Echo Therapeutics reports net loss of $5.5 million for third quarter 2014

Nov 19 2014

Echo Therapeutics, Inc. (NASDAQ: ECTE), a medical device company, today announced its financial results for the quarter ended September 30, 2014. Echo's Quarterly Report on Form 10-Q, when filed with the SEC, will be available by visiting the Investors section of Echo's website at www.echotx.com.

Recent Financial Corporate Updates

• On August 14, 2014, the Company announced that it had taken steps to substantially reduce operating costs and preserve cash. The Company implemented significant cost reductions across all aspects of its operations in both external spend and workforce, including reductions in general and administrative, manufacturing, clinical and product development expenditures.
• On September 23, 2014, Echo announced that it had suspended its product development, research, manufacturing and clinical programs and operations to conserve liquidity and capital resources. The workforce reduction due to the suspension of operations comprised approximately 70% of Echo's workforce.
• On October 2, 2014, Echo retained PricewaterhouseCoopers LLP's Restructuring and Recovery Services Practice to assist the Company in exploring financial and strategic alternatives that could sufficiently address its liquidity needs and allow it to resume operations. Such financial and strategic alternatives could include, but are not limited to, a sale or license of intellectual property and other assets, a merger, other business combination, a capital transaction and/or a voluntary petition for reorganization or liquidation pursuant to the U.S. Bankruptcy Code.
• On October 28, 2014, the Company sent a letter to Platinum Montaur Life Sciences, LLC ("Montaur") to notify Montaur that the Company was irrevocably cancelling and terminating the credit facility between Montaur and the Company effective as of October 30, 2014. The Company issued to Montaur a Promissory Note dated August 31, 2012, with a maturity date of five years from the date of closing. On March 1, 2013, the Company elected to prepay all outstanding draws under the Montaur credit facility. After such date, no principal amount was outstanding under the credit facility.

Summary of Third Quarter 2014 Financial Results

• Echo's net loss for the third quarter of 2014 was $5.5 million, or $0.43 per share as compared to $5.2 million, or $0.49 per share, for the third quarter of 2013. The net loss calculation includes the third quarter of 2014's non-cash amortization of deferred financing costs related to the write-off of the Montaur credit facility for $3.1 million, as compared to the total interest expense for the third quarter of 2013 for $241,000.
• The operating loss for the third quarter of 2014 was $2.9 million compared to $4.9 million for the third quarter of 2013, a reduction of $2.0 million or 41%.
• Research and development expenses were $1.2 million, a decrease of $1.6 million or 56% for the third quarter of 2014 as compared to $2.8 million for the third quarter of 2013. This decrease was primarily related to reductions in engineering and design expenses.
• Due primarily to successful cost reduction measures, general and administrative expenses were $1.7 million, a decrease of $0.5 million or 21%, in the third quarter of 2014 as compared to $2.2 million for the third quarter of 2013.
• Echo reported a cash balance of approximately $1.5 million as of September 30, 2014.