IVAX Diagnostics, Inc., a fully integrated in vitro diagnostics company, reports its financial results for the quarter ended March 31, 2010.
Charles Struby, Ph.D., Chief Executive Officer and President of IVAX Diagnostics, said, "We continued our transition during the first quarter of the year, with some important organizational changes as well as the signing of three collaborative agreements highlighting our initiatives. The hiring of Steve Lufkin in January as General Manager, responsible for global sales and marketing operations and regulatory activities, has enabled the rest of the management team to focus on other areas, including efforts to improve our research and development activities and strengthen our production and business development activities. We believe having this new senior management structure in place will better position us to meet our strategic goals."
He continued, "During the quarter, we, either directly or indirectly through Diamedix Corporation, our subsidiary headquartered in Miami, Florida, entered into three collaborative agreements, all of which are aligned with our strategy of expanding our suite of high-quality, reliable products as well as increasing our global footprint. Diamedix’ distribution agreement with Fumouze Diagnostics of France, a well-established participant in the medical biology field, opens the French market to Diamedix’ and Delta Biologicals’, our European subsidiary, suite of more than 200 products, while Diamedix’ distribution agreement with Nova Century Scientific marks our entry into the Canadian market where Nova will market and sell 50 of Diamedix’ products, including analyzer instrumentation, under the Diamedix brand. We also expect that Diamedix’ distribution agreement with Nova will strengthen our relationship with IMMCO Diagnostics, Nova’s parent company, for whom we are currently distributing products in the U.S. and Europe. We also entered into an OEM agreement with SCIMEDX Corporation during the quarter, whereby we will market and sell SCIMEDX’ suite of diagnostics products on a worldwide basis under the Diamedix brand. This OEM agreement adds more than sixty-five ELISA (Enzyme-Linked Immunosorbent Assay) test kits and IFA (Immunoflourescence Assay) products to our portfolio. We continue to pursue other strategic collaborations with the goal of furthering our growth and, to that end, we have entered into 2 additional distribution agreements subsequent to the end of the first quarter of 2010, adding more than 120 tests to our portfolio in the U.S. and internationally."
"In connection with our 510(k) premarket submission filing with the U.S. Food and Drug Administration for the Mago® 4S, our next-generation fully automated ELISA system for autoimmune and infectious disease testing, and at the request of the FDA, we are in the process of conducting additional clinical testing on the Mago® 4S at multiple Beta sites. We believe that, following the receipt of all required regulatory approvals and the subsequent commercial launch of the product, which we currently expect to occur during the fourth quarter of 2010, the Mago® 4S will provide a flexible, efficient and cost-effective solution to high-performance laboratories, and will be our primary platform for marketing our kits in the U.S. We look forward to the completion of this process," Dr. Struby added.
Dr. Struby continued, "We also recently announced the departure of Mark Deutsch as Chief Financial Officer, effective May 21, 2010. Mark has been with IVAX Diagnostics and its predecessor companies for more than twenty years, and on behalf of the Board of Directors, we thank him for his years of dedicated service. It is our expectation that Arthur R. Levine, our Vice President – Finance, will succeed Mark as our principal financial and accounting officer. Arthur recently joined IVAX Diagnostics and has more than twenty-five years of finance experience with public and private companies as well as a prominent public accounting firm."
Dr. Struby concluded, "Since early 2009, we have implemented a number of initiatives that we believe will transform our Company and have already improved our management, operational and sales processes. We have entered into several new distribution and OEM agreements and expanded our product line and global footprint, and we are working towards completing the clinical testing on the Mago® 4S. We have more work to do and progress to achieve, and with what we believe to be a strong balance sheet, operational improvements and growth plans in place, we look forward to continuing our efforts to transform our Company and reporting on those efforts in the upcoming months."
Financial Highlights for the Quarter Ended March 31, 2010
Net revenues for the quarter ended March 31, 2010 were $4,655,000 compared with $4,719,000 in the quarter ended March 31, 2009, a decline of $64,000 or 1.4%. During the quarter ended March 31, 2010, we benefited from increased instrumentation sales, which were offset by a decline in sales of reagents. Results for the quarter ended March 31, 2010 also benefited from favorable exchange rates, with $85,000, or 1.8%, of net revenue attributable to currency fluctuations based on the strength of the U.S. dollar compared to the Euro.
Gross profit for the first quarter of 2010 was $2,488,000, or 53.4% of net revenue, compared with $2,773,000, or 58.1% of net revenue, for the first quarter of 2009. The decrease in gross profit and gross profit margins resulted from reduced production volumes and unfavorable manufacturing variances, as well as the effect of increased sales of instrumentation, which have a lower gross profit percentage compared to reagent sales.
Total operating expenses for the first quarter of 2010 increased to $3,368,000 from $3,172,000 for the first quarter of 2009. The increase in operating expenses was driven by increases in selling expenses, due to increased labor costs and the reallocation of personnel, increases in general and administrative expenses related to the hiring and appointment of a new Chief Executive Officer and President during the first quarter of 2009 and the addition of a General Manager during the first quarter of 2010, as well as increased severance costs. These increases were offset by declines in professional fees during the first quarter of 2010 compared to the first quarter of 2009, when we initiated a comprehensive review of our operations with a goal of improving our competitive position. Research and development costs also increased during the first quarter of 2010 compared to the first quarter of 2009 due to the additional clinical testing that the FDA requested in connection with our 510(k) premarket submission filing for the Mago® 4S.
Our loss from operations for the first quarter of 2010 was $880,700 compared with $398,700 in the first quarter of 2009. Net loss for the first quarter of 2010 was $957,400, or $0.03 per share, compared with a net loss of $465,000, or $0.02 per share, in the first quarter of 2009.