Minrad International's third-quarter losses more than tripled as the Orchard Park anesthesia and medical device manufacturer's sales were cut almost in half by delays in opening its expanded anesthesia factory in Pennsylvania.
"It's very difficult to put a bright face on the third quarter," said William Burns, Minrad's chairman and chief executive officer, during a conference call Tuesday. "The revenue numbers were disappointing, particularly in light of our increasing order rate."
Minrad's losses swelled to $5.3 million, or 11 cents per share, compared with a loss of $1.7 million, or 4 cents per share, a year ago.
With Minrad's sales dropping to $2.7 million during the quarter, down from $5.3 million a year earlier, the company lost $1.95 for every $1 in sales.
Much of the trouble stemmed from delays in completing the expansion of its Bethlehem, Pa., anesthesia factory, which for months has been running on a limited capacity and sharing production lines with different anesthesia products. The company also wrote down $1.1 million in inventories during the quarter.
"With the construction of the plant, there was only so much we could ship out," he said.
Burns, however, was optimistic that Minrad's performance would improve significantly now that the expansion of the Bethlehem factory will be essentially complete by early December. With four times the capacity of the original facility, the expanded factory should give Minrad the ability to greatly increase its production, while improving efficiency as volumes increase.
Minrad also has replaced some of its senior executives at its Bethlehem plant, including its vice president of operations and its senior pharmaceutical researcher, Burns said.
With $10 million in orders in hand, including $8 million for its sevoflurane anesthetic, Burns said Minrad should be able to work down much of that backlog throughout December and be all caught up by the end of January. He predicted that the company's operations during December would be profitable.
But Minrad remains strapped for cash, with just $118,000 in cash on its books at the end of September, although the company also received a $1.1 million cash infusion from a stock warrant incentive program last month.
Still, the company needs to raise more cash next month to fund its future operations, and Burns said a decision on what type of fund raising it will be is expected to be made by the company's directors later this month.
In the interim, Burns said the company has been stretching out its payments to vendors while it awaits its next infusion of cash. "I'm trying people's patience right now," he said. "We're working with our vendors and they're patient."