Axonics® Announces First Quarter 2019 Financial Results and Operational Update

IRVINE, Calif.–(BUSINESS WIRE)–Axonics Modulation Technologies, Inc. (NASDAQ: AXNX), a medical
technology company that has developed and is commercializing a novel
implantable Sacral Neuromodulation (“SNM”) device for the treatment
of urinary and bowel dysfunction, reported today financial results for
the first quarter ended March 31, 2019, and provided an update on
operational initiatives.

Recent Business Highlights

  • Net sales of the Axonics r-SNM® System1 from
    international markets totaled $1.1 million in the first quarter of
    2019, sequentially doubling sales from the 2018 fourth quarter. This
    compares to no revenue in the same period last year.
  • Commercial efforts in Europe were focused in England and the
    Netherlands, gaining an estimated 25% of the SNM market in England and
    approximately 30% in the Netherlands of new patient implants in the
    first quarter of 2019. A total of 23 hospitals in these markets are
    now implanting the Axonics r-SNM System.
  • Presented at the American Urology Association (AUA) Annual Meeting on
    May 5 the ARTISAN-SNM pivotal clinical study results on the full
    cohort of patients implanted with the Axonics r-SNM System. The
    pivotal study results indicated 90% of all implanted subjects met the
    efficacy endpoint and that the study met all primary and secondary
    endpoints.
  • Achieved CE Mark approval for full-body magnetic resonance imaging
    (“MRI”) conditional labeling in Europe making the Axonics system the
    first SNM device to allow a full-body MRI scan without being first
    explanted.
  • Filed full-body MRI data with the U.S. Food and Drug Administration
    (“FDA”) seeking conditional labeling upon pre-market approval (“PMA”)
    for the Axonics r-SNM System.
  • Filed, during the first week of March 2019, a PMA with the FDA seeking
    approval for expansion of the market labeling to include the clinical
    indication of fecal incontinence (“FI”).
  • Completed an FDA pre-PMA audit and inspection of the Axonics quality
    system and its manufacturing processes and facility resulting in zero
    observations.
  • Was informed by the FDA, there will be no formal “90-day substantive
    review letter” issued to Axonics because there are no outstanding
    deficiencies.
  • Appointed Michael H. Carrel, Jane E. Kiernan and Nancy L. Snyderman,
    M.D. to the Board of Directors.

1 The Axonics r-SNM System is currently designated as an
investigational medical device in the United States

Raymond W. Cohen, CEO of Axonics, commented, “The generation of $1.1
million of revenue in the first quarter shows strong progress and
reflects the growing number of centers adopting our r-SNM product. We
anticipate continued market share gains from our two primary markets in
Europe in 2019, England and the Netherlands, and view those countries as
models for engaging and earning market share in the United States upon
FDA regulatory approval. While we are clear that the prize is the U.S.
market which represents nearly 90 percent of the overall volume in SNM,
based on this encouraging start, we do plan to expand our footprint in
Europe during 2019 and into 2020. Achieving CE Mark for full-body MRI
labeling, along with the unique features of our long-lived
neurostimulator, has provided important differentiators as compared to
the legacy provider, aiding our modestly-sized field team in gaining
access to the most active implanting centers.”

Cohen continued, “On the regulatory front, we are engaged in regular and
productive interactions with the FDA with our primary focus on gaining
approval in the shortest possible timeframe. We have enriched our
current PMA with the full cohort of ARTISAN-SNM study data as well as
the full-body MRI data. We believe that a significant portion of the FDA
review is complete and are confident that FDA approval will come during
the second half of 2019. While we push forward for clearance to market
in the U.S., we continue to put all the operational, manufacturing and
commercial pieces in place to support a broad, fully staffed and
immediate U.S. launch upon approval. The internal and U.S. commercial
teams continue to be rounded out. Overall, we are making excellent
progress on our key operational objectives.”

First Quarter 2019 Financial Results

Net revenue was $1.1 million in the first quarter ended March 31, 2019,
derived from the sale of the Company’s r-SNM Systems to customers in
Europe and Canada, as compared to no net revenue for the same period of
last year.

Gross margin was 49.2% in the first quarter of 2019.

Operating expense was $14.1 million for the first quarter of 2019, as
compared to $6.5 million in the prior-year quarter. This increase was
primarily due to higher personnel costs across the organization related
to increased headcount in anticipation of the commercial launch of the
Company’s r-SNM System in the U.S., as well as higher costs associated
with operating as a public company.

Net loss for the first quarter of 2019 was $13.1 million as compared to
$6.6 million in the prior-year quarter. Net loss per share for the first
quarter of 2019 was $0.47 per share.

As of March 31, 2019, cash, cash equivalents and short-term investments
were $144.2 million.

Webcast and Conference Call

Today, on Wednesday, May 8, 2019, at 4:30 p.m. Eastern Time, the Company
will host a conference call with the investment community to discuss the
financial results and recent business developments. Interested parties
may access the live call via telephone by dialing (866) 687-5771 (U.S.)
or (409) 217-8725 (International) and using conference ID 7475517. A
live webcast of the call may be accessed by visiting the Events &
Presentations page of the investors section of the Company’s website at ir.axonicsmodulation.com.
A replay of the webcast will be available shortly after the conclusion
of the call and will be archived on the Company’s website for 90 days.

About Axonics Modulation Technologies, Inc.

Axonics, based in Irvine, CA, has developed and is commercializing a
novel implantable SNM device for patients with urinary and bowel
dysfunction. Overactive bladder affects an estimated 87 million adults
in the U.S. and Europe. Another estimated 40 million adults are reported
to suffer from fecal incontinence. SNM therapy is a well-established
treatment that has been widely used and reimbursed in the U.S. and
Europe for the past two decades. The Axonics r-SNM System is the first
rechargeable SNM system approved for sale in Europe, Canada and
Australia, and the first SNM system to gain CE mark for full-body MRI
conditional labeling. PMA for the r-SNM System is currently pending with
the U.S. FDA. For more information, visit the Company’s website at www.axonicsmodulation.com.

Forward-Looking Statements

Statements made in this press release that relate to future plans,
events, prospects or performance are forward-looking statements as
defined under the Private Securities Litigation Reform Act of 1995.
Words such as “planned,” “expects,” “believes,” “anticipates,”
“designed,” and similar words are intended to identify forward-looking
statements. While these forward-looking statements are based on the
current expectations and beliefs of management, such forward-looking
statements are subject to a number of risks, uncertainties, assumptions
and other factors that could cause actual results to differ materially
from the expectations expressed in this press release, including the
risks and uncertainties disclosed in Axonics filings with the Securities
and Exchange Commission, all of which are available online at www.sec.gov.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Except as required by law, Axonics undertakes no obligation to update or
revise any forward-looking statements to reflect new information,
changed circumstances or unanticipated events.

 
Axonics Modulation Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
    March 31,     December 31,
2019   2018
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 89,334 $ 98,306
Short-term investments 54,819 59,218
Accounts receivable 804 427
Inventory 5,064 3,673
Prepaid expenses and other current assets 2,778   3,716  
Total current assets 152,799 165,340
Property and equipment, net 2,887 2,784
Intangible asset, net 397 426
Other assets 3,344   3,356  
Total assets $ 159,427   $ 171,906  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 2,102 $ 3,436
Accrued liabilities 2,364 1,683
Lease liability, current portion 523 768
Debt, net of unamortized debt issuance costs, current portion 1,705    
Total current liabilities 6,694 5,887
Lease liability, net of current portion 3,476 3,281
Debt, net of unamortized debt issuance costs, net of current portion 17,923   19,463  
Total liabilities 28,093   28,631  
Stockholders’ equity
Preferred stock, par value $0.0001 per share; 10,000,000 shares
authorized, no shares issued and outstanding at March 31, 2019 and
December 31, 2018
Common stock, par value $0.0001, 50,000,000 shares authorized at
March 31, 2019 and December 31, 2018; 28,201,091 and 27,806,934
shares issued and outstanding at March 31, 2019 and December 31,
2018, respectively
3 3
Additional paid-in capital 244,523 243,337
Accumulated deficit (112,766 ) (99,649 )
Accumulated other comprehensive loss (426 ) (416 )
Total stockholders’ equity 131,334   143,275  
Total liabilities and stockholders’ equity $ 159,427   $ 171,906  
   

Axonics Modulation Technologies, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

 
Three Months Ended
March 31,
2019     2018
Net revenue $ 1,077 $
Cost of goods sold 548    
Gross profit 529
Operating Expenses
Research and development 4,219 4,543
General and administrative 4,015 1,435
Sales and marketing 5,914   548  
Total operating expenses 14,148   6,526  
Loss from operations (13,619 ) (6,526 )
Other Income (Expense)
Interest income 1,034 71
Interest and other expense (532 ) (149 )
Other income (expense), net 502 (78 )
Loss before income tax expense (13,117 ) (6,604 )
Income tax expense    
Net loss (13,117 ) (6,604 )
Foreign currency translation adjustment (10 ) (1 )
Comprehensive loss $ (13,127 ) $ (6,605 )
 
Net loss per share, basic and diluted $ (0.47 ) $ (2.36 )

Weighted-average shares used to compute basic and diluted net loss
per share

27,828,201 2,802,622

Contacts

Axonics’ Contact
Axonics Modulation Technologies, Inc.
Dan
Dearen, +1-949-396-6320
President & Chief Financial Officer
[email protected]

Investor
& Media Contact

W2Opure
Matt Clawson, +1-949-370-8500
[email protected]

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