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Amedica Corporation Reports Third Quarter 2015 Financial Results

Year-to-Date Operational Cash Burn Levels Decreased by $4.4 million, or 38%, Year-over-Year

Company Expands Product Offerings and Enters New Market Segments

SALT LAKE CITY, Nov. 12, 2015 (GLOBE NEWSWIRE) -- Amedica Corporation (AMDA), an innovative biomaterial company which develops and manufactures silicon nitride ceramics as a platform for biomedical applications, today announced financial results for the third quarter ended September 30, 2015.

Recent Company Highlights

  • Cash and cash equivalents totaled $11.3 million, and net cash used in operating activities during the quarter decreased by $1.3 million, or 43%, from the prior year period
  • Reduced debt principal balance by $3.5 million, or 14%, and eliminated conversion feature of the convertible note
  • Two-year performance data from the CASCADE clinical trial submitted to the U.S. Food and Drug Administration (FDA), with an anticipated final response in the first quarter of 2016
  • Received Brazilian clearance and shipped initial order of first generation silicon nitride interbody devices and instrumentation
  • Appointed world-renowned materials scientist Giuseppe Pezzotti, PhD to the Scientific Advisory Board
  • Launched Valeo II™ lateral lumber interbody fusion device system and innovative articulating inserter for minimally invasive TLIF procedures
  • Finalized definitive agreements to raise up to $15 million in equity financing, which will strengthen the Company’s balance sheet, reduce debt and be used for working capital

"I’m extremely pleased with the milestones Amedica reached during the third quarter and expects to reach during the balance of this year. These achievements have truly transformed our company for the better,” said Dr. Sonny Bal, Chairman and CEO of Amedica Corporation. “We made excellent progress this quarter as we launched new product offerings and expanded our silicon nitride global footprint into Brazil, which is both a sizeable targeted commercial market and provides a solid cornerstone for future growth in the South American market.

“From a financial perspective, the additional equity financing will strengthen the balance sheet and allow Amedica to rejuvenate previously shelved R&D and new product initiatives for the New Year. I’m also proud to announce that we’ve continued the trend of improving our operational cash burn levels and reducing our debt principal. As we layer in additional private label and OEM partners, in spine, dental, hip, or other applications, we will be positioned to further improve our financial standing, and communicate the efficacy of clinical outcomes through our unique and differentiated biomaterial technology platform,” concluded Dr. Bal.

Third Quarter 2015 Financial Results
For the three months ended September 30, 2015, Amedica recorded product revenue of $4.8 million, a decrease of $1.2 million, or 19%, as compared to the same period in 2014. The reduction was primarily due to decreased sales of non-silicon nitride products, which declined by $0.9 million, or 27%, for the third quarter as compared to the same period in 2014. Silicon nitride sales decreased by $0.3 million, or 10%, during the quarter as compared to the same period in 2014. This decline was primarily attributable to the loss of a few surgeons during 2015 and consequences from our restructuring. This was partially offset by the addition of new surgeons, as well as international and private label sales.

Cost of revenue for the quarter decreased $0.3 million, or 15%, as compared to the same period in 2014. The decrease in cost of revenue was primarily a result of reduced sales for the current year period, as compared to the same period in 2014. Excluding the impact of excess or obsolete inventory for both years, third quarter 2015 gross margins ended at 73% of total sales, as compared to 82% during the prior year period. Although product costs have been reduced through production efficiencies and lower overhead costs, the decline in gross margins was due to private label and increased international sales during the third quarter of 2015, which have lower gross margins due to lower selling prices, but have higher operating contribution margins since no commissions are paid on those sales and it requires less operating expenses to support these sales.

Operating expenses for the third quarter of 2015 declined by 38%, or $3.7 million, from the prior year period, to $6.0 million. This year-over-year decline in operating expenses is primarily due to the actions taken by the Company to simplify the organization and align financial objectives earlier in the year, as well as lower commission costs and a $1.7 million reduction in stock-based compensation expense during the third quarter of 2015.

Amedica reported a net loss for the third quarter of $(10.1) million, compared to a net loss of $(4.9) million in the prior-year period. The increase in net loss was primarily the result of an $8.0 million increase in the fair value of derivative liabilities, which was partially offset by reduced operating expenses of $3.7 million for the period. By December 31, 2015, the Company anticipates the majority of its derivative liabilities will be extinguished as a result of the completion of the most recent equity financing.

Adjusted EBITDA, which is defined as earnings before deductions for interest, taxes, depreciation, amortization, non-cash stock compensation expense, change in fair value of derivative liabilities, offering costs, gain or loss on extinguishment of debt, and gain or loss on extinguishment of derivative liabilities for the third quarter 2015 was $(2.1) million, compared to $(3.3) million for the prior year period.

Cash and cash equivalents totaled $11.3 million as of September 30, 2015. The decline in total cash burn year-over-year was driven by a decrease in operational cash burn of $4.4 million in the nine months ended September 30, 2015, as compared to the prior year period. Total principal debt obligations were $21.0 million as of September 30, 2015...