MAKO Surgical Corp. (MAKO), an orthopedic devices company, has reported revenues of $2.9 million for the full year of 2008, compared with the revenues of $0.77 million in the previous year-end. It has reported net loss applicable to common stockholders of $37.6 million, or $2.20 per share, for the full year of 2008, compared with the net loss applicable to common stockholders of $24.3 million, or $14.75 per share, in the previous year-end.
Recent Business Highlights
MAKOplasty Procedure Volume – During the fourth quarter, 200 MAKOplasty procedures were performed, representing a 26% increase over the third quarter of 2008. During 2008, 601 MAKOplasty procedures were performed and 782 MAKOplasty procedures have been performed since the first procedure in June 2006.
TGS Sales – Four Tactile Guidance System robotic arm units were installed and customer accepted at commercial sites during the fourth quarter, including the conversion of a non-commercial site. These new sites brought the total number of MAKO’s commercial TGS sites to seventeen as of December 31, 2008.
Product Milestones – During the quarter, MAKO obtained regulatory clearances for the RIO Robotic Arm Interactive Orthopedic system (version 2.0 of the TGS) and the RESTORIS MCK MultiCompartmental Knee implant system, both of which are anticipated to be commercially released in the first half of 2009.
Clinical Education – MAKO attended four major orthopedic meetings during the quarter, including the International Society for Technology in Arthroplasty, in Seoul, Korea, where, through the peer-review process, MAKO made three podium and four poster presentations featuring MAKOplasty. Topics discussed included early clinical success demonstrated by MAKOplasty, improved accuracy of the implant placement as evidenced in post-operative radiographic images and the benefits of bone preservation resulting from resurfacing arthroplasty. In addition, Thomas Coon of St. Elizabeth Community Hospital, in Red Bluff, California, performed a live MAKOplasty procedure on December 1, 2008, which was webcast on OR-Live.
Equity Financing – On October 31, 2008, MAKO closed an equity financing of up to $60 million, with first closing net proceeds of $ 39.7 million, which are anticipated to be used to support the commercialization of the RIO system and the RESTORIS MCK implant system and disposable products, for continuing research and development of future products and for the continuing expansion of operations and working capital to support growth. In January 2009, MAKO received stockholder approval for a potential second closing of an additional $20 million of common stock, along with related warrants, which is conditioned upon the achievement of certain business related milestones before December 31, 2009.
“We are pleased with our operating results for the fourth quarter,” said Maurice R. Ferre, president and chief executive officer of MAKO. “The 200 MAKOplasty procedures performed by our customers and the addition of four new commercial sites represent a continuation of the strong adoption trends apparent in the first three quarters of the year. In addition, we are gratified that we have received FDA clearance to market our RIO system and RESTORIS MCK implant system, as well as secured access to additional capital to allow for the continued execution of our business plan.”
2008 Fourth Quarter Financial Review
Revenue was $1.0 million in the fourth quarter of 2008 against $0.4 million in the fourth quarter of 2007, primarily generated from the 200 MAKOplasty procedures performed in the quarter. Additionally, deferred revenue increased to $11.6 million as of December 31, 2008, of which $2.7 million was generated during the fourth quarter, primarily as a result of the sale and customer acceptance of four TGS units during the quarter.
Operating expenses were $10.9 million in the fourth quarter of 2008 against $7.7 million in the fourth quarter of 2007. The increase in operating expenses is primarily attributable to an increase in sales and marketing activities for the continued expansion of the direct sales force and commercialization of the TGS and RIO system and MAKOplasty implant products, as well as ongoing research and development relating to future products. Further, general and administrative costs increased as MAKO continued to build infrastructure to support growth and incurred costs associated with operating as a public company.
Net loss attributable to common stockholders for the three months ended December 31, 2008 was $10.8 million, including non-cash stock-based compensation expense of $655,000, or $(0.48) per basic and diluted share, based on average basic and diluted shares outstanding of 22.5 million. This net loss compares to a net loss attributable to common stockholders for the same period in 2007 of $8.4 million, including non-cash stock-based compensation expense of $478,000, or $(4.53) per basic and diluted share, based on average basic and diluted shares outstanding of 1.8 million.
Cash, cash equivalents and short-term investments were $63.6 million as of December 31, 2008, against $12.7 million as of December 31, 2007. Included in short-term investments as of December 31, 2008 was $1.0 million par value of variable auction rate securities that had experienced failed auctions in 2008, limiting the liquidity of these securities. In January 2009, all of MAKO’s outstanding auction rate securities were redeemed at par value either by the issuing fund or MAKO’s investment firm.
2008 Full Year Financial Review
For the year ended December 31, 2008, revenue was $2.9 million, primarily generated from MAKOplasty procedures. Further, deferred revenue increased to $11.6 million at December 31, 2008 of which $8.2 million was generated during the year, primarily as a result of the sale and customer acceptance of twelve TGS units during the year. The net loss attributable to common stockholders for 2008 was $37.6 million, including non-cash stock-based compensation expense of $3.3 million, or $(2.20) per basic and diluted share, based on average basic and diluted shares outstanding of 17.1 million, against a net loss attributable to common stockholders for 2007 of $24.3 million, including non-cash stock-based compensation expense of $1.2 million, or $(14.75) per basic and diluted share, based on average basic and diluted shares outstanding of 1.6 million. Additionally, net loss attributable to common stockholders included non-cash charges for accretion and dividends on preferred stock of $0.6 million and $3.7 million for 2008 and 2007, respectively, which ceased upon the conversion of the preferred stock into common stock upon the closing of MAKO’s initial public offering during the first quarter of 2008.