Picard Medical Inc (NYSEAMERICAN: PMI) shares jumped higher on the NYSE American this week after the company released stronger-than-expected quarterly results. The stock rose more than 50 per cent on Aug. 24 as investors responded to the figures published the previous week.
Revenue for the second quarter reached approximately US$2.95 million, nearly double the Wall Street consensus of US$1.55 million and 39 per cent higher than the same period a year earlier. Gross profit swung to roughly US$0.6 million, yielding a 20.9 per cent margin while the net loss narrowed 16 per cent to about US$5.7 million. Although the per-share loss of US$3.05 was wider than expected, market participants seemed to focus on the strong revenue figure and the improved gross profitability.
Through its SynCardia subsidiary, Picard markets the only total artificial heart approved by both the United States Food and Drug Administration and Health Canada. The device replaces the functions of a failing heart and serves as a temporary bridge for patients awaiting transplant. More than 2,100 implants have taken place at hospitals in 27 countries.
The company’s latest investor presentation highlights a 79 per cent survival rate to transplantation among patients in a milestone 2004 trial, compared with 46 per cent in a matched control group. FDA approval was first attained 22 years ago. The study also recorded one patient supported for more than eight years with the early-stage technology.
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Persistent financial pressures remain
Despite the surge, broader balance sheet concerns linger. Cash stands at just US$38,000 against total liabilities near US$7.45 million, working capital of only US$141,000 and a book value per share of roughly US$0.02.
Operating cash flow remains negative, leverage is elevated and inventory stands high, thereby raising the prospect of further financing and dilution. Picard’s overall position is that of an early-stage medtech company with a commercially available product that generates modest revenue but continues to post substantial losses.
The firm’s longer-term outlook rests on development of the Emperor platform, the company’s next-generation fully implantable total artificial heart designed to eliminate the necessity of external drivers patients currently require for powering these devices.
Picard’s most significant competitors are BiVACOR and CARMAT. SynCardia remains the only device with full commercial approval in the U.S. and Canada and possesses by far the largest clinical track record. BiVACOR’s continuous-flow design is still in early feasibility studies with only a handful of implants. CARMAT’s Aeson system has achieved limited European use and remains investigational in the U.S. This device is also heavier, and the company has been facing financial challenges.
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