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Cytomedix Inc. (CMXI) Announces Third Quarter 2012 Financial Results



11/15/2012 9:35:10 AM

GAITHERSBURG, MD--(Marketwire - November 14, 2012) - Cytomedix, Inc. (OTCQX: CMXI) (the "Company"), a leading developer of biologically active regenerative therapies, today reported financial results for the three and nine months ended September 30, 2012.

Financial Highlights for the Third Quarter (all comparisons are with the 2011 third quarter)

  • Total revenues increased 15% to $1.76 million from $1.53 million.
  • Product sales increased 11% to $1.70 million from $1.53 million.
  • Net loss to common stockholders was $3.78 million or $0.04 per share. This compares with a net loss to common stockholders of $2.29 million or $0.04 per share in the prior year.
  • Stockholders' equity at quarter end was in excess of $40 million.
  • Cash and equivalents at September 30, 2012 were $5.83 million.

Clinical and Corporate Highlights for the Third Quarter and Recent Weeks

  • The FDA granted approval for the Angel® Concentrated Platelet Rich Plasma (cPRP) System for processing bone marrow aspirate. This approval significantly expands the commercial opportunity for the Angel system, increasing the addressable market to include the 400,000 spinal fusion procedures performed each year in the U.S.
  • The Centers for Medicare & Medicaid Services (CMS) granted coverage of AutoloGel™ in chronic wound care through its Coverage with Evidence Development (CED) program, reversing Medicare's nearly 20 year non-coverage decision.
  • AutoloGel was featured in multiple oral and poster presentations at a number of medical conferences including the Symposium on Advanced Wound Care in Baltimore, MD, the Congress of the World Union of Wound Healing Societies in Yokohama, Japan, the Inaugural Native American Wound Care Conference in Cabazon, CA, and the Diabetic Limb Salvage Conference in Washington, D.C.
  • Positive clinical data on the Angel System in facial rejuvenation were presented at the British Association of Aesthetic Plastic Surgeons annual scientific meeting in London.
  • Safety data from the first 10 patients in the Phase II RECOVER-Stroke study of ALD-401 were presented at the World Stroke Congress in Brazil. The trial has been expanded to multiple centers in the U.S. following clearance by the Data Safety Monitoring Board (DSMB).
  • Trading in Cytomedix shares was upgraded from OTCQB to the OTC market's highest marketplace, OTCQX.

Management Discussion

"The quarter was marked by excellent progress across multiple operational and clinical areas," said Martin Rosendale, Chief Executive Officer of Cytomedix. "We posted double-digit growth in product sales and are confident that our efforts to enhance market penetration will continue to build momentum. The recent positive gains we have made on regulatory and reimbursement fronts underscore the dedication and competency of the Cytomedix team and will enable us to bring our regenerative medicine products to an expanded patient population."

"We were very pleased to report last week that the FDA has granted approval for the Angel system for processing of bone marrow aspirate. We see this as an important milestone that will enable us to access a range of orthopedic procedures. This is a significant market opportunity for Cytomedix and we see Angel as a 'best in class' device with important competitive advantages. We also plan to have the bone marrow aspirate processing incorporated in our CE mark for Angel and we expect this can be accomplished before year end."

"The beginning of the third quarter was marked by the highly significant news that CMS has agreed to cover AutoloGel through the CED program. The coverage approval has important implications for the size of the commercial opportunity. We will soon be in a position to provide Medicare patients with access to an effective advanced wound care option and to demonstrate the clinical and financial benefits of AutoloGel across multiple wound types and different sites of care. Our interactions with CMS on the required protocol for collecting evidence have been very constructive; we have submitted the draft protocols and expect to have a response in the near future. We believe Medicare coverage under CED and our demonstrated regulatory achievements position AutoloGel favorably for substantive strategic conversations concerning distribution opportunities."

"The enthusiasm for the RECOVER-Stroke trial continues to build among healthcare providers and neurology experts. With nine sites actively screening patients, and a queue of interested sites, we have confidence that we will have more than fifteen sites screening and enrolling patients soon, allowing us to achieve our enrollment forecast in 2013. In the third quarter, we also announced the initiation of a clinical study, funded by Duke University's Robertson Clinical and Translational Cell Therapy Program, to treat cognitive disorders in patients that have been treated for malignant glioma. The initiation of this study further demonstrates the potential value of Bright Cells in regenerative medicine."

Third Quarter Financial Results

Total revenue for the third quarter of 2012 was $1.76 million, a 15% increase compared to $1.53 million in the third quarter of 2011. The increase was largely attributable to higher sales across all product lines.

Product sales in the quarter were $1.70 million, up 11% from the third quarter in 2011. Angel sales were $1.58 million, up 10% year over year. AutoloGel sales were $108,000, up 9% compared with the third quarter in 2011.

Gross margin on product sales declined from 53% to 42% year over year, primarily due to higher raw material related costs and a mix shift to lower margin products as more Angel machines were sold to international distributors. Going forward, these machine placements are expected to drive additional sales of disposables and, over time, this is expected to result in higher margin revenue. Increased depreciation expense charged to cost of sales also contributed to the reduction in gross margin.

Third quarter cash margins on product sales, excluding $168,000 in depreciation and patent amortization expense, were 52%. Cash margins on disposable products in the quarter were 56%, modestly behind historical norms. Cash margin is a non-GAAP financial measure, most directly comparable to gross margin, and should not be considered as an alternative thereto. Cytomedix defines cash margin as gross margin exclusive of patent amortization and depreciation expense, and it is a significant performance metric used by management to indicate cash profitability on product sales.

Operating expenses in the third quarter were $4.97 million, compared with $1.85 million in the third quarter of 2011. This increase was mainly due to operating expenses associated with the Aldagen business which was acquired in February of this year, higher bonus expenses as none were recorded in the 2011 period, increased stock-based compensation, professional fees, additional headcount, and increased costs related to reimbursement, regulatory and marketing activities.

Other income, (net) totaled $428,000 compared to other expense, (net) of $1.2 million for the quarters ended September 30, 2012 and 2011, respectively. The change was primarily due to $689,000 in income compared with a $780,000 loss associated with the non-cash change in fair value of derivative liabilities.

Net loss to common stockholders for the third quarter of 2012 was $3.78 million, or $0.04 per share, compared with a $2.29 million loss, or $0.04 in the same period last year.

Year-to-Date Results

Total revenues for the first nine months of 2012 were $8.46 million, up 97% from $4.29 million in the first nine months of 2011. Total product sales for the first nine months were $5.20 million, up 21% from $4.29 million in the comparable period in 2011. For the nine-month period, overall gross margin increased to 67% from 53%. The increase was primarily due to $3.15 million in license fee revenue which had no associated cost of revenue. Gross margin on product sales decreased to 46% from 53%. Operating expenses in the first nine months of the year were $14.91 million compared with $6.04 million in the comparable period last year.

Net loss attributable to common stockholders for the first nine months of 2012 was $15.98 million or $0.20 per share, compared with $4.67 million or $0.09 in 2011.

Cash and Liquidity

Cash and equivalents at September 30 2012 were $5.83 million, compared with $2.25 million as of December 31, 2011. Cash used in operating activities in the third quarter was just under $3 million. Approximately $1.7 million of the operating cash use related to the legacy Aldagen business.

For additional information please see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, filed with the U.S. Securities and Exchange Commission on November 14, 2012.

Conference Call

Cytomedix management will hold a conference call to discuss these results and answer questions beginning at 8:30 a.m. Eastern time on Thursday, November 15, 2012. Shareholders and other interested parties may participate in the call by dialing 877-556-5921 (domestic) or 617-597-5474 (international) and entering passcode 51983274. The call will also be broadcast live on the Internet at www.streetevents.com, www.fulldisclosure.com and www.cytomedix.com. A replay of the conference call will be available beginning two hours after its completion through November 22, 2012 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 22359860. The call will also be archived for 90 days at www.streetevents.com, www.fulldisclosure.com and www.cytomedix.com.

About Cytomedix, Inc.
Cytomedix, Inc. is a fully integrated regenerative medicine company commercializing and developing innovative platelet and adult stem cell separation products that enhance the body's natural healing processes. The Company's advanced autologous technologies offer clinicians a new treatment paradigm for wound and tissue repair. The Company's patient-derived PRP systems are marketed by Cytomedix in the U.S. and distributed internationally. Our commercial products include the AutoloGel™ System, cleared by the FDA for wound care and the Angel® Whole Blood Separation System. The Company is developing novel regenerative therapies using our proprietary ALDH Bright Cell ("ALDHbr") technology to isolate a unique, biologically active population of a patient's own stem cells. A Phase 2 trial evaluating the use of ALDHbr for the treatment of ischemic stroke is underway. For additional information please visit www.cytomedix.com.

Non-GAAP financial measures

The non-GAAP financial measures discussed in the text of this press release and accompanying non-GAAP supplemental information are financial measures used by our management to evaluate our operating performance and to calculate our cash profitability. These non-GAAP measures are not in accordance with, or an alternative for, U.S. generally accepted accounting principles ( GAAP ) and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles and management exercises judgment in determining which items should be excluded in the calculation of non-GAAP measures. While we believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, we believe that non-GAAP measures are valuable in analyzing our cash profitability. Management analyzes current and future results on a GAAP basis as well as a non-GAAP basis and also provides GAAP and non-GAAP measures in our earnings release. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures. We believe that the presentation of non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in our SEC filings.

Safe Harbor Statement
Statements contained in this press release not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule for such statements under the Private Securities Litigation Reform Act of 1995. The information contained in the forward-looking statements is inherently uncertain, and Cytomedix' actual results may differ materially due to a number of factors, many of which are beyond Cytomedix' ability to predict or control, including among many others, risks and uncertainties related to the Company's ability to successfully integrate the Aldagen acquisition, the Company's ability to expand patient populations as contemplated, its ability to provide Medicare patients with access as expected, the Company's expectations of favorable future dialogue with potential strategic partners, and its ability to successfully manage contemplated clinical trials, to manage and address the capital needs, human resource, management, compliance and other challenges of a larger, more complex and integrated business enterprise, viability and effectiveness of the Company's sales approach and overall marketing strategies, commercial success or acceptance by the medical community, competitive responses, the Company's ability to raise additional capital and to continue as a going concern, and Cytomedix's ability to execute on its strategy to market the AutoloGel™ System as contemplated. To the extent that any statements made here are not historical, these statements are essentially forward-looking. The Company uses words and phrases such as "believes", "forecasted," "projects," "is expected," "remain confident," "will" and/or similar expressions to identify forward-looking statements in this press release. Undue reliance should not be placed on forward-looking information. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the reports filed with the Securities and Exchange Commission by Cytomedix, Inc. Cytomedix operates in a highly competitive and rapidly changing business and regulatory environment, thus new or unforeseen risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. Except as is expressly required by the federal securities laws, Cytomedix undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. Additional risks that could affect our future operating results are more fully described in our U.S. Securities and Exchange Commission filings, including our Annual Report for the year ended December 31, 2011, as amended to date and other subsequent filings. These filings are available at www.sec.gov.

                                                                            
                              CYTOMEDIX, INC.                               
                                                                            
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                                                                            
                                (unaudited)                                 
                                                                            
                           Three Months Ended         Nine Months Ended     
                              September 30,             September 30,       
                        ------------------------  ------------------------- 
                            2012         2011         2012          2011    
                        -----------  -----------  ------------  ----------- 
                                                                            
Revenues                                                                    
  Product Sales         $ 1,703,311  $ 1,532,378  $  5,203,675  $ 4,292,285 
  License Fees                   --           --     3,154,722           -- 
  Royalties                  56,000           --       103,021           -- 
                        -----------  -----------  ------------  ----------- 
Total revenues            1,759,311    1,532,378     8,461,418    4,292,285 
                        -----------  -----------  ------------  ----------- 
                                                                            
                                                                            
Cost of revenues                                                            
  Cost of sales             992,277      716,835     2,815,623    2,001,446 
  Cost of royalties           5,658           --        10,774           -- 
                        -----------  -----------  ------------  ----------- 
Total cost of revenues      997,935      716,835     2,826,397    2,001,446 
                        -----------  -----------  ------------  ----------- 
Gross profit                761,376      815,543     5,635,021    2,290,839 
                        -----------  -----------  ------------  ----------- 
                                                                            
                                                                            
Operating expenses                                                          
  Salaries and wages      1,745,520      718,291     5,586,743    2,177,764 
  Consulting expenses       501,058      312,696     1,784,401      947,929 
  Professional fees         336,446      136,455     1,002,947      586,606 
  Research,                                                                 
   development, trials                                                      
   and studies            1,006,049        4,063     2,454,615      106,116 
  General and                                                               
   administrative                                                           
   expenses               1,380,449      676,264     4,082,400    2,225,355 
                        -----------  -----------  ------------  ----------- 
Total operating                                                             
 expenses                 4,969,522    1,847,769    14,911,106    6,043,770 
                        -----------  -----------  ------------  ----------- 
Loss from operations     (4,208,146)  (1,032,226)   (9,276,085)  (3,752,931)
                        -----------  -----------  ------------  ----------- 
                                                                            
Other income (expense)                                                      
  Interest, net            (262,008)    (385,364)     (797,140)    (757,457)
  Change in fair value                                                      
   of derivative                                                            
   liabilities              689,264     (780,238)      442,743     (402,113)
  Change in fair value                                                      
   of contingent                                                            
   consideration                 --           --    (4,334,932)          -- 
  Gain on debt                                                              
   restructuring                 --           --            --      576,677 
  Inducement expense             --           --    (1,513,371)          -- 
  Settlement of                                                             
   contingency                   --           --      (471,250)          -- 
  Other                         576       (4,525)         (529)     (58,110)
                        -----------  -----------  ------------  ----------- 
Total other income                                                          
 (expenses)                 427,832   (1,170,127)   (6,674,479)    (641,003)
                        -----------  -----------  ------------  ----------- 
Loss before provision                                                       
 for income taxes        (3,780,314)  (2,202,353)  (15,950,564)  (4,393,934)
Income tax provision          4,609        4,000        13,827       14,000 
                        -----------  -----------  ------------  ----------- 
Net loss                 (3,784,923)  (2,206,353)  (15,964,391)  (4,407,934)
                                                                            
Preferred dividends:                                                        
  Series A preferred                                                        
   stock                         --        2,289            --        6,730 
  Series B preferred                                                        
   stock                         --        1,557            --        4,579 
  Series D preferred                                                        
   stock                         --       82,755        13,562      248,505 
                        -----------  -----------  ------------  ----------- 
Net loss to common                                                          
 stockholders           $(3,784,923) $(2,292,954) $(15,977,953) $(4,667,748)
                        ===========  ===========  ============  =========== 
                                                                            
Loss per common share                                                       
 --                                                                         
  Basic and diluted     $     (0.04) $     (0.04) $      (0.20) $     (0.09)
                        ===========  ===========  ============  =========== 
                                                                            
Weighted average shares                                                     
 outstanding --                                                             
  Basic and diluted      91,214,635   52,276,521    78,502,867   49,664,005 
                        ===========  ===========  ============  =========== 
                                                                            
                                                                            
                                                                            
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                                (unaudited)                                 
                                                                            
                                                                            
                                               September 30,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                                            
                    ASSETS                                                  
                                                                            
Current assets                                                              
  Cash (including $3.2 million of cash in 2012                              
   dedicated for clinical trials and related                                
   matters)                                    $   5,833,245  $   2,246,050 
  Short-term investments, restricted                  53,176         52,840 
  Accounts and other receivable, net               1,616,105      1,480,463 
  Inventory                                        1,122,433        548,159 
  Prepaid expenses and other current assets          701,167        695,567 
  Deferred costs, current portion                    136,436        136,436 
                                               -------------  ------------- 
Total current assets                               9,462,562      5,159,515 
                                                                            
Property and equipment, net                        2,506,111        978,893 
Deferred costs                                       214,892        317,219 
Intangible assets, net                            34,226,871      2,916,042 
Goodwill                                           1,128,517        706,823 
                                               -------------  ------------- 
Total assets                                   $  47,538,953  $  10,078,492 
                                               =============  ============= 
                                                                            
     LIABILITIES AND STOCKHOLDERS' EQUITY                                   
                                                                            
Current liabilities                                                         
  Accounts payable and accrued expenses        $   3,611,962  $   1,849,133 
  Deferred revenues, current portion                      --        654,721 
  Dividends payable on preferred stock                    --        105,533 
  Derivative liabilities, current portion                 --        528,467 
                                               -------------  ------------- 
Total current liabilities                          3,611,962      3,137,854 
                                                                            
Note payable                                       2,100,000      2,100,000 
Derivative and other liabilities                   1,635,469      1,559,055 
                                               -------------  ------------- 
Total liabilities                                  7,347,431      6,796,909 
                                               -------------  ------------- 
                                                                            
Commitments and contingencies                                               
                                                                            
Stockholders' equity                                                        
  Series A Convertible preferred stock; $.0001                              
   par value, authorized 5,000,000 shares;                                  
    2012 issued and outstanding - 0 shares;                                 
    2011 issued and outstanding - 97,663                                    
     shares;                                                                
    2012 liquidation preference of $0;                                      
    2011 liquidation preference of $97,663                --             10 
  Series B Convertible preferred stock; $.0001                              
   par value, authorized 5,000,000 shares;                                  
    2012 issued and outstanding - 0 shares;                                 
    2011 issued and outstanding - 65,784                                    
     shares;                                                                
    2012 liquidation preference of $0;                                      
    2011 liquidation preference of $65,784                --              7 
  Series D Convertible preferred stock; $.0001                              
   par value, authorized 2,000,000 shares;                                  
    2012 issued and outstanding - 0 shares;                                 
    2011 issued and outstanding - 3,300                                     
     shares;                                                                
    2012 liquidation preference of $0;                                      
    2011 liquidation preference of $3,300,000             --             -- 
  Series E Convertible preferred stock; $.0001                              
   par value, authorized 250,000                                            
    2012 issued and outstanding - 0 shares;                                 
    2011 issued and outstanding - 0 shares;                                 
    2012 liquidation preference of $0;                                      
    2011 liquidation preference of $0                     --             -- 
  Common stock; $.0001 par value, authorized                                
   160,000,000 shares;                                                      
    2012 issued and outstanding - 91,483,386                                
     shares;                                                                
    2011 issued and outstanding - 55,536,292                                
     shares                                            9,148          5,554 
  Common stock issuable                              506,950             -- 
  Additional paid-in capital                     106,821,973     54,458,170 
  Accumulated deficit                            (67,146,549)   (51,182,158)
                                               -------------  ------------- 
Total stockholders' equity                        40,191,522      3,281,583 
                                               -------------  ------------- 
Total liabilities and stockholders' equity     $  47,538,953  $  10,078,492 
                                               =============  ============= 
                                                                            

Contacts:
Cytomedix, Inc.
Martin Rosendale
Chief Executive Officer
Andrew Maslan
Chief Financial Officer
David Jorden
Executive Chairman
(240) 499-2680

Media Inquiries
Michelle Linn
Linnden Communications
linnmich@comcast.net
(508) 362-3087


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