TearLab Corporation Reports Third Quarter and September Year-To-Date 2017 Financial Results

SAN DIEGO, Nov. 13, 2017 (GLOBE NEWSWIRE) — TearLab Corporation (OTCQB:TEAR) (TSX:TLB) (“TearLab” or the “Company”) today reported its consolidated financial results for the third quarter and nine months ended September 30, 2017. All dollar amounts are expressed in U.S. currency and results are reported in accordance with United States generally accepted accounting principles except where noted otherwise.

Third Quarter 2017 and Recent Operational Highlights

  • Announced updated U.S. regulatory strategy for TearLab Discovery™ System; Company remains on-track to submit 510(k) application to FDA by year-end
  • Expanded the active U.S. user base of TearLab Osmolarity Systems in key programs by 74 units to 4,522 devices
  • Further reduction in operating expenses; operating loss improved 6.9% compared to 3Q 2016
  • Amended loan agreement with CRG to lower the minimum revenue levels for years 2017 through 2019
  • Cash position of $7.7 million as of September 30, 2017

For the three months ended September 30, 2017, TearLab’s net revenues were $6.5 million, compared with $7.2 million for the same period in 2016. A net total of 80 TearLab Osmolarity® Systems were added in the third quarter of 2017, of which 48 were under the Company’s Flex program and 22 were purchased outside of the United States.

The following table sets forth the estimated annualized revenue per U.S. device and account analysis for the third quarter ended September 30, 2017.  The table below includes devices and accounts under the Company’s Purchased, Masters and Flex programs only.  Accounts and devices under the Company’s discontinued Use program are no longer meaningful to the Company’s results. 

                 
            Annualized   Annualized
    Active   Active   Revenue   Revenue
Program   Devices   Accounts   Per Device   Per Account
Purchased   839   735   $ 2,684   $ 3,064
Masters   1,705   211   $ 3,092   $ 24,984
Flex   1,978   763   $ 8,100   $ 20,999
Total     4,522      1,709        
                 

The Company’s reported net loss for the 2017 third quarter was approximately $3.8 million, or ($0.67) loss per share which included a pre-tax charge of approximately $0.7 million to cost of goods sold related to a settlement with a supplier.  This compared to a reported net loss of approximately $4.0 million, or ($0.75) loss per share, in the third quarter of 2016. In addition, the Company’s cash burn in the third quarter was approximately $2.5 million, resulting in an ending cash balance of $7.7 million as of September 30, 2017.

“During the third quarter, we continued to execute against our refocused commercial model, and remain optimistic with respect to the longer-term prospects for our business despite some revenue softness in the quarter, primarily related to our international business. In the U.S., we are intently focused on the Flex business for our current-generation TearLab Osmolarity System, and we are pleased with the performance of this segment which added both accounts and devices during Q3. Importantly, our continued expense management efforts contributed to improvements in both operating expenses and net loss compared to the third quarter of 2016,” said Seph Jensen, TearLab’s Chief Executive Officer. “Looking ahead, we recently announced a shift in our U.S. regulatory strategy for the TearLab Discovery™ System, which will have us pursue initial FDA clearance on the device and a test card measuring osmolarity and a single inflammatory biomarker, MMP-9. Both MMP-9 and osmolarity have FDA-cleared predicates with established reimbursement codes, which we believe could reduce the review period for our application, once submitted.”

Business Outlook

Tearlab expects to file its 510(k) application with the U.S. Food and Drug Administration for clearance of the TearLab Discovery™ System by the end of 2017. 

The company is taking the necessary steps to complete a capital raise by the end of the fourth quarter of 2017. TearLab plans to utilize the net proceeds from this funding round to support the clearance and launch of the TearLab Discovery™ System, expected to occur in 2018, as well as to continue the development work on follow-on tests for the Discovery™ platform. 

About TearLab Corporation

TearLab Corporation (www.tearlab.com) develops and markets lab-on-a-chip technologies that enable eye care practitioners to improve standard of care by objectively and quantitatively testing for disease markers in tears at the point-of-care. The TearLab Osmolarity Test, for diagnosing Dry Eye Disease, is the first assay developed for the award-winning TearLab Osmolarity System.  TearLab Corporation’s common shares trade on the OTCQB Market Place under the symbol ‘TEAR’ and on the Toronto Stock Exchange under the symbol ‘TLB’.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning the market for dry eye patients, the potential success in developing and commercializing the TearLab Discovery™ System and the TearLab Osmolarity System, the timeframe and ability to file and secure U.S. Food and Drug Administration approval for the next generation commercial test card and testing device, the ability to quickly train and maintain stability in our sales force for continued execution, the ability to raise capital needed to gain clearance for and maximize the launch of our new platform under acceptable terms or at all. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results expressed or implied by the forward-looking statements. Forward-looking statements are based on management’s current, preliminary expectations and are subject to various risks and uncertainties. Many factors, risks and uncertainties may cause our actual results to differ materially from forward-looking statements, including the factors, risks, and uncertainties detailed in our filings with the Securities and Exchange Commission and Canadian securities regulatory authorities, including but not limited to our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 10, 2017,and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, which TearLab expects to file with the SEC on November 13, 2017. We do not undertake to update any forward-looking statements except as required by law.

CONTACT: Investor Contact: 
The Ruth Group
Lee Roth
Tel: 646-536-7012
lroth@theruthgroup.com

 
TearLab Corp.
Condensed Consolidated Statements of Operations
(Expressed in U.S. Dollars (000’s) except for number of shares and net loss per share)
(Unaudited)

    Three months
     ended September 30,
      2017       2016  
Revenue        
  Product sales   $   5,733     $   6,463  
  Reader equipment rentals       790         760  
Total revenue     6,523       7,223  
Cost of goods sold        
Cost of goods sold  (excluding amortization of intangible assets)     3,028       2,564  
Cost of goods sold – reader equipment depreciation     415       527  
Gross profit     3,080       4,132  
Operating expenses        
Sales and marketing     2,659       3,109  
Clinical, regulatory and research & development        898         1,007  
General and administrative       2,260         2,598  
Amortization of intangible assets       –          359  
Total operating expenses       5,817         7,073  
Loss from operations       (2,737 )       (2,941 )
Other income (expense)       (1,084 )       (1,041 )
Net loss and comprehensive loss   $   (3,821 )   $   (3,982 )
Weighted average shares outstanding       5,742,234         5,334,891  
Net loss per share   $   (0.67 )   $   (0.75 )
         

 
TearLab Corp.
Condensed Consolidated Statements of Operations
(Expressed in U.S. Dollars (000’s) except for number of shares and net loss per share)
(Unaudited)
    Nine months
     ended September 30,
      2017       2016  
Revenue        
  Product sales   $   17,949     $   17,393  
  Reader equipment rentals       2,289         3,500  
Total revenue     20,238       20,893  
Cost of goods sold        
Cost of goods sold  (excluding amortization of intangible assets)     8,252       7,569  
Cost of goods sold – reader equipment depreciation     1,328       1,635  
Gross profit     10,658       11,689  
Operating expenses        
Sales and marketing     9,294       11,109  
Clinical, regulatory and research & development        3,572         2,805  
General and administrative       6,755         9,490  
Amortization of intangible assets       –          966  
Total operating expenses       19,621         24,370  
Loss from operations       (8,963 )       (12,681 )
Other income (expense)       (3,172 )       (2,898 )
Net loss and comprehensive loss   $   (12,135 )   $   (15,579 )
Weighted average shares outstanding       5,615,903         4,404,203  
Net loss per share   $   (2.16 )   $   (3.54 )
         

 
TearLab Corp.
Consolidated Balance Sheets
(Expressed in U.S. Dollars (000’s)
(Unaudited)

    September 30,   December 31,
    2017     2016  
ASSETS            
Current assets            
Cash     $   7,713       $   15,471  
Accounts receivable, net         1,656           2,279  
Inventory         2,590           3,193  
Prepaid expenses and other current assets         775           1,226  
Total current assets       12,734         22,169  
             
Fixed assets, net       3,432         4,178  
Intangible assets, net       15         60  
Other non-current assets       289         220  
Total assets     $   16,470       $   26,627  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities            
Accounts payable     $   1,909       $   1,858  
Accrued liabilities       3,855         3,958  
Deferred Rent       49         83  
Total current liabilities       5,813         5,899  
             
Long-term debt         27,843         26,449  
             
Total liabilities       33,656         32,348  
             
Exchange right                
             
Stockholders’ equity (deficit)            
Capital stock            
Preferred Stock, $0.001 par value, 10,000,000 authorized, 0 and 2,764 issued and outstanding at September 30, 2017 and December 31, 2016, respectively                
Common stock, $0.001 par value, 9,500,000 authorized, 5,742,453 and 5,360,198 issued and outstanding at September 30, 2017 and December 31, 2016, respectively       6         5  
Additional paid-in capital       507,651         506,982  
Accumulated deficit       (524,843 )       (512,708 )
Total stockholders’ equity (deficit)         (17,186 )         (5,721 )
Total liabilities and stockholders’ equity     $   16,470       $   26,627