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Posted: March 4, 2008
Luna Innovations Reports Fourth Quarter and Full Year 2007 Financial Results
(Nanowerk News) Luna Innovations Incorporated (NASDAQ:LUNA) today announced its financial results for its fourth quarter and full year ended December 31, 2007.
As compared to the same quarter last year, revenues grew by 23%, from $8.0 million to $9.9 million, gross profit increased from $2.5 million to $3.7 million, and net loss per share declined from $0.27 to $0.11.
Kent Murphy, Chairman and Chief Executive Officer, provided this overview of Luna's results: 'The fourth quarter proved to be a very successful one for us. Product and license sales increased by 64% year-over-year, which drove our overall gross margins from 31% in the fourth quarter of 2006 to 37% in our most recent quarter. With our growing backlog of new research opportunities and a promising pipeline of potential products, we remain well positioned to pursue our strategy and long-term business model of investing in the product side of our business.'
Murphy added, 'Advances in our nanotechnology are proving to be a particularly promising source of potential products. For example, in November we announced that we had been awarded a grant from the National Heart, Lung, and Blood Institute, one of the National Institutes of Health, to develop a new magnetic resonance imaging (MRI) contrast agent that could improve the diagnosis of coronary artery disease. The results of our efforts in this area are important because they could ultimately permit the evaluation of plaque levels without the use of potentially harmful ionizing radiation.'
In remarking on Luna's exclusive carbon nanomaterial in relation to its use in MRI procedures, Murphy said, 'Our tests continue to indicate that the Trimetasphere is very effective in keeping the gadolinium safely encapsulated, thereby reducing the risks that the Food and Drug Administration has been providing warnings about. The unique structure of a Trimetasphere-based contrast agent encloses the metallic signal molecule in such a way that it will not escape under physiological conditions and cause harm to the patient.'
Murphy further remarked, 'While there are many hurdles to overcome before any of these Trimetasphere-based agents could be approved for marketing, we are excited because we believe we have discovered a platform technology that has the potential to produce many new varieties of contrast agents, expanding the use of MRI to improve the diagnostics and the management of diseases where MRI is not currently being used.'
Fourth Quarter Financial Highlights
Total revenues for the fourth quarter of 2007 increased 23% compared to the fourth quarter of 2006.
Product and license revenues represented 37% of total revenues in the fourth quarter of 2007, compared to 28% in the fourth quarter of 2006. Product and license revenues grew 64% to approximately $3.7 million in the fourth quarter of 2007, compared to $2.2 million in the fourth quarter of 2006.
Gross profit for the fourth quarter of 2007 increased to $3.7 million, or 37% of total revenues, from $2.5 million, or 31% of total revenues, for the corresponding period of 2006. The improved gross profit was largely attributed to the higher proportion of product and license sales to total revenues.
Net loss per share for the fourth quarter of 2007 was $0.11 per share, which is an improvement upon a loss per share of $0.27 for the fourth quarter of 2006.
Cash and cash equivalents totaled $12.0 million at December 31, 2007, as compared to $12.5 million at September 30, 2007 and $17.9 million at December 31, 2006.
Fourth Quarter Business Highlights
Awarded a grant from the National Heart, Lung, and Blood Institute to develop a new diagnostic agent that could improve the diagnosis of coronary artery disease, a condition that causes most heart attacks. Luna is investigating using its exclusive TRIMETASPHERE® platform which may provide the ability to use MRI to reveal plaque buildup in the arterial walls of the heart and possibly provide fine structural detail of the plaque.
Made significant progress in the design of new therapeutic nanomedicines using our discoveries of functionalized nanomaterials and their beneficial effects on inflammatory and allergic responses in animal models.
Attracted world-class experts to Luna's nanoWorks organization, including Vice President of Research and Development Krishan Kumar, Ph.D., an accomplished pharmaceutical manager and scientist with extensive pharmaceutical industry experience, and nanoImmunology Group Leader Chris Kepley, Ph.D., who for more than two decades has devoted his research to studying the mechanisms of allergic disease.
Made significant progress in advancing the efficiencies of organic solar cells by applying patented TRIMETASPHERE® carbon nanomaterial technology, which could lead to the development of more efficient and less expensive alternative energy solutions. The U.S. Department of Energy's National Renewable Energy Laboratory (NREL) recently verified that using Luna's TRIMETASPHERE® nanomaterials significantly increase open circuit voltage in organic solar cells by more than 40% compared to today's standard C60 fullerenes.
Initiated clinical trials for Luna's EDAC® (Emboli Detection and Classification) QUANTIFIER under a recently announced agreement with Terumo Cardiovascular Systems.
Instrumentation, Test & Measurement Products
Expanded the Luna Technologies division's offerings with two new product releases, including the PHOENIX' 1000 laser, a tunable MEMS-based product designed to improve the performance of fiber optic test and measurement equipment, such as our Optical Backscatter Reflectometer platform, while reducing the size and cost of the equipment, allowing us to address broader markets such as handheld devices. Additionally, we introduced our PR' 4400, an advanced precision reflectometer offering industry-leading micrometer spatial resolution, increased measurement range, high speed measurements, greater ease of use and a more cost-effective price point for optical component manufacturers.
Year-End Financial Highlights
For the year ended December 31, 2007, total revenues grew $10.1 million, or 43%, to $33.7 million, compared to $23.5 million in 2006. Technology development revenue for 2007 increased $4.6 million, or 24%, over 2006. Product and license revenue was $10.3 million in 2007, representing a 117% increase over 2006. Gross profit increased to $12.3 million, or 37% of revenues, for 2007, from $7.2 million, or 31% of revenues, in 2006. Operating expenses were $20.6 million in 2007, compared to $17.2 million in 2006. The increase in year-over-year operating expenses reflects the company's strategy to increase its product portfolio and product sales. The company incurred a loss from operations of $8.3 million in 2007, versus a loss from operations of $10.0 million for the prior year.
The net loss applicable to common stockholders for 2007 was $7.8 million, or $0.77 per share on a diluted basis, compared to the net loss applicable to common stockholders of $9.4 million, or $1.14 per share on a diluted basis, for the previous year.
Outlook for 2008
The company anticipates continued strong growth in both its product and license segment and its technology development division in 2008. For 2008, the company expects total revenue to be in the range of $40.0 million to $42.0 million, consisting of product and license revenue of $14.0 to $15.0 million and technology development revenue of $26.0 to $27.0 million. Also for 2008, the company anticipates a net loss in the range of $6.5 to $7.0 million. For the first quarter of 2008, the company expects revenue of approximately $8.8 million and a net loss of approximately $2.8 million. These expected results for the first quarter of 2008 reflect the historical seasonality in the company's revenue, particularly in product sales, where sales volumes each year have historically been lower in the first half of the year and higher in the second half of the year.
About Luna Innovations
Luna Innovations Incorporated (www.lunainnovations.com) develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. Luna's products are used to measure, monitor, protect and improve critical processes in the markets we serve. Through its disciplined commercialization business model, Luna has become a recognized leader in transitioning science to solutions. Luna is headquartered in Roanoke, Virginia.