RIVER EDGE, N.J., Nov. 12 /PRNewswire-FirstCall/ -- Nephros, Inc. (OTC Bulletin Board: NEPH) announced today financial results for the three month period ended September 30, 2009.
"During the third quarter, Nephros continued to expand revenues while containing expenses," said Ernest A. Elgin, President and CEO of Nephros. "Nephros was awarded a $2.0 million research grant to continue development of filtration products for the U.S. military. In July, we received 510(k) approval for our DSU technology and have now signed initial distributor agreements for this product. Separately, we are still awaiting a final decision from the FDA on the pending applications for our OLpur(TM) H2H(TM) module and OLpur(TM) MD 220 filter."
Financial Performance for the Third Quarter Ended September 30, 2009.
For the quarter ended September 30, 2009, Nephros reported revenues of approximately $711,000 compared to approximately $393,000 for the three months ended September 30, 2008. Total revenues increased approximately $318,000 during the three months ended September 30, 2009 over the same period in 2008. The increase of approximately 81% was due primarily to increased revenue of approximately $172,000 related to our contract with the U.S. Office of Naval Research ("ONR") and $98,000 in sales of our DSU for the three months ended September 30, 2009 whereas we had no DSU revenue in the same period in 2008. In addition, sales of our MD filters in our target European market were $48,000 higher in the three months ended September 30, 2009 compared to the same period in 2008. Unit sales in Europe were slightly lower in the three months ended September 30, 2009 compared to the same period in 2008 but were not the result of decreased customer orders, but rather due to production delays resulting in deferment of shipments.
Operating expenses for the three months ended September 30, 2009 were approximately $791,000 compared with $1,517,000 in the corresponding period of 2008. The decrease of approximately $726,000 or 48% is primarily related to: decrease in research and development expenses of approximately $129,000 due to the fact that there was no clinical trial being conducted in the three months ended September 30, 2009 compared to the same period in 2008; decrease in selling, general and administrative expenses of approximately $566,000 resulting from decreased legal, insurance, rent, personnel and other expenses; and a reduction in depreciation expense of approximately $31,000.
The Company's net loss was approximately $395,000 or $0.01 per basic and diluted common share for the third quarter of 2009 compared to a net loss of approximately $1,346,000 or $0.04 per basic and diluted common share in the third quarter of 2008.
As of September 30, 2009, Nephros had cash and cash equivalents in the amount of $1,795,000.
End-Stage Renal Disease (ESRD) Products
Nephros completed the patient treatment phase of the U.S. clinical trial evaluation of the OLpur(TM) H2H(TM) module and OLpur(TM) MD 220 filter during the second quarter of 2008. The Company submitted the clinical data to the U.S. Food and Drug Administration ("FDA") with the 510(k) application for U.S. marketing approval of these products in November 2008. Following its review of the application, the FDA requested additional information from us. Nephros replied to the FDA inquiries on March 13, 2009. We have made inquiries to the FDA about the status of our application and have been informed that our application is still under review. As of September 30, 2009, Nephros has not received a formal decision or a request for additional information from the FDA for this 510(k) application. Nephros believes that, if approved, its technology would be the first FDA-approved on-line HDF therapy available in the U.S.
Water Ultrafiltration Products
On July 1, 2009, Nephros received 510(k) marketing approval from the FDA for the DSU to be used to filter biological contaminants from water and bicarbonate concentrate used in hemodialysis procedures. During the third quarter, Nephros signed agreements with two new distributors for distribution of the DSU for ultra pure dialysate in the U.S. Within the U.S., there are approximately 4,500 clinics providing over 50 million dialysis treatments to 350,000 patients annually. The DSU filter can be used as the last step in the water purification process to ensure ultra pure water for dialysis procedures. Nephros is investigating a range of additional commercial, industrial and retail opportunities for its DSU technology.
Military Product Development
On Aug. 31 2009, Nephros reported that it was awarded a new research contract from the U.S. ONR for development of a portable dual-stage military water purifying filter. The research contract is an expansion of the Company's prior ONR contract which was being performed as part of the Marine Corps Advanced Technology Demonstration (ATD) project. The primary objective of this expanded research program is to select concepts and functional prototype filter/pump units which were developed during the first phase of the project, and further develop them into smaller field-testable devices that can be used for military evaluation purposes. Nephros plans to conclude development and to conduct limited field testing in 2010. Nephros' proprietary dual stage cold sterilization ultrafilter will form the basis of the portable system. An advantage of the Nephros ultrafilter is the removal of viruses which are not removed with commercially available off-the-shelf microfilter devices. Such devices generally rely on a secondary chemical disinfection step to make the water safe to drink. The expanded ONR contract also includes research geared toward improving membrane performance, improving device durability, developing larger squad-level water purifier devices, and investigating desalination filter/pump devices for emergency-use purposes. Nephros has introduced the DSU to various government agencies as a solution for providing potable water in certain emergency response situations.
About Nephros, Inc.
Nephros, Inc., headquartered in River Edge, New Jersey, is a medical device company developing and marketing filtration products for therapeutic applications, infection control, and water purification.
The Nephros hemodiafiltration ("HDF") system is designed to improve the quality of life for the End-Stage Renal Disease (ESRD) patient while addressing the critical financial and clinical needs of the care provider. ESRD is a disease state characterized by the irreversible loss of kidney function. The Nephros HDF system removes a range of harmful substances more effectively, and with greater capacity, than existing ESRD treatment methods, particularly with respect to substances known collectively as "middle molecules." These molecules have been found to contribute to such conditions as dialysis-related amyloidosis, carpal tunnel syndrome, degenerative bone disease and, ultimately, mortality in the ESRD patient. Nephros ESRD products are sold and distributed throughout Europe and are currently being used in over fifty clinics in Europe.
The Nephros Dual Stage Ultrafilter (DSU) is the basis for the Nephros line of water filtration products. The patented dual stage cold sterilization ultrafilter has the capability to filter out bacteria and, due to its exceptional filtration levels, filter out many viruses, parasites and biotoxins. Sale of the DSU has begun at several major U.S. medical centers for infection control. The DSU has also been selected for further development by the U.S. Marine Corps for purification of drinking water by soldiers in the field.
For more information about Nephros, please visit our website at http://www.nephros.com/.
Forward-Looking Statements
Statements in this news release that are not historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such statements may be preceded by words such as "may," "plans," "expects," "believes," "hopes," "potential" or similar words. For such statements, Nephros claims the protection of the PSLRA.
Forward-looking statements are not guarantees of future performance, are based on assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond Nephros' control. Actual results may differ materially from the expectations contained in the forward-looking statements. Factors that may cause such differences include the risks that Nephros may not be able: (i) to obtain additional funding when needed or on favorable terms; (ii) to continue as a going concern; (iii) to obtain appropriate or necessary governmental approvals to achieve its business plan or effectively market its products; (iv) to have its technologies and products accepted in current or future target markets; (v) to demonstrate in pre-clinical or clinical trials the anticipated efficacy, safety or cost savings of products that appeared promising to Nephros in research or clinical trials; or (vi) to secure or enforce adequate legal protection, including patent protection, for its products. More detailed information about Nephros and the risk factors that may affect the realization of forward-looking statements is set forth in Nephros' filings with the SEC, including Nephros' Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Investors and security holders are encouraged to read these documents on the SEC's website at http://www.sec.gov/. Nephros does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise except as required by law.
Nephros, Inc.
CONTACT: Eileen Sukumaran, +1-201-343-5202 ext 100, eileen@nephros.com
Web Site: http://www.nephros.com/
