IsoRay Announces Third Quarter Fiscal 2017 Financial Results

RICHLAND, Wash. , May 10, 2017 /PRNewswire/ -- IsoRay, Inc. (NYSE MKT: ISR), a medical technology company and innovator in seed brachytherapy and medical radioisotope applications for the treatment of prostate, brain, lung, head and neck and gynecological cancers, today announced financial results for the third quarter of fiscal 2017, ended March 31, 2017.

Total operating expenses were  $1.68 million  in the third quarter of fiscal 2017, a 21% increase compared to  $1.39 million  recorded in the third quarter of fiscal 2016. Increases in research and development and sales and marketing expenses of 79% and 76% respectively, were partially offset by a 9% decrease in general and administrative (G&A) expenses. The G&A decrease is primarily due to lower legal fees as well as the absence of other one-time personnel related expenses recorded in the year ago period.

Operating loss was  $1.39 million , a slight increase from the operating loss of  $1.33 million  for the third quarter of fiscal 2016. The net loss was  $1.36 million , or  $(0.02)  per basic and diluted share, compared to a net loss of  $1.20 million , or  $(0.02) , per basic and diluted share, for the same period of fiscal 2016. Basic and diluted per share results are based on weighted average shares outstanding of approximately 55.0 million shares in both periods. IsoRay had cash, cash equivalents and certificates of deposit of  $10.4 million  as of  March 31, 2017 , and no debt.

"IsoRay's sales improved in the third quarter with revenue increasing 7% from the same period last year and 24% from the previous quarter. The revenue increase was driven by the more aggressive sales and marketing strategy we introduced earlier in the fiscal year that positions IsoRay and Cesium-131 as a leader in brachytherapy for prostate cancer treatment. This turnaround also underscores the quality of our recently expanded sales force, which is comprised of highly experienced brachytherapy sales people, most of whom are new to IsoRay. Combined with our renewed commitment to the prostate brachytherapy community, our message is gaining traction as our client roster has expanded with both new and returning accounts," said Thomas LaVoy, Chairman and CEO.

"Our results also benefited from the cost reductions and production and process improvements that we've put in place over the last year. These actions, in concert with the quarterly revenue increase, led to an expansion of the Gross Profit Margin to 23%, a significant increase over prior periods. We've strategically reallocated the funds we've freed up from operating more efficiently throughout our organization into revenue producing areas such as sales and marketing and research and development, and we believe that it is these substantial investments which have led to the improved results in the third quarter."

"We continue to have an ongoing commitment in the development of the GammaTile, a novel system that is a combination of Cesium-131 seeds embedded into collagen tiles, developed and owned by GammaTile LLC, that delivers brain brachytherapy treatment at the time of surgery. GammaTile LLC collaborates with the Barrows Neurological Institute, one of the largest neurological disease treatment and research institutions and consistently ranked as one of the best neurosurgical training centers in U.S. Over 80 patients have been treated in clinical trials with GammaTile to date and results point to an extension of the median time to recurrence and a very low rate of side effects. We submitted an application for 510(k) clearance in March, 2017 related to embedding our Cesium-131 seeds into collagen tiles and look forward to the FDA's decision in the coming months. Other R&D investments include updates to loading and other placement devices for prostate applications," continued Mr. LaVoy.

"We were pleased that the study entitled "Long-term Quality of Life in Prostate Cancer Patients Treated with Cesium-131" was accepted for publication in the highly respected International Journal of Radiation Oncology, Biology, Physics (the "Red Journal").  The study was conducted by a respected team of doctors from the departments of Radiation Oncology and Urology at the University of Pittsburgh Medical Center (UPMC) that we have worked closely with. The aim of the study was to evaluate the long-term quality of life (QOL) as reported by men treated at UPMC with Cesium-131 prostate brachytherapy. The report concluded that patients treated with Cesium-131 are able to recover from prostate cancer treatment quickly and then maintain their baseline quality of life over the long term. These results, combined with results from other recent studies that support triple therapy - external beam radiation, brachytherapy and hormone therapy – have begun to drive increasing growth in multiple prostate patient segments such as targeted and salvage treatments and higher risk patients."

"Looking ahead, we're encouraged by the third quarter results. We believe that IsoRay's renewed commitment and messaging is resonating with the brachytherapy community. We're also continuing to invest in sales and marketing activities and the automation of our production processes which are expected to continue to lower our cost of production in the months ahead. As such, if revenue levels continue to increase, and costs stabilize or move lower, as we experienced this quarter, our financial results are expected to benefit from increasing operating leverage in the fourth quarter and next fiscal year. We remain on track for a combined third and fourth quarter revenue increase of approximately 20% over last year's second half revenue," concluded Mr. LaVoy.  

For the first nine months of fiscal 2017 ended  March 31, 2017 , revenue was  $3.39 million , a 7% decrease compared to revenue of  $3.65 million  for the same period of fiscal 2016. Prostate brachytherapy represented 88% of total revenue for the first nine months of fiscal 2017 and 86% of total revenue in fiscal 2016. Operating expenses were  $4.78 million , a 19% increase compared to  $4.00 million  for the nine months ended  March 31, 2016 . Operating loss was  $4.44 million  for the nine months ended  March 31, 2017 , compared to a  $3.83 million  operating loss for the comparable period of fiscal 2016. The net loss for the nine month period was  $4.31 million , or  $(0.08)  per basic and diluted share, compared to a net loss of  $3.54 million , or  $(0.06) , per basic and diluted share, for the nine month period of fiscal 2016. Basic and diluted per share results are based on weighted average shares outstanding of approximately 55.0 million shares in both periods.

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About IsoRay, Inc.
IsoRay, Inc., through its subsidiary, IsoRay Medical, Inc. is the sole producer of Cesium-131 brachytherapy seeds, which are expanding brachytherapy options throughout the body. Learn more about this innovative  Richland, Washington  company and explore the many benefits and uses of Cesium-131 by visiting  www.isoray.com . Join us on Facebook/IsoRay. Follow us on Twitter @IsoRay.

Safe Harbor Statement
Statements in this news release about IsoRay's future expectations, including: the advantages of our products and their delivery systems, whether interest in and use of our products will increase or continue, whether the new marketing strategy will increase sales, whether the changes to the sales staff will result in increased sales, whether the additional resources being added to IsoRay's online presence will increase patient or clinician engagement and interest, whether use of Cesium-131 in non-prostate applications will increase revenue, whether we obtain and the timing of obtaining our application for 510(k) clearance, our ongoing relationship with GammaTile LLC, whether further automation of production processes will be completed or will result in lower costs, whether revenue will increase and costs decrease in the upcoming quarters, the perception by patients of quality of life outcomes, and all other statements in this release, other than historical facts, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). This statement is included for the express purpose of availing IsoRay, Inc. of the protections of the safe harbor provisions of the PSLRA. It is important to note that actual results and ultimate corporate actions could differ materially from those in such forward-looking statements based on such factors as physician acceptance, training and use of our products, our ability to successfully manufacture, market and sell our products, our ability to manufacture our products in sufficient quantities to meet demand within required delivery time periods while meeting our quality control standards, our ability to enforce our intellectual property rights, whether additional studies are released and support the conclusions of past studies, whether ongoing patient quality of life results with our products are favorable and in line with the conclusions of clinical studies and initial patient results, patient results achieved when our products are used for the treatment of cancers and malignant diseases whether or not used in conjunction with other treatments, successful completion of future research and development activities, whether we, our distributors and our customers will successfully obtain and maintain all required regulatory approvals and licenses to market, sell and use our products in its various forms, continued compliance with ISO standards as audited by BSI, the success of our sales and marketing efforts, changes in reimbursement rates, the procedures and regulatory requirements mandated by the FDA for 510(k) approval and agreements we ultimately negotiate with third parties related to distribution of GammaTile products, changes in laws and regulations applicable to our products, the scheduling of physicians who either delay or do not schedule patients in the six month period that an increase is anticipated, the use of competitors' products in lieu of our products over the six month period we expect an increase, less favorable reimbursement rates during the six month period we expect an increase, and other risks detailed from time to time in IsoRay's reports filed with the SEC. Unless required to do so by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOURCE IsoRay, Inc.