Neoprobe Corp. (OTC:NEOP) shareholders took a bath in the second quarter, largely because of one-time charges related to converting their company’s debt to preferred equity.
But the Dublin, Ohio-based cancer detection firm is on the verge of launching its first game-changing product: Lymphoseek, a tracing agent that identifies cancerous lymph nodes in patients with breast cancer and melanoma.
Neoprobe executives say they expect (PDF) to have a discussion about Lymphoseek with the Food & Drug Administration in preparation for filing a new drug application in the fourth quarter.
As for the just-completed second quarter, converting $11 million in Platinum-Montaur Life Sciences LLC debt to new preferred equity freed Neoprobe’s balance sheet from complicated debt securities. That could help in the company’s bid for a listing on the New York Stock Exchange.
The new listing could give Neoprobe investors more assurance of liquidity, which might help encourage trading in the stock, which in turn could boost its price of $2 and change.
A more liquid market also could enable the company to sell $20 million in securities for which it has filed a shelf offering registration.
But the conversion also cost $41.7 million, pushing Neoprobe to net losses of $51.2 million, or 64 cents per diluted share, in the second quarter. That compares with a loss of $15.2 million, or 21 cents per diluted share, in the year-ago quarter, which included a $13.7 million charge to change the carrying value of derivative securities to their market value.
For the six months ended June 30, Neoprobe lost $53.7 million, or 67 cents a diluted share, compared with a loss of $14.4 million, or 20 cents a diluted share, in the year-ago period.
Revenues from the sale of gamma detection devices grew 40 percent in the second quarter, to $2.5 million, up from $1.8 million a year ago. For the six-month period, revenues were up 16 percent to $5.2 million.
“The increases were due to increased sales volumes offset by slightly lower prices,” CFO Brent Larson said in prepared remarks (PDF). “Gross margins from our device sales remained steady at 68 percent for the first half of 2010 compared to the same period in 2009.”
Though Neoprobe lost money, the second quarter helped set the stage to launch Lymphoseek, as well as relaunch a real-time tumor detection system called RIGScan CR. In 1998, the company aborted its attempt to launch an earlier RIGS system.
“We are pleased with the progress we’ve made with the clinical and regulatory pathway for Lymphoseek,” CEO David Bupp said in the release. “We have successfully completed the re-characterization of the RIGScan CR biologic agent and are now preparing an investigational new drug amendment and a Phase 3 clinical protocol to support the ongoing clinical development program.”
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