Echo Therapeutics Announces First Quarter 2010 Financial Results

Company begins transformative 2010 poised to grow revenue and achieve national listing

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May 17, 2010, 05:31 ET

FRANKLIN, Mass., May 17 /PRNewswire-FirstCall/ -- Echo Therapeutics, Inc. (OTC Bulletin Board: ECTE), a company developing its needle-free Symphony™ tCGM System as a non-invasive, wireless, transdermal continuous glucose monitoring (tCGM) system and its Prelude™ SkinPrep System for transdermal drug delivery, today announced financial results for the period ended March 31, 2010.

Recent Corporate Highlights:

In April, Echo Therapeutics and Ferndale Pharma Group initiated a clinical trial for Echo's Prelude SkinPrep System for the topical delivery of Lidocaine cream. Upon completion of this study, it is anticipated that Ferndale will submit a 510(k) premarket notification to the United States Food and Drug Administration (FDA) with subsequent commercial launch of the product after 510(k) clearance.
Echo Therapeutics' needle-free Symphony tCGM System was featured in a March 31, 2010 online article in Scientific American Magazine entitled "This Really Won't Hurt a Bit: Wireless Sensor Promises Diabetics Noninvasive Blood Sugar Readings," which discusses the importance of continuous glucose monitoring.
In February 2010, Echo Therapeutics, Inc. announced an additional advance in the product design of Symphony with the development of its next generation electronic component package. This important advance includes an initial 33% reduction in component size and improved architectural design as compared to the prototype electronic package of the Company's earlier Symphony tCGM device.
In January 2010, Echo Therapeutics completed the product development work for its Prelude SkinPrep System and now has the commercially ready product to be used in the Ferndale clinical trial. In this announcement, management indicated that no further changes will be made to the Prelude SkinPrep System and that the current device will be the one used for sale, subject to FDA market clearance of the product.

"We continue to exploit the tangible progress we made during 2009 and achieved some very important milestones, including our announcement that the first patients were enrolled in a clinical study of our Prelude SkinPrep System with our partner Ferndale Pharma Group," commented Patrick T. Mooney, M.D., Chairman and Chief Executive Officer of Echo Therapeutics. "This clinical study is designed to evaluate the ability of the Prelude SkinPrep System to ablate the skin prior to application of OTC lidocaine cream for local dermal anesthesia. Upon completion of this study, we anticipate that Ferndale will submit a 510(k) premarket notification to the United States Food and Drug Administration (FDA) with subsequent commercial launch of the product after 510(k) clearance."

First quarter 2010 financial results

For the first quarter of 2010, Echo reported approximately $14,000 in licensing revenue compared to no revenue in the first quarter of 2009. The Company increased operating expenses by 178% to $2.4 million compared to $0.9 million during the first quarter of 2009. This increase included a 286% increase in research and development and a 123% increase in selling, general and administrative expenses. The net loss for the first quarter was $1.9 million, or ($0.07) per share, compared to a net loss of $1.3 million, or ($0.07) per share last year. The Company completed the quarter with cash of $1.9 million, after the Company raised an additional $2.5 million in cash from the issuance of Common Stock and warrants during the quarter.

2010 Outlook

Echo Therapeutics management reiterated its expectations for the 2010 outlook:

"We are focused on completing several key milestones during 2010 that will enable the company to begin generating near-term revenue," Dr. Mooney concluded. "This includes the successful advancement of a clinical trial study with our Symphony system, which incorporates our Prelude SkinPrep System, substantially the same System that is being used in the Ferndale clinical trial for enhanced delivery of lidocaine. We anticipate securing additional strategic partner licensing arrangements while we begin manufacturing scale-up for Prelude's product validation and planned product launch in late 2010."

About Echo Therapeutics

Echo is developing the Symphony tCGM System as a non-invasive, wireless, transdermal continuous glucose monitoring system for use in hospital critical care units and for patients with diabetes. Echo is also developing its needle-free Prelude SkinPrep System as a platform technology for enhanced skin permeation for transdermal drug delivery of a wide range of novel topical reformulations of widely-used, FDA-approved products.

Cautionary Statement Regarding Forward Looking Statements

The statements in this press release that are not historical facts may constitute forward-looking statements that are based on current expectations and are subject to risks and uncertainties that could cause actual future results to differ materially from those expressed or implied by such statements. Those risks and uncertainties include, but are not limited to, risks related to regulatory approvals and the success of Echo's and its licensees' ongoing studies, including the efficacy of Echo's Symphony tCGM and Prelude SkinPrep Systems, the failure of future development and preliminary marketing efforts related to Echo's Symphony tCGM and Prelude SkinPrep Systems, Echo's ability to secure additional commercial partnering arrangements, risks and uncertainties relating to Echo's and its licensees' ability to develop, market and sell diagnostic and transdermal drug delivery products based on its skin permeation platform technologies, including the Symphony tCGM and Prelude SkinPrep Systems, the availability of substantial additional equity or debt capital to support its research, development and product commercialization activities, and the success of its research, development, regulatory approval, marketing and distribution plans and strategies, including those plans and strategies related to its Symphony tCGM and Prelude SkinPrep Systems. These and other risks and uncertainties are identified and described in more detail in Echo's filings with the Securities and Exchange Commission, including, without limitation, its annual report on Form 10-K for the year ended December 31, 2009, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. Echo undertakes no obligation to publicly update or revise any forward-looking statements.

For More Information:
Patrick T. Mooney, M.D.	Jeffrey Stanlis
Chairman and Chief Executive Officer	Partner, Hayden IR
(508)-530-0329	(602) 476-1821


Tables to Follow

Echo Therapeutics, Inc. Consolidated Balance Sheets
		As of,
		March 31,	December 31,
		2010	2009
ASSETS		Unaudited
Current Assets:
Cash and cash equivalents		$ 1,897,238	$ 1,166,858
Accounts receivable		-	130,036
Prepaid expenses and other current assets		283,413	226,641
Total current assets		2,180,651	1,523,535

Property and Equipment, at cost:
Computer equipment		262,958	262,278
Office and laboratory equipment (including assets under capitalized leases)		618,723	618,723
Furniture and fixtures		14,288	14,288
Manufacturing equipment		129,320	129,320
Leasehold improvements		177,768	177,768
		1,203,057	1,202,377
Less-Accumulated depreciation and amortization		(1,151,398)	(1,143,167)
Net property and equipment (including assets under capitalized leases)	51,659		59,210

Other Assets:
Restricted cash		9,749	9,749
Intangible assets, net of accumulated amortization		9,679,239	9,708,822
Deposits and other assets		2,000	2,000
Total other assets		9,690,988	9,720,571
Total assets		$ 11,923,298	$ 11,303,316


	As of,
	March 31,	December 31,
	2010	2009
	Unaudited

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$ 925,057	$ 948,712
Deferred revenue	551,982	591,051
Current portion of capital lease obligation	1,921	1,874
Derivative warrant liability	1,620,351	2,116,696
Accrued expenses and other liabilities	166,414	481,679
Total current liabilities	3,265,725	4,140,012

Capital lease obligation, net of current portion	7,749	8,247
Deferred revenue, net of current portion	147,550	122,451
Total liabilities	3,421,024	4,270,710

Commitments

Stockholders' Equity:
Perpetual, Redeemable Preferred Stock:
Series B, authorized 40,000 shares, issued and outstanding 144.0140 and 141.2281 shares at March 31, 2010 and December 31, 2009, respectively (preference in liquidation of $1,440,140 at March 31, 2010)	2	2
Convertible Preferred Series:
Series C, authorized 10,000 shares, issued and outstanding 4,918.1 shares at March 31, 2010 and December 31, 2009	49	49
Common stock, $0.01 par value, authorized 100,000,000 shares, issued and outstanding 29,053,245 and 27,045,792 shares at March 31, 2010 and December 31, 2009, respectively	290,534	270,459
Additional paid-in capital	77,486,855	74,155,716
Accumulated deficit	(69,275,166)	(67,393,620)
Total stockholders' equity	8,502,274	7,032,606
Total liabilities and stockholders' equity	$ 11,923,298	$ 11,303,316


Echo Therapeutics, Inc. Consolidated Statements of Operations Unaudited

	Three Months Ended
	March 31,
	2010	2009
Licensing revenue	$ 13,972	$ -



Operating Expenses:
Research and development	1,113,485	288,216
Selling, general and administrative	1,277,623	573,364
Total operating expenses	2,391,108	861,580

Loss from operations	(2,377,136)	(861,580)

Other Income (Expense):
Interest income	691	389
Interest expense	(1,089)	(178,707)
Gain on extinguishment of financial advisor fee payable	200,000	-
Derivatives gain (loss)	295,988	(251,432)
Other income (expense), net	495,590	(429,750)

Net loss	(1,881,546)	(1,291,330)

Accretion of dividends on Convertible Preferred Stock	--	(57,674)
In-kind dividends on Perpetual Redeemable Preferred Stock	(27,859)	--
Net loss applicable to common shareholders	$ (1,909,405)	$ (1,349,004)
Net loss per common share, basic and diluted	$ (0.07)	$ (0.07)
Basic and diluted weighted average common shares outstanding	28,242,669	19,380,146