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Intersect ENT Reports Second Quarter 2018 Results

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Intersect ENT, Inc. (NASDAQ:XENT), a company dedicated to improving the
quality of life for patients with ear, nose and throat conditions, today
reported financial results for the second quarter ended June 30, 2018.

On April 1, 2018, the company announced commencement of the commercial
launch of the SINUVA® (mometasone furoate) Sinus Implant, an
in-office treatment for nasal polyp disease in adult patients who have
had previous sinus surgery.

"We are gratified by the initial response of patients and physicians to
SINUVA, with over 325 patients treated through the second quarter. We
are also pleased with the rate of payor coverage and believe that these
factors, combined with our strong clinical evidence, reinforce the
significant potential of SINUVA," said Lisa Earnhardt, president and CEO
of Intersect ENT. "We are meeting the challenges of the launch by taking
action including expanding and leveraging the reimbursement hub and
growing our sales and reimbursement teams. We remain convinced that
SINUVA has a bright future and that, with these measures in place, we
will be in a position to expand our launch and continue to grow PROPEL."

Second Quarter Financial Results

Total revenue grew to $26.3 million for the second quarter 2018 compared
to $24.0 million for the same period of 2017, an increase of 10%. This
increase was attributable to growth in the adoption of the PROPEL®
family of steroid releasing implants as well as to the commercialization
of SINUVA, which contributed 2% of revenue in the second quarter of 2018.

Gross profit for the second quarter 2018 was $20.7 million and gross
margin was 79%. These results compare with gross profit of $20.3 million
and gross margin of 85% in the second quarter 2017. The decrease in
gross margin was attributable to increased overhead and inefficiencies
largely associated with the introduction of SINUVA and to a benefit in
the second quarter 2017 from the sale of PROPEL® Contour
product that was produced prior to FDA approval and therefore expensed
in the fourth quarter 2016.

Operating expenses for the second quarter 2018 were $25.4
million compared to $22.9 million in the same period of 2017, an
increase of 11%. R&D expenses were relatively flat at $4.4 million
versus $4.2 million in the second quarter 2017. SG&A expenses increased
to $21.0 million from $18.7 million, primarily driven by an increase in
headcount and related expenses.

The balance of cash, cash equivalents and short-term investments were
$104.9 million compared to $102.3 million at the start of the year.

Outlook

The company expects to achieve third quarter revenue in the range of
$23.8 to $24.3 million, and updated full year revenue guidance to $106
to $109 million, including an estimated 2% to 4% contribution from
SINUVA product sales. The company expects third quarter and full year
gross margin of approximately 80% and full year operating expenses, as
previously guided, in the range of $113 to $115 million.

Webcast and Conference Call Information

Intersect ENT will host a conference call today at 9:00 a.m. ET to
discuss the company's second quarter 2018 results and business outlook.
To access the conference call via the internet, go to the "Investor
Relations" page of the company's web site at www.intersectENT.com.
To access the live conference call via phone, dial 1-844-850-0548 and
ask to join the Intersect ENT call. International callers may access the
live call by dialing 1-412-317-5205. Participants may expedite telephone
access by pre-registering for the call using the following link: http://dpregister.com/10121740.

A replay of the conference call may be accessed that same day after 8:00
p.m. ET at www.intersectENT.com or
via phone at 1-877-344-7529 or 1-412-317-0088 for international callers.
The reference number to enter the replay of the call is 10121740. The
dial-in replay will be available for a week after the call and via the
internet for approximately one month.

About Intersect ENT

Intersect ENT is dedicated to transforming ear, nose and throat care by
providing innovative, clinically meaningful therapies to physicians and
patients. The company's steroid releasing implants are designed to
provide mechanical spacing and deliver targeted therapy to the site of
disease. In addition, Intersect ENT is continuing to expand its
portfolio of products based on the company's unique localized steroid
releasing technology and is committed to broadening patient access to
less invasive and more cost-effective care.

For additional information on the company or the products including
risks and benefits please visit www.IntersectENT.com.
For more information about SINUVA, please visit www.SINUVA.com.

Intersect ENT®, PROPEL® and SINUVA® are
registered trademarks of Intersect ENT, Inc.

Forward-Looking Statements

The statements in this press release regarding Intersect ENT's continued
growth and financial outlook are "forward-looking" statements. These
forward-looking statements are based on Intersect ENT's current
expectations and inherently involve significant risks and uncertainties.
These statements and risks include Intersect ENT's ability to provide
solutions to improve surgical outcomes, Intersect ENT's ability to
expand the use and adoption of its current products and advance its
pipeline, Intersect ENT's ability to obtain and maintain FDA or other
regulatory approvals, the ability to procure and maintain adequate
coverage and reimbursement for our products and/or the procedures in
which they are used, Intersect ENT's projections about 2018 full year
and third quarter revenue, gross margin and operating expenses, and the
commercial launch of SINUVA. Actual results and the timing of events
could differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which are
described in the company's filings on Form 10-K, Form 10-Q and the
company's other filings with the Securities and Exchange
Commission (SEC) available at the SEC's Internet site (www.sec.gov).
Intersect ENT does not undertake any obligation to update
forward-looking statements and expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein.

XENT-F

         
Intersect ENT, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except percentages and per share data)
(unaudited)
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenue $ 26,300 $ 23,985 $ 51,023 $ 44,459
Cost of sales   5,558     3,684     11,040     6,568  
Gross profit 20,742 20,301 39,983 37,891
Gross margin 79 % 85 % 78 % 85 %
 
Operating expenses:
Selling, general and administrative 21,005 18,682 42,521 39,001
Research and development   4,374     4,176     8,647     8,396  
Total operating expenses   25,379     22,858     51,168     47,397  
Loss from operations (4,637 ) (2,557 ) (11,185 ) (9,506 )
Interest income and other, net   477     288     889     556  
Net loss $ (4,160 ) $ (2,269 ) $ (10,296 ) $ (8,950 )
 
Net loss per share, basic and diluted $ (0.14 ) $ (0.08 ) $ (0.34 ) $ (0.31 )
 

Weighted average common shares used to compute net loss per share,
basic and diluted

30,264 28,950 30,072 28,830
 
Intersect ENT, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
June 30, December 31,
2018 2017
Assets
Current assets:
Cash, cash equivalents and short-term investments $ 104,897 $ 102,320
Accounts receivable, net 14,640 16,589
Inventory 9,133 8,474
Prepaid expenses and other current assets   1,893   2,908
Total current assets 130,563 130,291
Property and equipment, net 4,656 4,848
Other non-current assets   369   436
Total assets $ 135,588 $ 135,575
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,967 $ 3,400
Accrued compensation 8,698 13,152
Other current liabilities   1,073   1,125
Total current liabilities 12,738 17,677
Deferred rent and other non-current liabilities   471   679
Total liabilities 13,209 18,356
Total stockholders' equity   122,379   117,219
Total liabilities and stockholders' equity $ 135,588 $ 135,575
 

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