Operating Highlights

Number of patients treated with Aorfix more than doubled to 347 in 2008 (2007: 163)

Total worldwide implantations now exceed 800

500 commercial cases in voluntary registry (RADAR) show:

Positive clinical results even in challenging patients

Growing key opinion leader support in the medical community

Good progress made with pivotal US trial for Aorfix™:

FDA grant approval to increase the number of trial centres and implement an improved training programme

77 patients recruited into the trial during 2008

38 centres trained and qualified to treat high-angle neck aneurysms

European Aorfix™ trial in high-angle neck aneurysms completed and data submitted to regulatory authority

Aorfix™ launched in Russia

Restructuring plan implemented:

Headcount reduced to 88 at 31 December 2008 (2007: 109) and reduced further in 2009 to 58

US trial for EndoRefix™ suspended pending further funding

Financial Highlights

£8.1 million (£7.3 million net of expenses) raised in October 2008 and January 2009 in addition to £7.6 million (£7.1 million net of expenses) fundraising completed January 2008

Revenues increase by 94% to £1.95 million (2007: £1.0 million)

Significant improvement in gross margin to 43% (2007: 21%)

Investment in R&D increased to £7.5 million (2007: £6.4 million)

Other operating expenses excluding investment related items reduced by 10% to £4.7 million (2007: £5.2 million)

Year-end cash balance of £0.8 million (2007: £2.7 million)

Current cash balance £4.8 million after £0.3 million restructuring costs in Q1 2009

Brian Howlett, Chief Executive of LMT, commented:

“Despite challenging market conditions we succeeded in raising more than £15 million which is testament to the growing clinical support for our lead product, the Aorfix™ stent graft. We also filed the ARBITER II trial data and significantly increased the number of patients recruited into the Aorfix™ US trial. Additionally, we made significant financial progress with revenues nearly doubling, improved margins and a reduced cash burn.”Finance Director’s Report

Gross Profit

The gross profit for the year increased almost fourfold to GBP844,000 (2007: GBP214,000). The gross margin of 43.2% (2007: 21.2%) increased primarily due to yield improvements following the introduction of a new process for loading the Aorfix™ stent graft into the delivery device in December 2007.

The gross margin for the full year is slightly less than that reported at the half year due to the timing of licence fee revenues and lower production volumes in the second half of the year after a planned increase in finished goods stocks in the first half of the year.

Operating Expenses before Investment Related Items

The Group’s operating expenses before investment related items increased by GBP0.6 million to GBP12.2 million (2007: GBP11.6 million) as the company’s investment in R&D rose GBP1.1 million to GBP7.5 million.

The 18% increase in R&D costs was primarily due to increased clinical trial costs relating to the PYTHAGORAS and ARBITER II Aorfix™ trials and the US trial for EndoRefix, partially offset by reduced product development costs associated with production process improvements.

Selling, marketing and distribution expenses were broadly stable at GBP2.1 million (2007: GBP2.1 million) despite a threefold increase in distribution costs to GBP94,000 (2007: GBP29,000) as a result of increased shipments to the US for clinical trials.

Administrative expenses of GBP2.6 million (2007: GBP3.1 million) include redundancy costs of GBP257,000 (2007: GBP218,000) related to headcount reductions, primarily in the fourth quarter, and share-based compensation expenses which fell to GBP251,000 (2007: GBP353,000) as more of the options granted at the time of the company’s IPO lapsed. Other administrative expenses declined 14% to GBP2.1 million (2007: GBP2.5 million) as the company recorded exchange gains of GBP0.1 million and sought to cut all non-essential costs.


In February 2007, the company sold its 3.2% shareholding in EndoArt SA pursuant to the acquisition of EndoArt by Allergan Inc. The company received $2.8 million (GBP1.4 million) on closing of the transaction and a further $0.4 million (GBP0.2 million) of consideration was held in escrow until February 2009 against any potential warranty claims made by Allergan under the terms of the purchase agreement. No asset was recorded for the potential deferred consideration at the time of the transaction as there was a risk that warranty claims would be made and no further funds received. However, in March 2009, the company received deferred consideration of GBP276,000 and as such has recognized this amount in the 2008 accounts as both a profit on disposal of investments and a debtor.

In 2007, the company’s shareholding in Vascular Concepts Holdings Limited was written down to the same price per share as an inward investment that occurred in early 2008. Since the time of this inward investment, the equity market values for similar listed companies have fallen by between 40% and 60% and hence it was considered prudent to reduce the book value of the company’s shareholding by a similar percentage, resulting in a non-cash charge to the profit and loss account of GBP874,000.

Net Interest Receivable

Net interest receivable fell to GBP132,000 (2007: GBP202,000) primarily as a result of the amortisation of issue costs and interest payable on the Convertible Loan Notes issued in October 2008.


The R&D tax credit, recorded in the Income Statement, increased to GBP1,971,000 (2007: GBP844,000) as, having established a track record in receiving such credits, recovery was considered sufficiently probable for the company to recognise R&D tax credits on an accruals basis rather than on confirmation of a claim. Therefore, the figure of GBP1,971,000 represents the R&D tax credits confirmed or received in the year primarily relating to the previous year of GBP1,071,000 (2007: GBP844,000) plus an accrual for GBP900,000 (2007: GBPnil) being an estimate of the amount due in respect of 2008.

Loss after Taxation

The loss after taxation attributable to equity shareholders decreased 1% to GBP9.9 million (2007: GBP10.0 million). The average number of shares in issue during 2008 more than doubled to 132.4 million (2007: 64.3 million) resulting in a decrease in the loss per ordinary share of 52% to 7.46 pence (2007: 15.55 pence).

Operating Cash Flow

Net cash outflow from operating activities increased by GBP1.0 million to GBP10.5 million (2007: GBP9.5 million) primarily as a result of the higher loss before taxation which in turn was largely due to a higher investment in R&D.

Investing activities

Overall there was a small net cash outflow from investing activities of GBP16,000 as capital expenditure of GBP211,000 (2007: GBP135,000) slightly exceeded interest received of GBP195,000 (2007: GBP206,000). This compared with an inflow of GBP1.3 million in 2007 which included GBP1.4 million of proceeds from the sale of the company’s investment in EndoArt SA.

Financing activities

In January 2008, the company issued 54.2 million shares at a price of 14 pence per share generating GBP7.6 million before expenses of GBP0.5 million.

In October 2008, the company issued GBP1.7 million of convertible loan notes at par with a term of one year. Costs associated with this issue were GBP0.3 million. These convertible loan notes accrued interest at 1 per cent above the Bank of England base rate and each GBP1 nominal value could be converted into 40 ordinary shares either on election by the holder or mandatorily by the company following a successful fundraising of more than GBP6 million. Following the fundraisi