Cytori Therapeutics (NASDAQ: CYTX) reports its 2012 business and
financial results and provides an outlook for 2013. The Company achieved
record total revenues for the year and fourth quarter ended December 31,
2012 of $14.5 million and $7.3 million, respectively, compared to $10.0
million and $2.8 million, respectively, for the same periods in 2011.
Milestone Highlights
Cytori’s 2012 and year-to-date milestones include the following:
-
Initiated enrollment in the ATHENA U.S. refractory heart failure
trial; all six centers are actively screening patients, enrollment is
on track to be complete mid-summer
-
Awarded contract with BARDA, a division of the U.S. Health and Human
Services, worth up to $106 million to develop a novel cell-based
treatment of thermal burns combined with radiation injury
-
Obtained Class I device clearance in Japan, opening the Japanese
market and increasing fourth quarter revenues
-
Opened EU vascular market with CE Mark claims for intravascular
delivery (Intravase®)
-
Expanded CE Mark claims for multiple indications including
cryptoglandular fistulae and tissue ischemia
-
Amended and resumed enrollment in the ADVANCE European heart attack
trial
-
Achieved $9.1 million in product and contract revenue, including a
record $4.3 million in the fourth quarter
-
Grew Celution® and StemSource® System shipments by 46% year-over-year
-
Increased patent portfolio year-over-year by 36% with the issuance of
15 patents worldwide, bringing the total number of global patents to
57 with 75 additional applications under review
-
Recruited Steven Kesten, M.D., as Executive Vice President and Chief
Medical Officer
-
Raised $21.4 million in net proceeds from public offering of shares,
including $2.8 million in net proceeds in January 2013 from the
exercise of the full over-allotment option
“We made substantial progress in 2012 across three key areas of our
business: our cardiac pipeline, our recently awarded government contract
and our commercial operations,” said Chris Calhoun, Chief Executive
Officer of Cytori. “The specific developments include the initiation of
the ATHENA trial, a significant contract with the Biomedical Advanced
Research Authority (BARDA) related to thermal burns, and growing revenue
opportunities through important European and Japanese regulatory
approvals, which was reflected in strong fourth quarter sales and which
we see significantly contributing to revenue growth in 2013 and beyond.
“These three areas will be the priorities we intend to focus on in the
next 12 to 18 months. We believe these objectives provide the greatest
potential to impact shareholder value and make the most efficient use of
our capital. Given the platform nature of our products, there are
several other compelling medical applications and geographies in which
we have made progress. We expect to move these opportunities forward as
additional resources become available with an emphasis on grant and
contract funding, organic customer demand or partnerships.”
Financial Performance and Guidance
Product and contract revenues more than doubled in the fourth quarter of
2012 to $4.3 million compared to $2.1 million for the same period in
2011. For the full year 2012, we saw 14% growth in product and contract
revenues to $9.1 million as compared to $8.0 million for the prior year.
The increase in product revenue in the fourth quarter ($4.0 million in
2012 compared to $2.1 million in 2011) was primarily a result of sales
under the Class I device clearance in Japan achieved in September 2012.
Cytori recognized $0.4 million in contract revenue related to the BARDA
agreement for the year and fourth quarter of 2012 for which there was no
comparable revenue recognized in 2011. Total development revenues,
including contract revenue, were $5.8 million and $3.4 million for the
year and fourth quarter of 2012 compared to $2.0 million and $0.8
million in the same periods of 2011. The balance of development revenue
is the result of the recognition of deferred revenue in connection with
the Astellas 2010 equity agreement and the recognition of clinical and
regulatory milestones related to the Company’s Joint Venture with
Olympus Corporation.
Gross profit was $2.6 million for the fourth quarter ended December 31,
2012, compared to $1.1 million in the fourth quarter in 2011,
representing a 126% increase in gross profit and exceeding sales and
marketing expenses in the quarter by $0.5 million. Gross profit was $4.7
million for the full year 2012 as compared to $4.1 million in 2011.
Research and development expenses were $13.6 million and $4.0 million
for the year and fourth quarter ended December 31, 2012, compared to
$10.9 million and $2.0 million for the same periods in 2011. This
planned increase was principally associated with the initiation of the
ATHENA trial. In contrast, sales, general and administrative expenses
were reduced to $25.2 million and $6.3 million for the year and fourth
quarter ended December 31, 2012, compared to $28.3 million and $6.5
million for the respective periods in 2011. The decrease in SG&A
expenses was the result of planned reductions in expenses based on the
establishment of a more efficient commercial operations structure.
Net loss was $32.3 million, or ($0.55) per share, and $3.8 million, or
($0.06) per share, for the year and fourth quarter ended 2012,
respectively. This compares to $32.5 million, or ($0.61) per share, and
$6.9 million, or ($0.12) per share for the same periods of 2011,
respectively. Net loss for year end 2012 includes a net non-cash charge
of $0.1 million compared to a net non-cash credit of $3.6 million in
2011. Net non-cash charges include the change in the fair value of
warrant and option liabilities.
At the end of 2012, Cytori had $25.7 million of cash and cash
equivalents and $3.9 million of accounts receivable, net. In addition,
in January 2013 the Company received $2.8 million in net proceeds from
the exercise of the over-allotment option as part of the public equity
offering Cytori executed in December 2012.
“We are focusing our variable expenditures on key areas that are
expected to provide substantial near and medium term value,” said Mark
Saad, Chief Financial Officer. “Our greatest single investment will be
the U.S. ATHENA trial, for which we expect the first data readout in the
first half of 2014. We believe the BARDA contract represents a
potentially fully funded pathway to U.S. commercialization with a near
term opportunity to qualify for the next option phases within twelve
months. And lastly, we expect to accelerate revenue growth in 2013 based
on recent regulatory approvals to achieve at least $15 million in
combined product and contract revenue, while maintaining sales, general
and administrative expenses at their current levels. Similar to 2012,
the majority of the total revenue estimate is expected to be achieved in
the second half of the year.”
Cardiovascular Disease Pipeline
The ATHENA trial is Cytori’s primary clinical focus in 2013. For this
trial, all six centers have received institutional review board approval
to begin screening and enrolling patients. We believe low screen failure
rates and positive feedback from investigators have contributed to
relatively rapid enrollment per active site thus far. The trial
currently remains on track for completion of enrollment by mid-summer
with six month results anticipated in the first half of 2014.
In 2012, Cytori amended the ADVANCE trial and enrolled patients across a
small number of European trial centers. The Company is encouraged by the
long term data from the pilot trial APOLLO, which led to the initiation
of ADVANCE. 15 patients have been enrolled in ADVANCE to date. In light
of the required resources to complete enrollment in an accelerated
fashion and competing corporate priorities at this time, Cytori is
prepared only to commit a minimal level of investment in ADVANCE for
2013. The goal for 2013 is to bring the total ADVANCE enrollment to 25
patients with an interim analysis to be performed after the first 72
patients.
Thermal Burns Combined with Radiation Injury
We believe Cytori’s contract with BARDA provides a potentially fully
funded path to market and a likely customer for Cytori technology, the
U.S. government. In the fourth quarter, the first quarter under
contract, Cytori recognized $0.4 million in contract revenue toward the
achievement of contract deliverables including development of the
next-generation Celution® device. Cytori expects to achieve
proof-of-concept milestones as required under the contract in the first
quarter of 2014.
Revenue Growth
The commercial operations in 2012 delivered by increasing revenues
despite the implementation of substantial cost reductions:
-
Total product and contract revenues grew 14% year-over-year, with $4.4
million coming from Japan
-
System shipments grew 46% year-over-year, due mostly to the Class I
device clearance in Japan in September 2012
-
Puregraft® sales grew 46% in 2012 during which time more than 5,000
units were shipped
-
Demonstrated leverage of commercial infrastructure as fourth quarter
gross profit of $2.6 million exceeded sales and marketing expenses of
$2.1 million
In the second half of 2012, we achieved Class I device clearance in
Japan. This contributed to an increase in total product sales in the
fourth quarter of 2012 based on demand that has continued into 2013.
Demand for Cytori’s products as a result of this approval is coming
primarily from hospitals seeking to perform self or government funded
investigator-initiated research or trials with Celution® cell therapy.
At present, there are 40 investigator-initiated clinical studies in
development, in process or now complete utilizing Cytori’s cell therapy
technology. Future customers will include groups beginning new
investigator-initiated trials and current customers expanding existing
studies involving more centers and patients and a related increase in
systems and consumables. Reflective of this model is a stress urinary
incontinence pilot study that was approved to begin in May 2011 at
Nagoya University. The University was recently awarded a ¥500 million
(approximately $5 million) grant from the Ministry of Health, Labour and
Welfare (MHLW) to fund a multi-center trial that we believe could lead
to approval and reimbursement for Cytori’s cell therapy for that
indication.
In 2012, Cytori expanded its CE Mark to include treatment of ischemic
tissue and recently (February 2013) received certification of its
Intravase® product specifically for the safe infusion of ADRCs into the
intravascular system. These expanded certifications enable commercial
sales of Celution® for ischemic tissue and vascular delivery. The
ongoing commercial launch will target ADVANCE centers as well as other
select hospitals in Europe and other regions that recognize the CE Mark.
Further claims expansion and reimbursement is expected upon completion
of ATHENA, a subsequent U.S. pivotal study and further clinical
experience, including registries, in key countries.
Upcoming Milestones
Cytori’s core milestones for the next 12 months include the following:
-
Complete enrollment in the ATHENA trial in mid-summer; six month data
in the first half of 2014
-
Achieve proof-of-concept under the first option of the BARDA contract,
which will qualify Cytori for up to $56 million in additional
development funding
-
Publish the 18 month outcomes from the PRECISE European refractory
heart failure trial
-
Continue to strengthen the Company’s patent position
-
Increase product and contract revenue by at least 65% (at least $15
million) in 2013
Management Conference Call Webcast and
Shareholder Letter Information
Cytori will host a management conference call at 5:00 p.m. Eastern Time
today to further discuss the company’s progress. The webcast
will be available live and by replay two hours after the call and may be
accessed under “Webcasts” in the Investor
Relations section of Cytori’s website. If you are unable to access
the webcast, you may dial in to the call at +1-877-402-3914, Conference
ID: 11509895.
About Cytori
Cytori Therapeutics is developing cell therapies based on autologous
adipose-derived regenerative cells (ADRCs) to treat cardiovascular
disease and other medical conditions. Our scientific data suggest ADRCs
improve blood flow, moderate the inflammatory response and keep tissue
at risk of dying alive. As a result, we believe these cells can be
applied across multiple “ischemic” conditions. These therapies are made
available to the physician and patient at the point-of-care by Cytori’s
proprietary technologies and products, including the Celution® System
product family. www.cytori.com
Cautionary Statement Regarding Forward-Looking
Statements
This press release includes forward-looking statements regarding events,
trends and business prospects, which may affect our future operating
results and financial position, such as our expectation of completion of
enrollment of the ATHENA clinical trial by mid-summer with six month
results in the first half of 2014, our ability to meet the BARDA
proof-of-concept milestones by the first quarter of 2014, the potential
for the BARDA contract to represent a fully funded pathway to U.S.
commercialization, our expectation of continuing demand from
investigator initiated trial customers, the ability of the Nagoya
University trial to lead to approval and reimbursement of our cell
therapy in Japan, our ability to pursue additional grant funding and
partnership opportunities, our establishment of a patient registry, our
publication of 18 month trial outcomes from the PRECISE trial, our
ability to maintain our sales, general and administrative expenses at
current levels, and our revenue guidance of $15 million in product and
contract revenue for the year. Such statements are subject to risks and
uncertainties that could cause our actual results and financial position
to differ materially. Some of these risks include the level of future
interest in our products by Japan research institutions, performance of
our Japan distribution network, clinical, pre-clinical and regulatory
uncertainties, such as those associated with the ATHENA clinical trial
and the BARDA proof-of-concept milestones, including risks in the
collection and results of clinical data, final clinical outcomes,
dependence on third party performance, performance and acceptance of our
products in the marketplace, and other risks and uncertainties described
under the “Risk Factors” in Cytori’s Securities and Exchange Commission
Filings. We assume no responsibility to update or revise any
forward-looking statements to reflect events, trends or circumstances
after the date they are made.
|
CYTORI THERAPEUTICS, INC.
|
CONSOLIDATED CONDENSED BALANCE SHEETS
|
(UNAUDITED)
|
|
|
|
As of December 31,
|
|
|
2012
|
|
2011
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
25,717,000
|
|
|
$
|
36,922,000
|
|
Accounts receivable, net of reserves of $278,000 and of $474,000 in
2012 and 2011, respectively
|
|
|
3,926,000
|
|
|
|
2,260,000
|
|
Inventories, net
|
|
|
3,175,000
|
|
|
|
3,318,000
|
|
Other current assets
|
|
|
1,161,000
|
|
|
|
837,000
|
|
|
|
|
|
|
Total current assets
|
|
|
33,979,000
|
|
|
|
43,337,000
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
2,174,000
|
|
|
|
1,711,000
|
|
Restricted cash and cash equivalents
|
|
|
350,000
|
|
|
|
350,000
|
|
Investment in joint venture
|
|
|
85,000
|
|
|
|
250,000
|
|
Other assets
|
|
|
2,740,000
|
|
|
|
1,772,000
|
|
Intangibles, net
|
|
|
—
|
|
|
|
192,000
|
|
Goodwill
|
|
|
3,922,000
|
|
|
|
3,922,000
|
|
|
|
|
|
|
Total assets
|
|
$
|
43,250,000
|
|
|
$
|
51,534,000
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
7,411,000
|
|
|
$
|
5,334,000
|
|
Current portion of long-term obligations
|
|
|
9,784,000
|
|
|
|
2,487,000
|
|
Warrant liability, current
|
|
|
418,000
|
|
|
|
—
|
|
|
|
|
|
|
Total current liabilities
|
|
|
17,613,000
|
|
|
|
7,821,000
|
|
|
|
|
|
|
Deferred revenues, related party
|
|
|
638,000
|
|
|
|
3,520,000
|
|
Deferred revenues
|
|
|
2,635,000
|
|
|
|
5,244,000
|
|
Warrant liability, long-term
|
|
|
—
|
|
|
|
627,000
|
|
Option liability
|
|
|
2,250,000
|
|
|
|
1,910,000
|
|
Long-term deferred rent
|
|
|
756,000
|
|
|
|
504,000
|
|
Long-term obligations, net of discount, less current portion
|
|
|
12,903,000
|
|
|
|
21,962,000
|
|
|
|
|
|
|
Total liabilities
|
|
|
36,795,000
|
|
|
|
41,588,000
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
Preferred stock, $0.001 par value; 5,000,000 shares authorized; -0-
shares issued and outstanding in 2012 and 2011
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.001 par value; 95,000,000 shares authorized;
65,914,050 and 56,594,683 shares issued and outstanding in 2012 and
2011, respectively
|
|
|
66,000
|
|
|
|
57,000
|
|
Additional paid-in capital
|
|
|
281,117,000
|
|
|
|
252,338,000
|
|
Accumulated deficit
|
|
|
(274,728,000
|
)
|
|
|
(242,449,000
|
)
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
6,455,000
|
|
|
|
9,946,000
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
43,250,000
|
|
|
$
|
51,534,000
|
|
|
|
CYTORI THERAPEUTICS, INC.
|
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
|
(UNAUDITED)
|
|
|
|
For the Three Months
|
|
For the Twelve Months
|
|
|
Ended December 31,
|
|
Ended December 31,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
3,967,000
|
|
|
$
|
2,076,000
|
|
|
$
|
8,709,000
|
|
|
$
|
7,983,000
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenues
|
|
|
1,412,000
|
|
|
|
944,000
|
|
|
|
4,000,000
|
|
|
|
3,837,000
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2,555,000
|
|
|
|
1,132,000
|
|
|
|
4,709,000
|
|
|
|
4,146,000
|
|
|
|
|
|
|
|
|
|
|
Development revenues:
|
|
|
|
|
|
|
|
|
Development, related party
|
|
|
469,000
|
|
|
|
761,000
|
|
|
|
2,882,000
|
|
|
|
1,992,000
|
|
Development
|
|
|
2,529,000
|
|
|
|
—
|
|
|
|
2,529,000
|
|
|
|
—
|
|
Government contract and other
|
|
|
360,000
|
|
|
|
1,000
|
|
|
|
381,000
|
|
|
|
21,000
|
|
|
|
|
3,358,000
|
|
|
|
762,000
|
|
|
|
5,792,000
|
|
|
|
2,013,000
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
4,013,000
|
|
|
|
1,956,000
|
|
|
|
13,628,000
|
|
|
|
10,904,000
|
|
Sales and marketing
|
|
|
2,081,000
|
|
|
|
3,000,000
|
|
|
|
9,488,000
|
|
|
|
13,560,000
|
|
General and administrative
|
|
|
4,183,000
|
|
|
|
3,498,000
|
|
|
|
15,672,000
|
|
|
|
14,727,000
|
|
Change in fair value of warrant liability
|
|
|
(1,453,000
|
)
|
|
|
(646,000
|
)
|
|
|
(209,000
|
)
|
|
|
(4,360,000
|
)
|
Change in fair value of option liability
|
|
|
(150,000
|
)
|
|
|
60,000
|
|
|
|
340,000
|
|
|
|
740,000
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
8,674,000
|
|
|
|
7,868,000
|
|
|
|
38,919,000
|
|
|
|
35,571,000
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(2,761,000
|
)
|
|
|
(5,974,000
|
)
|
|
|
(28,418,000
|
)
|
|
|
(29,412,000
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,000
|
|
|
|
3,000
|
|
|
|
4,000
|
|
|
|
9,000
|
|
Interest expense
|
|
|
(804,000
|
)
|
|
|
(861,000
|
)
|
|
|
(3,386,000
|
)
|
|
|
(2,784,000
|
)
|
Other income (expense), net
|
|
|
(223,000
|
)
|
|
|
(18,000
|
)
|
|
|
(314,000
|
)
|
|
|
(55,000
|
)
|
Equity loss from investment in joint venture
|
|
|
(36,000
|
)
|
|
|
(56,000
|
)
|
|
|
(165,000
|
)
|
|
|
(209,000
|
)
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(1,062,000
|
)
|
|
|
(932,000
|
)
|
|
|
(3,861,000
|
)
|
|
|
(3,039,000
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,823,000
|
)
|
|
$
|
(6,906,000
|
)
|
|
$
|
(32,279,000
|
)
|
|
$
|
(32,451,000
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.06
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.55
|
)
|
|
$
|
(0.61
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares
|
|
|
59,581,607
|
|
|
|
55,664,792
|
|
|
|
58,679,687
|
|
|
|
53,504,030
|
|
|
|
CYTORI THERAPEUTICS, INC.
|
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
For the Years Ended December 31,
|
|
|
2012
|
|
2011
|
Cash flows from operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(32,279,000
|
)
|
|
$
|
(32,451,000
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
933,000
|
|
|
|
855,000
|
|
Amortization of deferred financing costs and debt discount
|
|
|
930,000
|
|
|
|
711,000
|
|
Increase in allowance for doubtful accounts
|
|
|
144,000
|
|
|
|
483,000
|
|
Change in fair value of warrants
|
|
|
(209,000
|
)
|
|
|
(4,360,000
|
)
|
Change in fair value of option liability
|
|
|
340,000
|
|
|
|
740,000
|
|
Stock-based compensation
|
|
|
3,904,000
|
|
|
|
3,316,000
|
|
Equity loss from investment in joint venture
|
|
|
165,000
|
|
|
|
209,000
|
|
Increases (decreases) in cash caused by changes in operating assets
and liabilities:
|
|
|
|
|
Accounts receivable
|
|
|
(1,810,000
|
)
|
|
|
(670,000
|
)
|
Inventories
|
|
|
143,000
|
|
|
|
60,000
|
|
Other current assets
|
|
|
(324,000
|
)
|
|
|
(3,000
|
)
|
Other assets
|
|
|
(74,000
|
)
|
|
|
(1,206,000
|
)
|
Accounts payable and accrued expenses
|
|
|
1,183,000
|
|
|
|
(1,436,000
|
)
|
Deferred revenues, related party
|
|
|
(2,882,000
|
)
|
|
|
(1,992,000
|
)
|
Deferred revenues
|
|
|
(2,609,000
|
)
|
|
|
315,000
|
|
Long-term deferred rent
|
|
|
252,000
|
|
|
|
106,000
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(32,193,000
|
)
|
|
|
(35,323,000
|
)
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property and equipment
|
|
|
(1,204,000
|
)
|
|
|
(560,000
|
)
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(1,204,000
|
)
|
|
|
(560,000
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Principal payments on long-term obligations
|
|
|
(2,692,000
|
)
|
|
|
(4,529,000
|
)
|
Proceeds from long-term obligations
|
|
|
—
|
|
|
|
9,444,000
|
|
Debt issuance costs and loan fees
|
|
|
—
|
|
|
|
(719,000
|
)
|
Proceeds from exercise of employee stock options and warrants and
stock purchase plan
|
|
|
1,413,000
|
|
|
|
2,849,000
|
|
Proceeds from sale of common stock
|
|
|
24,953,000
|
|
|
|
13,286,000
|
|
Costs from sale of common stock
|
|
|
(1,482,000
|
)
|
|
|
(194,000
|
)
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
22,192,000
|
|
|
|
20,137,000
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(11,205,000
|
)
|
|
|
(15,746,000
|
)
|
|
|
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
36,922,000
|
|
|
|
52,668,000
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
25,717,000
|
|
|
$
|
36,922,000
|
|
|