Alphatec Holdings Inc. (ATEC)
Q2 2008 Earnings Call
August 4, 2008 4:30 pm ET
Cheryl Monblatt - IR
Dirk Kuyper - President and CEO
Peter Wulff - CFO
Bruce Jackson - RBC Capital Markets
Bill Plovanic - Canaccord Adams
Bud Leedom - Hunter Securities
Julie Hoggatt - Noble Financial
Steve Ogilvie - Thinkpanmure
Tao Levy - Deutsche Bank
Previous Statements by ATEC
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Thank you, and good afternoon, everyone. Welcome to Alphatec Spine's conference call to discuss our Second Quarter Fiscal Year 2008 Financial and Operating Results. With me today are Mr. Dirk Kuyper, President and Chief Executive Officer, Peter Wulff, Chief Financial Officer and Ebun Garner, General Counsel.
By now, you should all have seen a copy of today's press release announcing our financial results. If you do not have a copy of the press release, you can find it in the Investor Relations section on our website at www.alphatecspine.com.
Before we start there are a couple of items we would like to cover. I would like to remind you that this call is being webcast live and recorded. A replay of this event will be available later today on our website and will remain available for at least 30 days following the call.
We would like to remind you that our discussions today include forward looking statements. These statements are based on certain assumptions made by us based on historical trends, current conditions, expected future developments, including business prospects, product development objectives, and future financial performance, and other factors we believe to be appropriate in the circumstances. Risks and uncertainties may cause our actual results to differ materially from those projected in these forward-looking statements.
You can find a discussion of these factors and more information about us in our filings with the SEC, including the risk factors section on our Form 10-K for 2007, as amended, and subsequent quarterly reports on from 10-Q, and periodic filings on Form 8-K. These forward-looking statements are made as of the date of this call, and we assume no obligations to update these statements publicly, even if new information becomes available in the future.
This broadcast is covered by US copyright laws, and any use or rebroadcast of all or any portion of this conference call can only done with our express written permission.
I'll now hand the call over to Dirk Kuyper, Alphatec's President and CEO.
Thank you, Cheryl, and good afternoon everyone. First, I will review highlights from the second quarter of 2008 and turn the call over to our new CFO, Peter Wulff, who will provide a more detailed review of our operating and financial performance. Lastly, I will come back and discuss the status of our key development projects in our product pipeline, guidance for 2008 before opening the call for questions.
First, I'd like to congratulate the Alphatec team for achieving quarterly revenues of 23.9 million for the second quarter of 2008, representing a 27% increase over the same period last year. In the US, we grew 20% over last year, representing a sequential acceleration of our core growth rate. It is significant to note that we were able to grow our core business at a rate greater than the spine market prior to the launch of any of our new products that are focused on treating disorders of the ageing spine.
We are pleased to announce that we launched our European business with our first sales transaction of 1.4 million to one of our European distribution partners. We recorded this transaction as deferred revenue on our balance sheet. As this is both a new market and channel of distribution, we will recognize revenue as we get paid. The total amount due to us for the European order is backed by a binding letter of credit.
We're looking forward to serving the European surgeon and patient populations. To date, there have already been over 30 surgeries completed in Europe, and we look forward to additional adoption of our products. The European sales channel provides a strategic market opportunity for Alphatec. And we are working to evaluate and add new distribution partners in selected countries.
Two weeks ago, we announced the first successful surgery with the OsseoFix Spinal Fracture Reduction System, formerly known as V-Stent, in Germany by world-renowned spine surgeon Rudy Bertagnoli. Dr. Bertagnoli reported that the OsseoFix System was easy to use, and he was able to effectively restore vertebral height in a patient that had experienced a vertebral compression fracture at the T12 vertebrae.
This represents a noteworthy milestone, reflecting Alphatec's dedication to improving the quality of life of older patients, and treating conditions that affect the ageing spine. Most significant is that our -- what our new team was able to achieve, in that we were able to move this technology from concept to first human implantation in 10 months, which is world-class, and reflects that our investment in R&D has been well spent.
We submitted a 510(k) application to the FDA for the OsseoFix System in June of 2008. We anticipate that OsseoFix will receive FDA clearance and will be launched in the US by late '08.
Regarding product development, we continue to upgrade and run out our core product line. During the second quarter of 2008, we received 510(k) clearance for scoliosis-related implants that are used in conjunction with the ZODIAC Luxe Spine Fixation System. We also received 510(k) clearance for our NOVEL family spinal spacers to be used as inter-body devices in lumbar procedures.