TranS1 Inc. (TSON) filed Quarterly Report for the period ended 2009-09-30.
TranS1 is a medical device company focused on designing developing and marketing products that implement its proprietary minimally invasive surgical approach to treat degenerative disc disease affecting the lower lumbar region of the spine. TranS1 was incorporated in Delaware and is headquartered in Wilmington North Carolina. Trans1 Inc. has a market cap of $82.5 million; its shares were traded at around $4 with and P/S ratio of 3.2.
Highlight of Business Operations:
Revenue. Revenue increased from $6.0 million in the three months ended September 30, 2008 to $6.9 million in the three months ended September 30, 2009. The $0.9 million increase in revenue from 2008 to 2009 was primarily attributable to an increase in the number of AxiaLIF products sold, which we believe resulted from continued market acceptance of our AxiaLIF and AxiaLIF 360° products, and the commercialization of our AxiaLIF 2L product in the United States, which had its full market release in the fourth quarter of 2008. Our revenues this quarter were impacted by continuing uncertainty in the marketplace surrounding reimbursement for our AxiaLIF procedure, which we are addressing with increased education and support resources for our current and prospective surgeon users. None of this increase was attributable to price increases. Domestically, sales of our AxiaLIF 2L product increased from $0.9 million in the three months ended September 30, 2008 to $1.8 million in the three months ended September 30, 2009 and sales of our AxiaLIF 360° product decreased from $2.0 million in the three months ended September 30, 2008 to $1.7 million in the three months ended September 30, 2009. As a result of the launch of the AxiaLIF 2L, which has a higher selling price than our other products, average selling prices in the United States increased from approximately $9,800 in the three months ended September 30, 2008 to approximately $10,400 in the three months ended September 30, 2009. In the three months ended September 30, 2008 and 2009, we recorded 555 and 606 domestic AxiaLIF cases, respectively, including 201 AxiaLIF 360° cases and 64 AxiaLIF 2L cases in the third quarter of 2008, and 169 AxiaLIF 360° cases and 138 AxiaLIF 2L cases in the third quarter of 2009. Additionally, during the three months ended September 30, 2008 and 2009, we generated $203,000 and $191,000, respectively, in revenues from stand alone sales of our percutaneous facet screw system. Revenue generated outside the United States increased from $354,000 in the three months ended September 30, 2008 to $402,000 in the three months ended September 30, 2009. There were no initial stocking shipments to new distributors outside the United States in the third quarter of 2008, compared to $35,000 in the third quarter of 2009. In the three months ended September 30, 2008 and 2009, 94% of our revenues were generated within the United States.
Cost of Revenue. Cost of revenue increased from $1.0 million in the three months ended September 30, 2008 to $1.4 million in the three months ended September 30, 2009. The $354,000 increase in cost of revenue resulted primarily from higher material and overhead costs associated with increased sales volume for our products. As a percentage of revenue, cost of revenue increased from 16.8% in the three months ended September 30, 2008 to 19.8% in the three months ended September 30, 2009. The increase in cost of revenue as a percent of revenue from 2008 to 2009 was primarily attributable to an inventory obsolescence reserve of $125,000 for discontinued product, which was recorded in the third quarter of 2009.
Revenue. Revenue increased from $18.0 million in the nine months ended September 30, 2008 to $23.5 million in the nine months ended September 30, 2009. The $5.5 million increase in revenue from 2008 to 2009 was primarily attributable to an increase in the number of AxiaLIF products sold. None of this increase was attributable to price increases. Sales of our AxiaLIF 360° product remained consistent at $6.4 million in the nine months ended September 30, 2008 and 2009. Sales of our AxiaLIF 2L product, which had its full market release in the fourth quarter of 2008, increased from $1.3 million in the nine months ended September 30, 2008 to $6.5 million in the nine months ended September 30, 2009. As a result of the launch of the AxiaLIF 2L, which has a higher selling price than our other products, average selling prices in the United States increased from approximately $9,500 in the nine months ended September 30, 2008 to approximately $10,600 in the nine months ended September 30, 2009. In the nine months ended September 30, 2008 and 2009, we recorded 1,629 and 2,028 domestic AxiaLIF cases, respectively, including 627 AxiaLIF 360° cases and 88 AxiaLIF 2L cases in 2008, and 629 AxiaLIF 360° cases and 481 AxiaLIF 2L cases in 2009. Additionally, during the nine months ended September 30, 2008 and 2009 we generated $644,000 and $699,000, respectively, in revenues from stand alone sales of our percutaneous facet screw system. Revenue generated outside the United States decreased from $1.8 million in the nine months ended September 30, 2008 to $1.4 million in the nine months ended September 30, 2009. $260,000 of this decrease was attributable to initial stocking shipments to new distributors in 2008. In the nine months ended September 30, 2008 and 2009, 90% and 94%, respectively, of our revenues were generated in the United States.
Sales and Marketing. Sales and marketing expenses increased from $20.7 million in the nine months ended September 30, 2008 to $26.2 million in the nine months ended September 30, 2009. The increase in expenses from 2008 to 2009 of $5.5 million was primarily the result of increased personnel related costs, including commissions, of $3.7 million, increased travel and entertainment expenses of $0.3 million related to the larger sales force, increased surgeon consulting expenses of $0.7 million and increased tradeshow and promotional expenses of $0.6 million.
General and Administrative. General and administrative expenses increased from $5.6 million in the nine months ended September 30, 2008 to $5.7 million in the nine months ended September 30, 2009. The increase in expenses from 2008 to 2009 of $0.1 million was primarily due to increased personnel related costs, including stock-based compensation expense, of $0.3 million, partially offset by a decrease in consulting fees of $0.1 million.
Cash, cash equivalents and short-term investments decreased from $77.3 million at December 31, 2008 to $61.3 million at September 30, 2009. The decrease of $16.0 million was primarily the result of net cash used in operating activities of $15.5 million and purchases of property and equipment of $553,000.
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