, 2017 was $5.1 million, as compared with $6.4 million for the same period in 2016.

Cash used in operating activities for the nine months ended September 30, 2017 was $4.2 million, as compared with $4.7 million of for the same period in 2016. This improvement was due primarily to the reduction in the Company’s net loss for the nine months ended September 30, 2017, relative to the same period in 2016, which was partially offset by the planned increase in inventory safety stock levels during the three months ended September 30, 2017.

Private Placement

As previously announced, on May 26, 2017, the Company completed a private placement of equity units, which resulted in gross proceeds of $13.25 million, before deducting placement agents’ fees and offering expenses.

Conference Call and Webcast

Investors and analysts who would like to participate in a conference call today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to review the Company’s financial results may do so via telephone at (877) 407-9034, or at (201) 493-6737 if calling from outside the U.S. or Canada. Callers should dial in at least 5 minutes prior to the call start time.

A live and archived webcast may be accessed by visiting the Company's website at www.mriinterventions.com, by selecting “Investors” / “News” / “IR Calendar.” The conference call may also be accessed at http://mriinterventions.equisolvewebcast.com/q3-2017. A replay of the conference call will be available shortly after completion of the call until November 13, 2017 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering conference ID number 413671.

About MRI Interventions, Inc.

Building on the imaging power of magnetic resonance imaging (“MRI”), MRI Interventions is creating innovative platforms for performing the next generation of minimally invasive surgical procedures in the brain.  The ClearPoint Neuro Navigation System, which has received 510(k) clearance and is CE marked, utilizes a hospital’s existing diagnostic or intraoperative MRI suite to enable a range of minimally invasive procedures in the brain. For more information, please visit www.mriinterventions.com.

Forward-Looking Statements

Statements herein concerning the Company’s plans, growth and strategies may include forward-looking statements within the context of the federal securities laws. Statements regarding the Company’s future events, developments and future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Uncertainties and risks may cause the Company’s actual results to differ materially from those expressed in or implied by forward-looking statements. Particular uncertainties and risks include those relating to: future revenues from sales of the Company’s ClearPoint Neuro Navigation System products; the Company’s ability to market, commercialize and achieve broader market acceptance for the Company’s ClearPoint Neuro Navigation System products; and estimates regarding the sufficiency of the Company’s cash resources. More detailed information on these and additional factors that could affect the Company’s actual results are described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as well as the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, both of which have been filed with the Securities and Exchange Commission.

Contact:          
Harold A. Hurwitz, Chief Financial Officer
(949) 900-6833
Matt Kreps, Darrow Associates Investor Relations
(512) 696-6401; mkreps@darrowir.com  

 (tables follow)

   
MRI INTERVENTIONS, INC.  
Condensed Consolidated Statements of Operations  
(Unaudited)  
       
    For The Three Months Ended
September 30,
 
    2017   2016  
Revenues:              
Product revenues   $   1,628,435   $  1,580,826  
Service and other revenues       88,635      35,507  
Total revenues       1,717,070      1,616,333  
Cost of product revenues       688,847      748,305  
Research and development costs       589,716      691,330  
Selling, general, and administrative expenses       1,765,830      1,886,220  
Operating loss       (1,327,323 )    (1,709,522 )
Other income (expense):              
Loss from debt restructuring       -      (933,134  )
Gain from change in fair value of derivative liabilities       109,803     324,035  
Other income (expense), net       3,363     (4,877 )
Interest expense, net     (211,362 )   (239,733 )
Net loss   $ (1,425,519 ) $ (2,563,231 )
Net loss per share attributable to common stockholders:              
Basic and diluted   $ (0.14 ) $ (0.92 )
Weighted average shares outstanding:              
Basic and diluted     10,339,210     2,779,803  
               


   
MRI INTERVENTIONS, INC.  
Condensed Consolidated Statement of Operations  
(Unaudited)  
       


  For The Nine Months Ended
September 30,
 
    2017     2016  
Revenues:                
Product revenues   $ 5,443,287     $  4,013,531  
Service and other revenues     256,860        100,818  
Total revenues     5,700,147        4,114,349  
Cost of product revenues     2,239,808        1,965,839  
Research and development costs     2,231,616        2,098,465  
Selling, general, and administrative expenses     5,731,961        5,748,524  
Operating loss     (4,503,238 )     (5,698,479 )
Other income (expense):                
Loss from debt restructuring     -       (811,909 )
Gain from change in fair value of derivative liabilities     48,064       748,080  
Other income, net     6,774       209,504  
Interest expense, net     (637,270 )     (836,208 )
Net loss   $ (5,085,670 )   $ (6,389,012 )
Net loss per share attributable to common stockholders:                
Basic and diluted   $ (0.75 )   $ (2.59 )
Weighted average shares outstanding:                
Basic and diluted     6,783,605       2,467,437  



MRI INTERVENTIONS, INC.
 
Condensed Consolidated Balance Sheets  
(Unaudited)  
             
    September 30,
2017
    December 31,
2016
 
ASSETS                
Current Assets:                
Cash and cash equivalents   $   11,028,973     $ 3,315,774  
Accounts receivable, net of allowance for doubtful accounts of $26,714 and $25,000 at September 30, 2017 and December 31, 2016, respectively       863,758       865,943  
Inventory, net       2,181,245       1,768,382  
Prepaid expenses and other current assets       239,326       134,996  
Total current assets       14,313,302       6,085,095  
Property and equipment, net       246,381       328,249  
Software license inventory       889,400       976,900  
Other assets       10,641       10,641  
Total assets   $   15,459,724     $ 7,400,885  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                
Current liabilities:                
Accounts payable   $   957,660     $ 1,546,926  
Accrued compensation       809,323       666,060  
Other accrued liabilities       529,942       450,424  
Derivative liabilities       72,450       131,173  
Deferred product and service revenues       281,826       223,117  
Total current liabilities       2,651,201       3,017,700  
Accrued interest     734,625       647,500  
Senior secured note payable     2,000,000       2,000,000  
2014 junior secured notes payable, net of unamortized discount and deferred issuance costs of $120,516 and $180,774 at September 30, 2017 and December 31, 2016, respectively     1,854,484       1,794,226  
2010 junior secured notes payable, net of unamortized discount of $2,060,865 and $2,302,472 at September 30, 2017 and December 31, 2016, respectively     939,135       697,528  
Total liabilities     8,179,445       8,156,954  
Commitments and contingencies                
Stockholders’ equity (deficit):                
Preferred stock, $0.01 par value; 25,000,000 shares authorized at September 30, 2017 and December 31, 2016; none issued and outstanding at September 30, 2017 and December 31, 2016     -       -  
Common stock, $0.01 par value; 200,000,000 shares authorized; 10,339,210 shares issued and outstanding at September 30, 2017; and 3,622,032 issued and outstanding at December 31, 2016     103,391       36,220  
Additional paid-in capital     106,131,322       93,076,475  
Accumulated deficit     (98,954,434 )     (93,868,764 )
Total stockholders’ equity (deficit)     7,280,279       (756,069 )
Total liabilities and stockholders’ equity (deficit)   $ 15,459,724     $ 7,400,885  
                 


   
MRI INTERVENTIONS, INC.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)   
   
    For The Nine Months Ended
September 30,
 
    2017     2016  
Cash flows from operating activities:                
Net loss   $ (5,085,670 )   $ (6,389,012 )
Adjustments to reconcile net loss to net cash flows from operating activities:                
Depreciation and amortization     92,656        125,076  
Share-based compensation     616,007        736,982  
Expenses paid through the issuance of common stock     502,032        259,898  
Gain from change in fair value of derivative liabilities     (48,064 )      (748,080 )
Amortization of debt issuance costs and original issue discounts     301,865       323,016  
Loss from retirement of fixed assets     -       1,689  
Loss from debt restructuring     -       811,909  
Increase (decrease) in cash resulting from changes in:                
Accounts receivable     2,185        414,506  
Inventory, net     (311,637 )      (33,958 )
Prepaid expenses and other current assets     (104,329 )      (96,358 )
Accounts payable and accrued expenses     (270,535 )      (220,304 )
Deferred revenue     58,709        106,479  
Net cash flows from operating activities     (4,246,781 )      (4,708,157 )
Cash flows from investing activities:                
Purchases of property and equipment     (24,515 )     (100,324 )
Net cash flows from investing activities     (24,515 )     (100,324 )
Cash flows from financing activities:                
Proceeds from private equity offering     13,250,000        4,255,000  
Offering costs     (1,265,505 )     (417,865
Other     -        (4,756 )
Net cash flows from financing activities     11,984,495       3,832,379  
Net change in cash and cash equivalents     7,713,199        (976,102 )
Cash and cash equivalents, beginning of period     3,315,774        5,408,523  
Cash and cash equivalents, end of period   $ 11,028,973     $  4,432,421  
                 
SUPPLEMENTAL CASH FLOW INFORMATION                
Cash paid for:                
Income taxes   $ -     $ -  
Interest   $ 146,611     $ 976,295  
                 


Source: MRI Interventions, Inc.