Uroplasty reports strong sales growth for Macroplastique in fourth-quarter 2010

May 28 2010

Uroplasty, Inc. (NYSE Amex: UPI), a medical device company that develops, manufactures and markets innovative proprietary products to treat voiding dysfunctions, today reported financial results for the fourth fiscal quarter and full year ended March 31, 2010.  The results were highlighted by continued strong U.S. sales growth for Macroplastique and a reduction in operating and net loss compared to the prior year.

"From all perspectives, our team successfully executed our fiscal 2010 strategy focused on growing U.S. Macroplastique sales and maximizing the potential for gaining a unique CPT code for Urgent PC® treatments," said David Kaysen, President & CEO.  "In early May, we reported success on the CPT front with the news that percutaneous tibial nerve stimulation (PTNS), the procedure performed using our Urgent PC Neuromodulation System, will receive a Category I CPT reimbursement code.  Reimbursement rates for the procedure have not yet been established and a new CPT code number has not yet been assigned.  The new CPT code number and the reimbursement amount will be published in the Federal Register by the Centers for Medical and Medicare Services (CMS) sometime in October or early November 2010.  Physicians may not request reimbursement using the new CPT code prior to January 2011.  Receiving a Category I CPT code represents a major milestone for our Company as well as further advancement of Urgent PC to treat symptoms associated with overactive bladder.  

"Our fiscal fourth quarter sales illustrate the continued strong growth of Macroplastique in the U.S.," continued Mr. Kaysen.  "Sales of Macroplastique in the U.S. about doubled over the corresponding year-ago period and our momentum in the market continues to be quite strong.  Macroplastique's fourth quarter performance in the U.S. allowed us to reverse the overall sales decline in earlier quarters compared to the corresponding year-ago periods, even while the now-stable Urgent PC sales in the U.S. declined due to the current uncertain reimbursement situation.  We also continued our solid management of expenses and ended the fiscal year with a cash position of $5.8 million."

Fiscal Fourth Quarter and Full Year Results for the Periods Ended March 31, 2010

Net sales for the three months ended March 31, 2010 were $3.0 million versus $2.9 million for the year-ago quarter.  Net sales for fiscal 2010 were $11.9 million versus $14.7 million for the prior fiscal year.

Sales to customers in the U.S. for the three months ended March 31, 2010 were $1.6 million, about equal to the sales in the same period a year ago.  A decline in sales of Urgent PC product was about equally offset by an increase in sales of Macroplastique.  Macroplastique sales of $654,000 about doubled from $348,000 in the year-ago quarter.  Urgent PC sales of $909,000 declined from $1.2 million in the year-ago quarter.  For fiscal 2010 sales of $6.1 million declined from $8.0 million in fiscal 2009 due to the Urgent PC sales decline, which was partially offset by an increase in Macroplastique sales.    Sales in the U.S. of Urgent PC declined to $3.8 million in fiscal 2010, from $6.8 million in fiscal 2009.  The trend in decline of Urgent PC sales over corresponding year-ago periods began in the second half of fiscal 2009 due to reimbursement related issues.  Urgent PC sales in fiscal 2010 have stabilized at around $0.9 million to $1 million per quarter.  Sales in the U.S. of Macroplastique about doubled to $2.2 million in fiscal 2010 from $1.1 million in fiscal 2009.  Sales of Macroplastique have steadily increased because of increased sales and marketing focus, and the announced withdrawal from the market of a competitive product.

Net sales to customers outside of the U.S. for the three months ended March 31, 2010 were $1.4 million, an increase of 8%, compared to $1.3 million in the year-ago period.  Excluding the translation impact of fluctuations in foreign currency exchange rates, sales increased by approximately 1%.  Sales to customers outside of the U.S. for fiscal 2010 were $5.8 million, a decrease of 14 percent, from $6.8 million in fiscal 2009.  Excluding the translation impact of fluctuations in foreign currency exchange rates, sales decreased by approximately 12%.  The sales decrease for the fiscal year is mainly attributed to increased competition during the first half of the year for Macroplastique from a newly-introduced product.  In addition, in fiscal 2010, the Company discontinued in the United Kingdom its mid-urethral sling product, which accounted for approximately $191,000 of sales in fiscal 2009.

Operating loss for the fourth fiscal quarter ended March 31, 2010 was $561,000 compared to an operating loss of $1.7 million in the year-ago quarter.  Operating loss for fiscal 2010 was $3.2 million as compared with an operating loss of $3.6 million in fiscal 2009.  Net loss for the fourth fiscal quarter ended March 31, 2010 was $577,000, or $0.04 per diluted share, versus a net loss of $1.7 million, or $0.11 per diluted share in the year-ago quarter.  For fiscal 2010, the net loss was $3.2 million, or $0.21 per diluted share as compared with a net loss of $3.6 million in fiscal 2009, or $0.24 per diluted share.  The decline in operating and net loss is attributed primarily to spending reductions.

At March 31, 2010, cash and cash equivalents, and short-term investments were $5.8 million compared with $5.9 million at December 31, 2009 and $7.8 million as of March 31, 2009.  In addition, since March 31, 2010, the Company has realized approximately $0.9 million in proceeds from warrants exercised to purchase its common shares.  Further, on May 26, 2010 the Company exercised the early call provision on the remaining warrants to purchase 522,500 shares of common stock at an exercise price of $2.50 per share.

Fiscal 2011 Outlook

"Looking ahead, our fiscal 2011 is already off to an excellent start now that we have clarity about the CPT reimbursement code for Urgent PC.  Building off this momentum, Urgent PC will be the subject of a podium presentation and a poster presentation at the upcoming American Urological Association (AUA) Annual Meeting, which begins on May 29 in San Francisco, CA.  In addition, Macroplastique will be featured in a poster presentation at the AUA also," added Mr. Kaysen.

"From a revenue perspective, our goal for fiscal 2011 is to continue the strong growth of Macroplastique.  While reimbursement claims using the new CPT code for Urgent PC may not be submitted prior to January 2011, our team is preparing for a significant sales and marketing push later this calendar year.  We expect that U.S. Urgent PC sales will remain relatively stable during the first nine months of fiscal 2011, as compared to fiscal 2010 levels, and begin ramping in the fiscal fourth quarter once the CPT code becomes effective.  If reimbursement rates are adequate, we hope to capture some portion of the market for patients who discontinue the drug regimens to treat symptoms of overactive bladder due to the harsh side effects of those drugs.  Over time, if we can capture just five percent of those patients, we believe this could result in revenue of more than $200 million.  In addition, during fiscal 2011, we will be exploring the emerging opportunity in the U.S. to treat fecal incontinence using the Urgent PC.  The Urgent PC is already CE-marked for treatment of fecal incontinence and our Urgent PC business in Europe, though small, is primarily focused on the fecal incontinence market with good success.  In summary, we are quite excited about the opportunities ahead for our company, and are focused on executing plans that fully capitalize on those opportunities," Mr. Kaysen concluded.