EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Contacts:

At Cambridge Heart:    Media:    Investor Relations:
Vincenzo LiCausi    KOGS Communication    Allen & Caron
Chief Financial Officer    Edna Kaplan    Matt H. Clawson
(978) 654-7600 x 6645    (781) 639-1910    (949) 474-4300
vincenzol@cambridgeheart.com    kaplan@kogspr.com    matt@allencaron.com

CAMBRIDGE HEART REPORTS RESULTS FOR FOURTH QUARTER AND FULL YEAR 2008

Company Comments on Distribution Strategy and Expense Reduction Initiative

Tewksbury, Mass., March 26, 2009 – Cambridge Heart, Inc. (OTCBB: CAMH), today reported results for its fourth quarter and year ended December 31, 2008. Full financial statements and corresponding commentary can be found in the Company’s Form 10-K, which is expected to be filed with the Securities and Exchange Commission on March 31, 2009. The following financial, strategic and clinical milestones highlighted the fourth quarter and subsequent weeks:

 

   

Revenue – Sequentially, revenue for the fourth quarter was $1,012,000, compared to $1,122,000 in the third quarter of 2008. Domestic sales and placements of the Heartwave II systems were 19 for the fourth quarter, and included 6 placements under the Company’s technology placement program. This compares to 23 units sold in the third quarter of 2008.

 

   

Distribution Strategy – As previously stated, the Company believes that its direct sales and marketing efforts should be augmented by third party distribution relationships in order to accelerate the adoption of its Alternans technology and more fully realize the market opportunity. The Company is currently in negotiations with potential distribution partners and will provide an update upon the conclusion of these activities.

 

   

Cost Restructuring – In order to position the Company to operate more efficiently in the face of challenging economic conditions and to focus its resources to take advantage of strategic opportunities, the Company has implemented an expense reduction initiative. This initiative, in conjunction with previous measures, includes a 33% reduction in headcount from 46 FTE’s in the fourth quarter of 2008, and is expected to result in cash savings of approximately $500,000 per quarter. The reduction in headcount, which affects all of the Company’s operational areas, includes a restructuring of the direct sales organization to improve cost effectiveness.


   

Clinical Study Update – Five articles supporting the use of Microvolt T-Wave Alternans™ (MTWA) testing were published in a supplement to the March 2009 issue of the Heart Rhythm journal. Featured in the supplement is a comprehensive meta-analysis of 6,000 patients confirming the value of MTWA as a non-invasive marker of risk for sudden cardiac arrest (SCA). The meta-analysis authors concluded that 1) patients who test positive for MTWA are 14 times more likely to die from SCA than a MTWA negative patient, 2) patients who test negative for MTWA are at extremely low risk (0.3% annually) for SCA, 3) MTWA testing can assist physicians in guiding ICD therapy to appropriate patients, and overcome patient and referring physician reluctance to accept this ICD therapy, and 4) ICD shocks are an unreliable surrogate endpoint for SCA in clinical trials and may skew risk stratification studies.

Commenting on the results of the quarter and recent events, Cambridge Heart CEO Ali Haghighi-Mood said, “The relatively flat sequential revenue result in the fourth quarter underscores our need to access broader and more established distribution channels. This strategy will position us to accelerate the adoption and utilization of our technology.” In addition, Haghighi-Mood also stated, “The corporate restructuring that has been implemented allows us to best utilize our resources, and will result in immediate and significant cash savings.”

Financial Results for the three and twelve-month periods ended December 31, 2008

Total revenue for the three months ended December 31, 2008 was $1,012,000, a decrease of 54% from total revenue of $2,191,000 reported during the same period of 2007. On a sequential basis, total revenue decreased $110,000 or 10%, from total revenue of $1,122,000 for the quarter ended September 30, 2008. The decrease in revenue compared to the 2007 period was the result of a number of factors, including challenges with the St. Jude Medical co-marketing relationship, and the subsequent rebuilding of our own direct sales pipelines. The sequential decrease in revenue, in large part, reflects the continued worsening of the macro economic conditions.

Cost of sales for the fourth quarter of 2008 was $1,497,000 compared to $779,000 in the same period in 2007, and included a $921,000 charge to reserve for potentially excess inventory. The reserve is based on the uncertainty that we will realize the full value of the inventory over the next twelve months. The inventory increased in order to satisfy our contractual obligations under the Co-Marketing Agreement with St. Jude Medical. Excluding this reserve for excess inventory, the gross margin, as a percent of revenue, for the fourth 2008-quarter was 43% compared to 64% in 2007. The decrease in gross margin from the prior year is primarily attributable to lower sales volume relative to our fixed manufacturing costs.

Selling, general and administrative expenses for the fourth quarter of 2008 were $2,375,000, a decrease of $1,128,000, or 32%, compared to $3,504,000 in the fourth quarter of 2007. The decrease in SG&A expense is primarily due to lower variable


sales costs, and reduced marketing costs compared to the prior year, which included certain marketing expenses in connection with the Co-Marketing Agreement with St. Jude Medical. General and administrative expenses also decreased compared to the prior year, primarily as a result of lower business insurance expense and consulting costs.

The operating loss for the fourth quarter of 2008 was $3,009,000, compared to an operating loss of $2,224,000 for the same period last year. Included in the operating loss for the fourth quarter of 2008 was $588,000 of non-cash stock-based compensation expense, and the $921,000 reserve for potentially excess inventory. Excluding the inventory reserve, the operating loss for the fourth quarter of 2008 was $2,089,000. The net loss for the quarter was $2,981,000, or $0.05 per share, compared to a net loss of $2,048,000, or $0.03 per share, in the comparable 2007 period.

For the twelve months ended December 31, 2008, total revenue was $4,239,000, a decrease of $5,868,000, or 58%, compared to total revenue of $10,106,000 for the same period in 2007. Year-to-date gross margin as a percent of revenue was 25% compared to 65% last year. Excluding the reserve for potentially excess inventory, the gross margin for 2008 was 47%. Selling, general and administrative expenses for the twelve-month period in 2008 were $10,862,000 compared to $15,903,000 in 2007. The operating loss for 2008 of $10,344,000, which included the $921,000 inventory reserve, increased $449,000 compared to an operating loss of $9,895,000 for the same period in the prior year. The operating loss for the 2008 twelve-month period included $2,541,000 in non-cash stock based compensation expense. The net loss for the twelve-months ended December 31, 2008 was $10,030,000, or $0.16 per share, compared to a net loss of $9,210,000, or $0.14 per share, during the same period in 2007.

The Company ended the fourth quarter with cash and cash equivalents of $6,207,000. The cash used by operations was $1,780,000 and $5,685,000, respectively, for the three and twelve months ended December 31, 2008.

The Company currently has a total of 69.2 million shares of common stock and common stock equivalents issued and outstanding, including the effect of converting the Series A preferred stock purchased by investors in 2003 and Series C preferred stock purchased by St. Jude Medical in March 2007. In addition, there are options and warrants outstanding to purchase 8.2 million common equivalent shares, bringing the fully diluted share count to 77.4 million common equivalent shares.

Questions can be directed to the Company’s management or its investor relations firm at the contact numbers noted above.

About Cambridge Heart, Inc.

Cambridge Heart develops and commercializes non-invasive diagnostic tests for cardiac disease, with a focus on identifying those at risk for sudden cardiac arrest (SCA). The Company’s


products incorporate proprietary Microvolt T-Wave Alternans™ measurement technologies, including the patented Analytic Spectral Method® and ultrasensitive disposable electrode sensors. The Company’s MTWA test, originally based on research conducted at the Massachusetts Institute of Technology, is reimbursed by Medicare under its National Coverage Policy.

Cambridge Heart, founded in 1990, is based in Tewksbury, MA. It is traded on the Over-The-Counter Bulletin Board (OTCBB) under the symbol CAMH.

http://www.cambridgeheart.com.

Statements contained in this press release are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. In some cases, we use words such as “believes”, “expects”, “anticipates”, “plans”, “estimates”, “could”, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements. Factors that may cause or contribute to such differences include failure to achieve broad market acceptance of the Company’s MTWA technology, failure of our sales and marketing organization to market our products effectively, inability to hire and retain qualified clinical applications specialists in the Company’s target markets, failure to obtain or maintain adequate levels of third-party reimbursement for use of the Company’s MTWA test, customer delays in making final buying decisions, decreased demand for the Company’s products, failure to obtain funding necessary to develop or enhance our technology, adverse results in future clinical studies of our technology, failure to obtain or maintain patent protection for our technology and other factors identified in our most recent Annual Report on Form 10-K/A under “Risk Factors”, which is on file with the SEC and available at www.EDGAR.com. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so except as may be legally necessary, even if our estimates should change.

-Financial information follows-


Cambridge Heart, Inc.

Financial Highlights

 

Statement of Operations    Three months ended December 31,     Twelve months ended December 31,  
     2007     2008     2007     2008  
           (unaudited)           (unaudited)  

Revenue

   $ 2,190,969     $ 1,012,197     $ 10,106,408     $ 4,238,743  

Cost of goods sold

     778,520       1,496,679       3,583,705       3,178,849  
                                

Gross profit

   $ 1,412,449     $ (484,482 )   $ 6,522,703     $ 1,059,894  

Costs and expenses

        

Research and development

     132,507       149,401       515,182       542,102  

Selling, general and administrative

     3,503,656       2,375,474       15,902,866       10,861,678  
                                

Total Operating Expenses

   $ 3,636,163     $ 2,524,875     $ 16,418,048     $ 11,403,780  

Loss from operations

   $ (2,223,714 )   $ (3,009,357 )   $ (9,895,345 )   $ (10,343,886 )

Interest income

     176,940       46,397       698,807       356,941  

Interest expense

     (1,388 )     (18,021 )     (13,417 )     (43,144 )
                                

Net Loss

   $ (2,048,162 )   $ (2,980,981 )   $ (9,209,955 )   $ (10,030,089 )

Net Loss attributable to common shareholders

   $ (2,048,162 )   $ (2,980,981 )   $ (9,209,955 )   $ (10,030,089 )
                                

Net loss per common share—basic and diluted

   $ (0.03 )   $ (0.05 )   $ (0.14 )   $ (0.16 )
                                

Weighted average shares outstanding—basic and diluted

     64,543,021       64,543,021       64,420,227       64,543,021  
                                
Balance Sheet    December 31,
2007
    December 31,
2008
             
           (unaudited)              
Assets         

Cash & cash equivalents

   $ 866,510     $ 6,207,074      

Marketable securities

     11,200,000       —        

Restricted cash, current portion

     100,000       100,000      

Accounts receivable, net

     1,947,892       766,879      

Inventory

     2,405,144       1,455,330      

Other prepaid assets

     70,726       123,080      
                    

Total current assets

     16,590,272       8,652,363      

Fixed assets, net

     132,571       358,434      

Restricted cash, net of current portion

     400,000       400,000      

Other assets

     67,766       47,845      
                    

Total assets

   $ 17,190,609     $ 9,458,642      
                    
Liabilities and stockholders' equity (deficit)         

Accounts payable and accrued expenses

   $ 1,983,373     $ 1,750,700      

Debt, current portion

     11,151       11,135      
                    

Total current liabilities

     1,994,524       1,761,835      

Debt, long-term portion

     38,256       27,121      
                    

Total liabilities

   $ 2,032,780     $ 1,788,956      
                    

Convertible preferred stock

   $ 11,677,108     $ 11,678,244      
                    

Stockholders' equity

        

Common stock

     64,718       65,017      

Additional paid-in-capital

     82,030,007       84,570,518      

Accumulated deficit

     (78,614,004 )     (88,644,093 )    
                    

Total stockholders' equity (deficit)

     3,480,721       (4,008,558 )    
                    

Total liabilities and stockholders' equity (deficit)

   $ 17,190,609     $ 9,458,642      
                    

###