TIRAT CARMEL, ISRAEL--(Aug. 31, 2011) - D. Medical Industries Ltd. (NASDAQ:DMED)(TASE:DMED) ("D. Medical" or the "Company"), a medical device company engaged through its subsidiaries in the research, development, manufacture and sale of innovative products for diabetes treatment and drug delivery, today announced financial results for the three and six months ended June 30, 2011. Results were characterized by the Company's initial execution of its low risk and low cost strategy of introducing and promoting the "Spring" brand name to and across various target markets - including the United States, Canada, Europe, Mexico and the BRIC countries of Brazil, Russia, India and China – initially via the commercial roll out of its Spring Universal Infusion Sets.
Second Quarter Highlights:
- In April 2011, the Company received Japanese patent JP 468166, entitled
"Drug Delivery Device and Method," protecting innovative methods and
technologies for identifying the presence of a gas bubble in a drug delivery
system, such as an insulin delivery system worn for the treatment of
diabetes.
- In April 2011, D. Medical signed an agreement for a standby equity purchase
agreement with YA Global Investments L.P. ("YA"), a fund managed by
Yorkville Advisors, LLC, whereby D. Medical would have the option, at its
sole discretion, to issue and sell up to US$ 10 million of its ordinary
shares to YA over the course of 24 months (extendable for another US$ 10
million over a period of additional 24 months).
- In April 2011, the Company's subsidiaries, Spring Health Solutions Ltd. and
Spring-Set Health Solutions Ltd. received Canadian Medical Devices
Conformity Assessment System (CMDCAS) certification for their ISO 13485:2003
Quality System.
- In May 2011, the U.S. Food and Drug Administration granted D. Medical's
subsidiary, Spring-Set Health Solutions Ltd., 510(K) clearance to market its
Spring™ Universal Infusion Sets in the United States.
- In May 2011, the Company's subsidiary, Spring-Set Health Solutions Ltd.,
received a medical device license to market its Spring™ Universal Infusion
Sets in Canada.
- In May 2011, the Company announced the execution of an agreement for the
distribution of its Spring™ Universal Infusion Sets in Poland.
- In June 2011, the Company entered into a definitive agreement with a third
party for the sale of its holdings in its publicly held subsidiary, NextGen
Biomed Ltd. ("NextGen").
- In June 2011, D. Medical's subsidiary, Spring-Set Health Solutions Ltd., was
granted U.S. Patent No. 7,951,122, entitled "Infusion set self-occlusion
mechanism," protecting the breakthrough Detach-Detect mechanism that
distinguishes the Spring™ Universal Infusion Set from competitive products
currently on the market.
- In June 2011, the Company filed its annual report on Form 20-F with the U.S.
Securities and Exchange Commission. It can be accessed on the SEC's website
at http://www.sec.gov as well as on the Investors/SEC Filings page of the
Company's website at http://www.dmedicalindustries.com.
- In June 2011, the Company, through its wholly owned subsidiary Spring Health
Solution Ltd, submitted an application for CE Mark approval of its Spring™
Zone Insulin Delivery System.
Financial Results:
The unaudited selected consolidated financial statements presented below were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). A convenience U.S. dollar translation of NIS amounts is provided using the rate of NIS 3.415 to US$1.00, the representative rate of exchange as of June 30, 2011 as published by the Bank of Israel.
Sales for the six and three months ended June 30, 2011 amounted to NIS 840 thousand (US$ 246 thousand) and NIS 523 thousand (US$ 153 thousand), respectively. The increase of sales in the second quarter was mainly attributable to the increase in demand. Although first products rolled off the production line in China, the majority of the sold products were not yet supplied from this line.
Cost of sales for the six and three months ended June 30, 2011 amounted to NIS 6,025 thousand (US$ 1,764 thousand) and NIS 2,599 thousand (US$ 761 thousand), respectively. Cost of sales for the first and second quarters was mainly attributable to the preparation of the aforementioned UPG production line in China and the training of new staff.
R&D expenses for the six and three months ended June 30, 2011 amounted to NIS 7,946 thousand (US$ 2,327 thousand) and NIS 3,118 thousand (US$ 913 thousand), respectively.
General and Administration expenses for the six and three months ended June 30, 2011 amounted to NIS 6,137 thousand (US$ 1,797 thousand) and NIS 3,283 thousand (US$ 961 thousand), respectively. The increase in the second quarter of 2011 was due to the additional costs connected with the submission of the Company's annual reports and IR efforts.
D. Medical's comprehensive loss for the six and three months ended June 30, 2011 amounted to NIS 24,465 thousand (US$ 7,163 thousand), or NIS 2.73 (U.S. $0.80) per share and NIS 9,230 thousand (US$ 2,703 thousand), or NIS 1.13 (US$ 0.33) per share, respectively. Comprehensive loss includes loss from discontinued operations for the six and three months ended June 30, 2011 of NIS 3,683 thousand (US$ 1,078 thousand) and NIS 71 thousand (US$ 21 thousand). The discontinued operation is related to the sale the publicly held subsidiary, NextGen Biomed Ltd.
"The second quarter marked the completion of preparations for the commercial roll out of our Spring™ Universal Infusion Sets in the United States and Canada," said Efri Argaman, D. Medical's Chief Executive Officer. "Initial commercial activities are already taking place and the early interest shown by patients, doctors and Diabetes educators in this breakthrough product has been high. Accordingly, we remain hopeful that the business will start to generate meaningful and growing revenues toward the end of 2011."
As of June 30, 2011, D. Medical had cash and cash equivalents of NIS 14,926 thousand (US$ 4,371 thousand).
Main Events Subsequent to Quarter-End:
- In July 2011, the Company's subsidiary, Spring Health Solutions Ltd., signed a non-binding letter of intent with Dex Medical, Canada's largest distributor of diabetes care products, to become exclusive distributor of the Spring™ Universal infusion Set in Canada. - In August 2011, the Company's subsidiary, Spring Health Solutions Inc., signed a non- exclusive distribution agreement with RGH Enterprises, Inc., the parent company of Edgepark Medical Supplies and Independence Medical, for the distribution of its Spring™ Universal Infusion Sets in the United States. - In August 2011, D. Medical held its Annual General Meeting of shareholders where all proposals, with the exception of Proposal 6 (amendment to outstanding warrants of the Company), were approved.
Conference Call
D. Medical will host a conference call to discuss these results today, August 31, at 8:30 a.m. (Eastern Daylight Time). Those wishing to access the live conference call by telephone should dial 877-312-5445 (within the United States) or 253-237-1128 (outside of the United States) several minutes prior to the beginning of the call. The call will also be webcast live and archived for 30 days on the company's website at http://www.dmedicalindustries.com under the "Events" tab in the Investors section.
About D. Medical
D. Medical is a medical device company engaged through its subsidiaries in the research, development, manufacture and sale of innovative products for diabetes treatment and drug delivery. D. Medical has developed durable and semi-disposable insulin pumps, which continuously infuse insulin into a patient's body, using its proprietary spring-based delivery technology. D. Medical believes that its spring-based delivery mechanism is cost-effective compared to the motor and gear train mechanisms that drive competitive insulin pumps and also allows it to incorporate certain advantageous functions and design features in its insulin pumps. D. Medical has also developed an infusion set for insulin pumps and is focusing its research and development efforts on the development of next generation insulin pumps and a device that will combine a continuous glucose monitoring system and an insulin pump on the same patch. For more information, visit http://www.dmedicalindustries.com (corporate) and http://www.springnow.com (healthcare professionals, patients and care givers).
Forward-Looking Statements
This press release contains forward-looking statements (as defined by the Israeli Securities Law, 1968, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties. These statements include, forecasts, goals, uncertainties and assumptions and relate, inter alia, to D. Medical's future expectations in connection with its level of sales and cost of sales, manufacturing volumes, the cost-effectiveness of its spring-based design, target markets and timing of markets penetration. The forward-looking statements are based on D. Medical's current expectations and beliefs which are based on, among other things, its analysis of publicly available information and market research reports. All forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward- looking statements. Such risks and uncertainties include, but are not limited to, the impact of general economic conditions, competitive products, product demand, product performance, the performance of D. Medical's contract manufacturer and distributors, regulatory trends and approvals and healthcare reform legislation. If one or more of these risks and/or uncertainties materialize, or if the underlying assumptions prove to be incorrect, D. Medical's actual results, performance or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements or results which are based upon such assumptions. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or of any of them will transpire or occur, what impact it will have on D. Medical's results of operations or financial condition. D. Medical does not undertake to update any forward- looking statements.
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