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Cardica Reports Q2 Fiscal 2009 Results

Cardica, Inc. (Cardica) has reported total revenue of $2.9 million for the second quarter of fiscal 2009, compared with the total revenue of $1.7 million in the year-ago quarter. It has also reported net loss of $4.7 million, or $0.30 per share, for the second quarter of fiscal 2009, compared with the net loss of $4.2 million, or $0.29 per share, in the year-ago quarter.

“Clinical adoption of our PAS-Port(R) Proximal Anastomosis System by cardiothoracic surgeons for use in coronary artery bypass graft (CABG) procedures since FDA clearance in September has been encouraging,” said Bernard A. Hausen, president and chief executive officer of Cardica. “During the quarter, nearly 200 surgeons were trained to use the PAS- Port system. The PAS-Port system has been used in increasing numbers of CABG surgeries throughout the United States, including in dozens of total connector CABG cases, in which our C-Port and PAS-Port automated systems are used to connect all bypass vein grafts, eliminating the need to hand sew these vessels.”

Recent highlights and accomplishments

Trained a total of 226 US surgeons on the PAS-Port system since US Food and Drug Administration clearance, including 196 in the fiscal 2009 second quarter alone, and a total of 384 surgeons on the C-Port(R) Distal Anastomosis Systems since product introduction;

Increased cumulative worldwide shipments of PAS-Port systems to over 11,500 units, with 1,827 units shipped in the fiscal 2009 second quarter; the majority of units were shipped to U.S. customers;

Increased cumulative worldwide shipments of C-Port systems to over 8,000 units, with 993 units shipped in the fiscal 2009 second quarter;

Enabled cardiothoracic surgeons to perform dozens of total connector coronary artery bypass, or C-CAB(TM), procedures for the first time in the United States, using only the C-Port and PAS-Port systems to attach bypass grafts;

On January 7, 2009, ORLive hosted a webcast of a robot-assisted, closed-chest CABG procedure performed by internationally renowned cardiothoracic surgeon Sudhir Srivastava, of the University of Chicago Medical Center, using Cardica’s C-Port Flex-A system.

Fiscal 2009 second quarter and six months ended December 31, 2008, financial results

Total product sales were about $2.0 million for the fiscal 2009 second quarter, compared with $1.3 million for the same period of fiscal 2008. Cost of product sales was about $1.5 million for the fiscal 2009 second quarter, representing a 27 percent product gross margin, compared with $1.2 million for the fiscal 2008 second quarter.

Research and development expenses were about $2.1 million for the fiscal 2009 second quarter compared with $1.7 million for the fiscal 2008 second quarter. Selling, general and administrative expenses for the fiscal 2009 second quarter were about $4.1 million compared with $3.2 million for the fiscal 2008 second quarter.

Total net revenue for the six months ended December 31, 2008, was about $5.1 million compared with about $3.0 million for the same period of fiscal 2008. Total operating costs and expenses for the six months ended December 31, 2008, were about $15.0 million compared with about $11.4 million for the same period of fiscal 2008. The net loss for the first six months of fiscal 2009 was about $9.9 million, or $0.63 per share, compared with a net loss of about $7.8 million, or $0.56 per share, for the same period of fiscal 2008.

Cash and investments at December 31, 2008, were $13.1 million, compared with $17.6 million at September 30, 2008, and $23.3 million at June 30, 2008. As of December 31, 2008, there were about 15.8 million shares of common stock outstanding.

Financial guidance for fiscal 2009

“We are pleased with surgeon adoption of our PAS-Port system to date, and this quarter proved to be one of our best ever in terms of opening new hospital accounts. However, acceptance of new technology by hospitals is hard to predict,” said Bob Newell, vice president, finance and chief financial officer of Cardica. “In this financing environment, we have pushed out to a later date the date by when we will need additional cash by reducing our expenses, headcount and planned spending.”

It is still early in the adoption of Cardica’s systems and regular consistent usage patterns are difficult to predict. Cardica expects revenue from both its PAS-Port and C-Port product lines to grow quarter over quarter. However, because accurately forecasting product revenue for new and recently introduced products in the current economic environment is difficult, Cardica has determined not to provide product revenue guidance for fiscal 2009. Development revenue from corporate collaborations for fiscal 2009 is expected to be between $2 million and $3 million.

On January 7, 2009, Cardica announced an initiative to reduce costs by reducing about 13 positions. Cardica anticipates that the cost savings from the workforce reduction initiative will be about $3 million annually. Additionally, Cardica has taken other steps to reduce expenses and conserve cash. Cardica estimates that the total cash expenses to be incurred in connection with the workforce reduction will be about $200,000, the majority of which will be incurred in the third fiscal quarter of 2009. Accordingly, Cardica believes that fiscal 2009 research and development, sales, general and administrative expenses will total between $23 and $24 million, including non-cash stock-based compensation expense of about $2 million.