Zeltiq: First Quarter Financials, a Resignation, and Success in Court

There’s been a lot of activity at Zeltiq Aesthetics Inc. as it releases its first quarter financials. The company’s loss has widened from a loss of $800,000 in Q1 of 2011 to $10.3 million this year, even though total net revenue has gone up. Most of the loss is rooted in the company’s sales and marketing budget, which was $9 million higher this year than it was last year for Q1. On a conference call held on April 19th, chief financial officer Joshua Brumm noted that the bulk of the sales and marketing budget for this year fell in Q1, which affected the numbers. He also pointed out that 25 percent of the company’s North American sales staff was new in this quarter.

At the end of the first financial quarter this year also comes the announcement that the company’s president and CEO resigned for “personal reasons.” Appointed to the post in 2009, Gordy Nye helped create the company’s flagship product, CoolSculpting, a non-surgical medical weight-loss device system. Replacing him until an alternative is found will be Mark Foley, who has served as a company director.

Also appointed in 2009, Foley was first hired to serve as interim executive chairman. He has 25 years of experience in medical device operating, investment, board and CEO experience. He currently is also managing director of RWI Ventures, executive chairman for Onpharma, senior advisor to TauTona Group, and a director for Sonitus Medical and Voyage Medical.

On the conference call, Foley expressed confidence that his experience will help “drive the business forward in this interim stage.”

He went on to say, “The non-invasive fat reduction category is still in its early stages of growth, and we are focused on consistent execution in order to take full advantage of this exceptional opportunity.”

Mark Foley takes the helm—though only temporarily—in an interesting time for Zeltiq. Though the company has experienced a loss this quarter, it has also won a court case in South Korea against two individuals for false and exaggerated advertising of unspecified weight loss devices that were being compared to CoolSculpting. These devices had not been approved by any medical regulatory body. Seoul South Central District Court has mandated monetary fines.

“ZELTIQ has invested substantial efforts to develop safe and effective devices that are approved for fat reduction and has secured regulatory approvals for those devices,” said Steve Adkinson, senior vice president of international at Zeltiq. “ZELTIQ will vigilantly pursue persons or companies that are attempting to confuse or mislead consumers or physician-providers by inferring that any cold platform technology can do what the CoolSculpting System uniquely has proven we can safely do: reduce exercise-resistant fat non-surgically. We will not stand idly by while poseurs try to muddy our clear advantages. We firmly believe that the recent criminal judgments in South Korea will deter others from marketing and selling products that do not use proven technology or have the same regulatory approvals as Zeltiq.”

The company was founded in 2005 and is based in Pleasanton, Calif. Its specific focus is cooling technology that targets weight loss in areas of the body that are resistant to weight loss from exercise.