ZILA Restructures Loan Agreement, Shares Up Big
Despite facing potential de-listing, Zila Inc. (NasdaqGM: ZILA) shares gained $.12 or nearly 43% during regular trading before jumping another $.07 after hours for a final print of $.47.Volume of 1.7 million shares traded was the most since late April and news that the company has favorably re-structured its most crucial loan agreement was warmly embraced by investors.
Zila Inc. is best known for its flagship ViziLite® Plus product which is the first and only adjunctive medical device cleared by the FDA for use in a population at increased risk for oral cancer. ViziLite ® Plus net revenues increased to $3.2 million and $6.2 million for the three and six months ended January 31, 2008, respectively, an increase of 136.3% and 275.7% from the same periods in the previous year.With approximately $5.9 million of cash and cash equivalents and $8.3 million of working capital on hand to fund operations, the company may still need to seek additional financing over the near-term to ensure the future success of its core product line. The favorable modification to the EBITDA and minimum cash balance covenants of the company's loan agreement with holders of its senior secured convertible notes should help immensely. ZILA won't have to raise capital to pay back loans and can focus solely on marketing ViziLite® Plus worldwide.
Today's gains could exhibit the market's confidence in Zila's ability to grow revenues over the next 3 to 6 months through sales of ViziLite without the burden of said restrictive minimum cash balance requirements or the risk of further share dilution.
With an earnings call scheduled for 6/9, we will soon see how rapidly core product sales are growing. The next four quarters should be crucial to the future success of the company as its landmark product is now fully launched in both the U.S. and regions of the European Union including the UK. Zila's marketing and selling expenses increased more than 100% during the six months ended January 31, 2008 compared to the first half of '07 for an increase of $5.5 million. So, timely is clearly of the essence with big money being spent on creating awareness for ViziLite®
On a very positive note for Zila Inc., in December 2007, the U.S. Department of Veterans Affairs awarded Zila a five-year contract to market ViziLite® Plus to 58 Veterans Administration dental clinics and 154 Department of Defense dental clinics. This should certainly help to build brand recognition for ViziLite going forward.
Labels: NasdaqGM: ZILA, ViziLite®, Zila Inc, Zila Inc. (NasdaqGM: ZILA)
posted by "Staff" at
4:28 PM
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