Exhibit 99.1
FOR IMMEDIATE RELEASE
Lombard Medical Reports 2014 Fourth Quarter, Full Year Financial Results
Full Year Aorfix™ Revenue More than Doubled over 2013
Irvine, CA – February 26, 2015 – Lombard Medical, Inc. (NASDAQ: EVAR), a medical device company focused on endovascular aneurysm repair (EVAR) of abdominal aortic aneurysms (AAAs), today reported operational progress and financial results for the fourth quarter and year ended December 31, 2014.
The Company’s lead product, Aorfix™, is the only endovascular stent graft cleared by the U.S. Food and Drug Administration(FDA) for the treatment of AAAs with angulation at the neck of the aneurysm of up to 90 degrees providing physicians in the U.S. with the only ‘on-label’ endovascular treatment option for patients with this complex AAA anatomy. All other approved grafts are only cleared by the FDA for the treatment of neck angulation up to 60 degrees.
Q4 and Recent Operational Highlights
| • | Total2014 fourth quarterAorfix revenue grew 128 percent1 to $4.8 million as compared to revenue of $2.1 million in the fourth quarter of 2013. |
| • | U.S. Aorfix revenue grew to $1.2 million in the fourth quarter of 2014, up approximately 400 percent from $0.3 million in the fourth quarter of 2013. |
| • | In 2014, 44 percent of the Aorfix cases in the U.S. were performed on patients with aortic neck anatomy between 0-60 degrees and more than half were done using the least invasive percutaneous approach. |
| • | In February 2015, the Company executed a lease for its new global headquarters and innovation center in Irvine, California. This facility will support the Company’s innovation and development teams focused on expanding the Aorfix product platform and the thoracic stent (TEVAR) development program. |
| • | In February 2015, the FDA approved Aorfix™Plus, a new addition to the Aorfix endovascular stent graft family that features a 34mm proximal diameter, expanding the potential market by allowing treatment for up to 10 percent of patients previously unsuitable for treatment with Aorfix. |
| • | In January 2015, Lombard Medical initiated the ARCHYTAS global registry, a prospective study of up to 500 patients at 50 centers worldwide, designed to quantify the clinical outcomes of EVAR with Aorfix in a broad cross-section of ‘real-world’ patients with AAAs. |
| • | In November 2014, efficacy and safety data from the two-year follow up of the U.S. PYTHAGORAS pre-marketing approval trial of Aorfix were presented at the VEITHsymposium™ in New York City. |
| • | In November 2014, the Company gained FDA clearance for manufacturing to commence at its new cleanroom operation in the UK, enhancing the Company’s capacity to meet demand for the near and long term. |
Operational and Financial Results
Global Aorfix revenue increased 128 percent1 to $4.8 million in the fourth quarter of 2014 compared with $2.1 million in the fourth quarter of 2013. For the full year 2014, global Aorfix revenue grew 116 percent1 to $13.3 million compared with $6.1 million in 2013.
In the U.S., where Aorfix was formally launched in November 2013, andis sold exclusively through the Company’s own sales force, revenue in the 2014 fourth quarter and full year was $1.2 million and $3.2 million, respectively. Comparative U.S. revenue in the 2013 fourth quarter and full year was $0.3 million and $0.5 million, respectively.
"The more than doubling of Aorfix revenue in the fourth quarter and full year underscores the traction we are gaining in new and key global AAA markets,” said Chief Executive Officer Simon Hubbert. “2014 was a transformative year for Lombard Medical as we launched Aorfix in the U.S. and Japan, moved much of our operations to the U.S. and raised significant capital through an initial public offering on NASDAQ. In addition, we expanded manufacturing capacity in the UK and continued to produce high quality clinical data supporting the use of Aorfix across a broad range of both complex and standard AAA anatomies.”
In Japan, where Aorfix is sold through the Company’s exclusive distributor, Medico’s Hirata, and where regulatory approval was received in August 2014, revenue in the 2014 fourth quarter and full year was $1.9 million and $3.6 million respectively. 2014 revenue in Japan which began in August 2014 consisted of an initial stocking order and additional re-stocking orders.
In the key Western Europe markets (UK and Germany) where Lombard Medical also sells direct, revenue increased 14 percent2 to $3.4 million in 2014 compared with $3.0 million in the prior year; with both countries experiencing growth year over year. 2014 fourth quarter revenue in these markets declined 16 percent2 to $0.7 million compared with $0.9 million in the fourth quarter of 2013, mainly due to lower patient flow in the UK market.
Revenue in the international distributor markets (excluding Japan) for the 2014 fourth quarter and full year was $0.9 million and $3.0 million, respectively, compared with $0.9 million and $2.6 million in the prior year periods.
Total revenue for the fourth quarter of 2014 increased 111 percent3 to $4.8 million compared with $2.3 million in the fourth quarter of 2013. For 2014, total revenue increased 91 percent3 to $13.3 million compared with $7.0 million in 2013. 2013 total revenue included contributions of $0.2 million in the fourth quarter and $0.8 million in the full year from the Company’s OEM business, which was subsequently divested in December 2013.
Gross margins for the 2014 fourth quarter and full year were 46 percent and 43 percent, respectively, compared to 45 percent and 38 percent for the comparative 2013 periods. The improvement was primarily due to the effect of higher average U.S. selling prices and the spreading of fixed manufacturing costs over increased production volumes.
Total operating expenses for the 2014 fourth quarter and full year were $11.1 million and $41.9 million, respectively, compared to $8.0 million and $22.7 million for the comparative 2013 periods. The net loss for the fourth quarter of 2014 was $8.3 million, or $0.51 loss per share, compared to a net loss of $6.0 million, or $0.53 loss per share, for the fourth quarter of 2013. The net loss for 2014 was $34.8 million, or $2.39 loss per share, compared to a net loss of $19.2 million, or $2.14 loss per share for 2013. The increased operating expenses and net loss in the full year were principally due to on-going investments in U.S.-based operations, commercial infrastructure, additional direct sales people, product development activities, expenses of the NASDAQ initial public offering (IPO) and share-based compensation charges.
The Company’s balance sheet as of December 31, 2014, showed total cash and cash equivalents of $53.3 million, including proceeds from the U.S. IPO completed in April.
Company Outlook
The Company reaffirmed that it expects to achieve revenue for 2015 of between $18 million and $20 million. This growth is expected to result from a more than doubling of the combined number of Aorfix procedures in the Company’s four largest markets (U.S., Japan, UK and Germany) and pricing that remains stable in those markets.
In the Japanese market, the pending regulatory approval of the latest Aorflex™ delivery system is anticipated to come earlier than previously expected. Because of this shift in schedule, the Company’s distributor is expected to delay some of its 2015 first quarter orders into the second quarter allowing it to sell down its current stocking inventory. Due to the anticipated timing of Japan orders, total revenue in this year’s first quarter is anticipated to be between $3.0 million and $3.3 million. The Company does not anticipate providing regular quarterly revenue guidance, but believes that due to the special circumstances surrounding the Japanese approval, this information will be helpful for modeling purposes.
Conference Call
Lombard Medical’s management will discuss the Company's financial results for the fourth quarter and year ended December 31, 2014 and provide a general business update during a conference call beginning at 4:30 p.m. Eastern Time today, Thursday, February 26, 2015. To join the call, participants may dial 1-877-407-4018 (domestic), 0800-756-3429 (UK toll-free) or 1-201-689-8471 (international). To listen to a live webcast of the conference call, visit the Events and Presentations page under the Investors tab at www.lombardmedical.com.
An archived replay of the webcast will be available shortly following the completion of the call on the Events and Presentations page under the Investors tab at www.lombardmedical.com.
1Total Aorfix revenue growth was 131 percent for the 2014 fourth quarter and 115 percent for the full year on a constant currency basis, calculated using 2013 average rates.
2Aorfix revenue in the Western Europe direct markets declined 15 percent for the fourth quarter and grew 10 percent for 2014 on a constant currency basis, calculated using 2013 average rates.
3Total revenue growth was 113 percent for the 2014 fourth quarter and 89 percent for the full year on a constant currency basis, calculated using 2013 average rates.
About Lombard Medical, Inc.
Lombard Medical, Inc. is an Irvine-based medical device company focused on device solutions for the $1.6 billion per annum abdominal aortic aneurysm repair market. The Company’s lead product, Aorfix™, is an endovascular stent graft which has been specifically designed to solve the problems that exist in treating complex tortuous anatomy, which is often present in advanced AAA disease. For more information, please visit www.lombardmedical.com.
FORWARD-LOOKING STATEMENTS
This announcement may contain forward-looking statements that reflect the Company’s current expectations regarding future events, including the commercialization and additional regulatory clearances of the Company’s products, the Company's liquidity and results of operations, as well as future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the success of the Company’s research and development and commercialization strategies, the uncertainties related to the regulatory process and the acceptance of the Company’s products by hospitals and other medical professionals and the risks, uncertainties and other factors described under the heading “Risk Factors” in the Company’s prospectus filed with the Securities and Exchange Commission dated April 25, 2014. The Company undertakes no obligation to update these statements in the future.
For further information:
Lombard Medical, Inc. Simon Hubbert, Chief Executive Officer William J. Kullback, Chief Financial Officer | Tel: +1949 379 3750 /+44 (0)1235 750 800 Tel: +1 949 748 6764 |
Pure Communications
Matthew H Clawson Susan Heins (Media) | Tel: +1 949 370 8500 / matt@purecommunicationsinc.com Tel: +1 864 286 9597 / sjheins@purecommunicationsinc.com |
FTI Consulting (UK) Simon Conway, Victoria Foster Mitchell | Tel: +44 (0)20 3727 1000 |
- Tables Follow -
Consolidated Statements of Comprehensive Income
for the three- and twelve-month periods ended December 31, 2014 (unaudited)
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| Revenue | | | 4,758 | | | | 2,254 | | | | 13,277 | | | | 6,960 | |
| Cost of sales | | | (2,553 | ) | | | (1,242 | ) | | | (7,541 | ) | | | (4,315 | ) |
| Gross profit | | | 2,205 | | | | 1,012 | | | | 5,736 | | | | 2,645 | |
| Gross margin | | | 46 | % | | | 45 | % | | | 43 | % | | | 38 | % |
| Selling, marketing and distribution expenses | | | (5,786 | ) | | | (4,023 | ) | | | (21,363 | ) | | | (10,452 | ) |
| Research and development expenses | | | (2,737 | ) | | | (2,465 | ) | | | (9,213 | ) | | | (6,963 | ) |
| Administrative expenses | | | (2,616 | ) | | | (1,490 | ) | | | (9,800 | ) | | | (5,264 | ) |
| Initial Public Offering expenses | | | - | | | | - | | | | (1,503 | ) | | | - | |
| Total operating expenses | | | (11,139 | ) | | | (7,978 | ) | | | (41,879 | ) | | | (22,679 | ) |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (8,934 | ) | | | (6,966 | ) | | | (36,143 | ) | | | (20,034 | ) |
| Finance income—interest receivable | | | 58 | | | | 128 | | | | 247 | | | | 164 | |
| Finance costs | | | (24 | ) | | | (21 | ) | | | (83 | ) | | | (449 | ) |
| Loss before taxation | | | (8,900 | ) | | | (6,859 | ) | | | (35,979 | ) | | | (20,319 | ) |
| Taxation | | | 617 | | | | 886 | | | | 1,227 | | | | 1,115 | |
| Loss for the period | | | (8,283 | ) | | | (5,973 | ) | | | (34,752 | ) | | | (19,204 | ) |
| | | | | | | | | | | | | | | | | |
| Other comprehensive income: | | | | | | | | | | | | | | | | |
| Items that may be subsequently reclassified to profit or loss | | | | | | | | | | | | | | | | |
| Currency translation differences | | | 39 | | | | 1,169 | | | | (1,947 | ) | | | 2,908 | |
| Total comprehensive loss for the period | | | (8,244 | ) | | | (4,804 | ) | | | (36,699 | ) | | | (16,296 | ) |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per ordinary share (cents) | | | | | | | | | | | | | | | | |
| From continuing operations | | | (51.2 | ) | | | (53.4 | ) | | | (238.7 | ) | | | (214.0 | ) |
The accompanying notes form part of these financial statements.
Consolidated Balance Sheet
as at December 31, 2014 (unaudited)
| | | December 31, 2014 | | December 31, 2013 |
| | | $’000 | | $’000 |
| Assets | | | | | | | | |
| Intangible assets | | | 5,259 | | | | 5,722 | |
| Property, plant and equipment | | | 3,087 | | | | 2,411 | |
| Other receivables | | | 348 | | | | 523 | |
| Non-current assets | | | 8,694 | | | | 8,656 | |
| | | | | | | | | |
| Inventories | | | 4,895 | | | | 3,361 | |
| Trade and other receivables | | | 3,911 | | | | 3,444 | |
| Taxation recoverable | | | 2,065 | | | | 2,143 | |
| Cash and cash equivalents | | | 53,334 | | | | 40,866 | |
| Current assets | | | 64,205 | | | | 49,814 | |
| | | | | | | | | |
| Total assets | | | 72,899 | | | | 58,470 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Trade and other payables | | | (5,434 | ) | | | (6,579 | ) |
| Current liabilities | | | (5,434 | ) | | | (6,579 | ) |
| | | | | | | | | |
| Borrowings | | | (2,632 | ) | | | (2,558 | ) |
| Non-current liabilities | | | (2,632 | ) | | | (2,558 | ) |
| | | | | | | | | |
| Total Liabilities | | | (8,066 | ) | | | (9,137 | ) |
| | | | | | | | | |
| Net assets | | | 64,833 | | | | 49,333 | |
| | | | | | | | | |
| Equity | | | | | | | | |
| Called up share capital | | | 162 | | | | 52,406 | |
| Share premium account | | | 49,608 | | | | 134,305 | |
| Capital reorganization reserve | | | 205,686 | | | | - | |
| Other reserves | | | - | | | | 19,087 | |
| Translation reserve | | | 2,245 | | | | 4,192 | |
| Accumulated loss | | | (192,868 | ) | | | (160,657 | ) |
| Total equity | | | 64,833 | | | | 49,333 | |
The accompanying notes form part of these financial statements.
Consolidated Statements of Changes in Equity
for the twelve month period ended December 31, 2014 (unaudited)
| | | Share Capital | | Share Premium | | Other Reserves | | Translation Reserve | | Capital Reorganization Reserve | | Accumulated Loss | | Total Equity |
| | | $’000 | | $’000 | | $’000 | | $‘000 | | $‘000 | | $’000 | | $’000 |
| At January 1, 2013 | | | 44,800 | | | | 84,041 | | | | 19,594 | | | | 1,284 | | | | - | | | | (142,990 | ) | | | 6,729 | |
| Loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | (19,204 | ) | | | (19,204 | ) |
| Share-based compensation | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,176 | | | | 1,176 | |
| Issue of ordinary shares | | | 6,933 | | | | 48,408 | | | | - | | | | - | | | | - | | | | - | | | | 55,341 | |
| Share issue expenses | | | - | | | | (2,180 | ) | | | - | | | | - | | | | - | | | | - | | | | (2,180 | ) |
| Conversion of convertible loan note | | | 673 | | | | 4,036 | | | | (507 | ) | | | - | | | | - | | | | 361 | | | | 4,563 | |
| Currency translation | | | - | | | | - | | | | - | | | | 2,908 | | | | - | | | | - | | | | 2,908 | |
| At December 31, 2013 | | | 52,406 | | | | 134,305 | | | | 19,087 | | | | 4,192 | | | | - | | | | (160,657 | ) | | | 49,333 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | (34,752 | ) | | | (34,752 | ) |
| Share-based compensation | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,541 | | | | 2,541 | |
| Capital reorganisation | | | (52,294 | ) | | | (134,305 | ) | | | (19,087 | ) | | | - | | | | 205,686 | | | | - | | | | - | |
| Issue of ordinary shares | | | 50 | | | | 54,950 | | | | - | | | | - | | | | - | | | | - | | | | 55,000 | |
| Share issue expenses | | | - | | | | (5,342 | ) | | | - | | | | - | | | | - | | | | - | | | | (5,342 | ) |
| Currency translation | | | - | | | | - | | | | - | | | | (1,947 | ) | | | - | | | | - | | | | (1,947 | ) |
| At December 31, 2014 | | | 162 | | | | 49,608 | | | | - | | | | 2,245 | | | | 205,686 | | | | (192,868 | ) | | | 64,833 | |
The accompanying notes form part of these financial statements.
Consolidated Cash Flow Statements
for the twelve month period ended December 31, 2014 (unaudited)
| | | | | Twelve months ended
December 31, |
| | | NOTE | | 2014 | | 2013 |
| | | | | $’000 | | $’000 |
| Loss before taxation | | | | | | | (35,979 | ) | | | (20,319 | ) |
| Depreciation and amortization of licenses, software and property plant and equipment | | | | | | | 1,171 | | | | 573 | |
| Share-based compensation expense | | | | | | | 2,541 | | | | 1,176 | |
| Net finance expense/(income) | | | | | | | (164 | ) | | | 285 | |
| Increase in inventories | | | | | | | (1,841 | ) | | | (122 | ) |
| Increase in receivables | | | | | | | (483 | ) | | | (1,922 | ) |
| (Decrease)/increase in payables | | | | | | | (790 | ) | | | 2,601 | |
| Net cash used in operating activities | | | | | | | (35,545 | ) | | | (17,728 | ) |
| Interest paid | | | | | | | - | | | | (161 | ) |
| Interest received | | | | | | | 167 | | | | 124 | |
| Research and development tax credits / (income tax paid) | | | | | | | 1,172 | | | | (27 | ) |
| Net cash outflow from operating activities | | | | | | | (34,206 | ) | | | (17,792 | ) |
| | | | | | | | | | | | | |
| Cash flows from investing activities | | | | | | | | | | | | |
| Purchase of property, plant and equipment | | | | | | | (1,481 | ) | | | (1,807 | ) |
| Purchase of intangible assets | | | | | | | (266 | ) | | | (2,070 | ) |
| Net cash flows used in investing activities | | | | | | | (1,747 | ) | | | (3,877 | ) |
| | | | | | | | | | | | | |
| Cash flows from financing activities | | | | | | | | | | | | |
| Proceeds from issue of convertible loan notes | | | | | | | - | | | | 2,500 | |
| Proceeds from issue of ordinary shares | | | | | | | 55,000 | | | | 55,341 | |
| Share issue expenses | | | | | | | (5,342 | ) | | | (2,180 | ) |
| Net cash flows from financing activities | | | | | | | 49,658 | | | | 55,661 | |
| | | | | | | | | | | | | |
| Increase in cash and cash equivalents | | | | | | | 13,705 | | | | 33,992 | |
| Cash and cash equivalents at beginning of year | | | | | | | 40,866 | | | | 4,450 | |
| Effects of exchange rates on cash and cash equivalents | | | | | | | (1,237 | ) | | | 2,424 | |
| Cash and cash equivalents at end of year | | | | | | | 53,334 | | | | 40,866 | |
The accompanying notes form part of these financial statements.
Notes to the Consolidated Financial Statements
1 Accounting Policies
Basis of Preparation
The unaudited interim financial statements have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards (collectively IFRS) as issued by the IASB including those applicable to accounting periods ending December 31, 2014 and the accounting policies set out in the Company’s financial statements as of and for the two years ended December 31, 2013. These interim financial statements have been prepared and approved by the Directors in accordance with International Accounting Standard 34 “InterimFinancial Reporting.” They do not include all the statements required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at December 31, 2013.
The financial information contained in this interim financial statement is unaudited. The interim financial statements have been prepared on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.
The presentational currency for this interim financial statement is U.S. dollars. The exchange rates relevant for each period were as follows:
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| Sterling/U.S. dollar exchange rate | | | | | | | | | | | | | | | | |
| Closing rate | | | 1.55 | | | | 1.65 | | | | 1.55 | | | | 1.65 | |
| Average rate | | | 1.58 | | | | 1.62 | | | | 1.64 | | | | 1.56 | |
The Group received regulatory approval in February 2013 for its Aorfix product in the United States and formally launched the product in the fourth quarter of 2013. It will continue to absorb cash until sufficient funds from products sold are generated. Following the NASDAQ IPO in the first half of 2014, the group had $53.3 million of cash as at December 31, 2014 which is sufficient to fund its activities for the foreseeable future. Based on the above, the Directors consider the going concern assumption to be appropriate and therefore the going concern basis has been adopted in the preparation of these financial statements.
These policies have been applied consistently throughout the year except where otherwise indicated.
2 Operating Segment Analysis
The Group is engaged in a single business activity of cardiovascular devices and medical fabrics and the Group does not have multiple operating segments. The Group’s cardiovascular devices and medical fabrics business consists of the development and commercialization of these products. The Executive Management team is the Group’s chief operating decision-making body, as defined by IFRS 8, and all significant operating decisions are taken by the Executive Management team. In assessing performance, the Executive Management team reviews financial information on an integrated basis for the Group as a whole, substantially in the form of, and on the same basis as, the Group’s IFRS financial statements.
In addition to the geographical segments required under IFRS which is shown below, the Company analyzes its business based on the categories and information in the following table:
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| Aorfix Commercial Revenue | | | | | | | | | | | | | | | | |
| United States direct market | | | 1,188 | | | | 292 | | | | 3,248 | | | | 508 | |
| Western Europe direct markets | | | 728 | | | | 872 | | | | 3,431 | | | | 3,013 | |
| Japan distributor market | | | 1,920 | | | | - | | | | 3,550 | | | | - | |
| International distributor markets excluding Japan | | | 922 | | | | 919 | | | | 3,038 | | | | 2,610 | |
| Total Aorfix commercial revenue | | | 4,758 | | | | 2,083 | | | | 13,267 | | | | 6,131 | |
| Other commercial revenue | | | - | | | | 170 | | | | 10 | | | | 817 | |
| Total commercial revenue | | | 4,758 | | | | 2,253 | | | | 13,277 | | | | 6,948 | |
| Clinical trial revenue | | | - | | | | 1 | | | | - | | | | 12 | |
| Total revenue | | | 4,758 | | | | 2,254 | | | | 13,277 | | | | 6,960 | |
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| Revenue by destination: | | | | | | | | | | | | | | | | |
| United Kingdom | | | 387 | | | | 523 | | | | 1,926 | | | | 1,808 | |
| Germany | | | 341 | | | | 349 | | | | 1,505 | | | | 1,205 | |
| United States of America | | | 1,188 | | | | 293 | | | | 3,258 | | | | 530 | |
| Japan | | | 1,920 | | | | - | | | | 3,550 | | | | - | |
| Rest of World | | | 922 | | | | 1,089 | | | | 3,038 | | | | 3,417 | |
| | | | 4,758 | | | | 2,254 | | | | 13,277 | | | | 6,960 | |
Included in the Other Commercial Revenue and Rest of World categories in the tables above are the following revenue figures for the Company’s OEM business which was divested in December 2013:
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| | | | | | | | | |
| Revenue from the divested OEM Business | | | - | | | | 170 | | | | - | | | | 807 | |
3 NASDAQ Initial Public Offering and Group Restructure
On April 24, 2014, the Company’s Initial Public Offering of shares on the NASDAQ Global market was priced. The Company issued 5,000,000 ordinary shares of $0.01 each at a price of $11.00 to raise $55,000,000 before offering expenses. Total expenses of the offering were $6.8 million, of which $5.3 million were directly attributable to the issue of the new shares and have been charged to the Share Premium account. The balance of $1.5 million has been charged to the Income Statement in the period ended December 31, 2014.
To facilitate the NASDAQ IPO, Lombard Medical, Inc., a new Cayman Islands domiciled holding company, was created and the existing shares in Lombard Medical Technologies plc were exchanged for new shares in Lombard Medical, Inc. under a UK High Court approved Scheme of Arrangement. Following the Scheme of Arrangement, the trading in shares of Lombard Medical Technologies plc on the London Stock Exchange’s AIM market was cancelled and Lombard Medical Technologies plc reregistered as a private company, Lombard Medical Technologies Limited.
The group restructure has been accounted for as a capital reorganization, under which the balances on share capital, share premium and other reserve relating to Lombard Medical Technologies plc have been transferred to a capital reorganization reserve at the time of the restructure.
The comparatives in the Consolidated Statements of Comprehensive Income, the Consolidated Balance Sheet and Accumulated Losses, have been presented as those of the previous parent company, Lombard Medical Technologies plc.
4 Borrowings
Medico’s Hirata convertible loan
On March 28, 2013 the Company received $2.5 million from the total $5 million convertible loan facility granted by its exclusive distribution partner in Japan, Medico’s Hirata Inc. The loan accrues interest of 3 percent per annum, payable when the loan is repaid or converted. The loan is repayable seven years from the receipt of regulatory approval for Aorfix in Japan, which was granted in August 2014. Conversion of the loan is at Medico’s Hirata Inc.’s discretion and will be based on the share price at the time of conversion.
At December 31, 2014, the amount outstanding comprised:
| | | $’000 |
| Face value plus accrued interest of convertible loan notes at January 1, 2014 | | | 2,558 | |
| Interest expense | | | 74 | |
| Included in non-current liabilities | | | 2,632 | |
The convertible loan note is considered a financial liability with no equity component as there is a contractual obligation to deliver a variable number of shares at the market price if the loan note is converted. The fair value of the loan note is therefore the same whether the settlement of the obligation is made in cash or in shares at the time of repayment.
5 Taxation on Loss on Ordinary Activities
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| UK research and development claim: | | | | | | | | | | | | | | | | |
| for the current year | | | 524 | | | | 706 | | | | 1,150 | | | | 938 | |
| for prior years | | | 60 | | | | 233 | | | | 60 | | | | 233 | |
| | | | 584 | | | | 939 | | | | 1,210 | | | | 1,171 | |
| Overseas taxation credit (charge) | | | 33 | | | | (53 | ) | | | 17 | | | | (56 | ) |
| Total tax credit | | | 617 | | | | 886 | | | | 1,227 | | | | 1,115 | |
6 Loss per Share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares. The diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share as the exercise of share options and warrants would have had the effect of reducing the loss per ordinary share and are therefore not dilutive.
The Loss per Share calculations are set out below:
| | | Three months ended December 31, | | Twelve months ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | $’000 | | $’000 | | $’000 | | $’000 |
| Loss for the period ($’000) | | | (8,283 | ) | | | (5,973 | ) | | | (34,752 | ) | | | (19,204 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average number of ordinary shares (‘000) | | | 16,186 | | | | 11,186 | | | | 14,556 | | | | 8,972 | |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per share (cents) | | | (51.2 | ) | | | (53.4 | ) | | | (238.7 | ) | | | (214.0 | ) |
The weighted average number of shares figure for 2014 reflects the 2014 share for share exchange of one new ordinary share of $0.01 each of Lombard Medical, Inc. for every four existing ordinary shares of 20 pence each of Lombard Medical Technologies plc. The 2013 comparative has been recast retrospectively for the effect of the 2014 share for share exchange, to allow comparability.
7 Post Balance Sheet Events
The Company has no significant post balance sheet events.
8 Related Party Disclosures
Timothy Haines is a Partner at Abingworth LLP, a life science and healthcare investment firm which manages investment funds which together held 17.8 percent of the Company’s shares immediately before the NASDAQ Initial Public Offering. On April 25, 2014, the Abingworth funds subscribed for 727,272 ordinary shares of $0.01 pence each, as part of the Initial Public Offering. The shares were priced at $11 each, being the Initial Public Offering price. The Abingworth funds held 16.8 percent of the Company’s shares following the Initial Public Offering. In the months following the NASDAQ Initial Public Offering, Abingworth purchased 629,092 shares of the Company in open market transactions at an average price of $6.30. Abingworth held 20.7 percent of the Company’s shares on December 31, 2014.
Invesco Asset Management Limited is a shareholder of the Company and held 39.0 percent of the Company’s shares immediately before the NASDAQ Initial Public Offering. On April 25, 2014, Invesco subscribed for 1,951,818 ordinary shares of $0.01 pence each, as part of the Initial Public Offering. The shares were priced at $11 each, being the Initial Public Offering price. Invesco Asset Management Limited held 39.0 percent of the Company’s shares following the Initial Public Offering and on December 31, 2014.
Since the NASDAQ Initial Public Offering, directors have purchased shares of the Company in open market transactions as follows: Raymond W. Cohen purchased 8,075 shares at an average price of $6.41, Simon Hubbert purchased 2,900 shares at an average price of $7.67, Simon Neathercoat purchased 3,800 shares at an average price of $7.03, Craig Rennie purchased 15,060 shares at an average price of $6.52 and John B. Rush purchased 3,000 shares at an average price of $7.34.
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