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Cytomedix Inc. (CMXI) Reports Second Quarter 2012 Financial Results and Provides Corporate Update


8/15/2012 8:32:39 AM

GAITHERSBURG, MD--(Marketwire - August 14, 2012) - Cytomedix, Inc. (OTCBB: CMXI) (the "Company"), a regenerative therapies company commercializing and developing innovative platelet and adult stem cell technologies, today reported financial results for the three and six months ended June 30, 2012.

Separately, the Company announced that it accepted the early termination of the previously announced exclusivity period granted to a top 20 global pharmaceutical company and ceased negotiations for a distribution agreement for the Company's AutoloGel™ System in wound care, which would have expired August 30, 2012. The $4.50 million received by Cytomedix to date for this exclusivity was non-refundable. The Company is now free to re-engage with other interested parties experienced in wound care to pursue potential partnerships and commercial agreements for the product.

Financial Highlights for the Second Quarter (all comparisons are with the 2011 second quarter)

  • Total revenues increased 164% to $3.69 million from $1.39 million
  • Product sales increased 30% to $1.81 million from $1.39 million
  • Licensing revenue of $1.82 million was recorded as partial and final recognition of the $4.50 million non-refundable exclusivity payments received from a potential AutoloGel System distribution partner
  • Net loss to common stockholders of $7.46 million or $0.09 per share included $1.84 million in Aldagen operating expenses and approximately $5.04 million in various non-cash charges to other expense, including a $4.34 million charge for a change in the fair value of the contingent Aldagen consideration; this compares with a net loss to common stockholders of $0.88 million or $0.02 per share in the 2011 period, which included a $0.58 million gain on debt restructuring
  • Shareholder's equity at quarter end was in excess of $42 million

Clinical and Corporate Highlights of the Second Quarter and Recent Weeks

  • Announced Centers for Medicare & Medicaid Services ("CMS") coverage through its Coverage with Evidence Development ("CED") program for autologous platelet rich plasma ("PRP") in chronic wound care, reversing Medicare's nearly 20 year non-coverage decision
  • Initiated a Phase I clinical trial of ALD-451 in collaboration with Duke University Medical Center to demonstrate the safety of ALD-451 in malignant glioma patients who suffer from treatment-related neuro-cognitive deficits; this study is being funded by the Robertson Clinical & Translational Cell Therapy Program
  • Expanded the Phase II RECOVER-Stroke study of ALD-401 in post-acute ischemic stroke to multiple centers in the U.S. following clearance of the sequential safety assessment of the first 10 patients by the Data Safety Monitoring Board ("DSMB")
  • Published positive AutoloGel wound healing data in the peer-reviewed journal Ostomy Wound Management demonstrating AutoloGel's ability to heal complex, severe diabetic and ischemic wounds in patients with poor healing prognosis and probable limb amputation
  • Presented multiple poster presentations highlighting the clinical merits of the Company's AutoloGel System in wound management at the 2012 Wound, Ostomy and Continence Nurses Conference and the Symposium on Advanced Care Spring 2012

Management Discussion

Martin P. Rosendale, Chief Executive Officer of Cytomedix, said, "During the second quarter we continued to make significant strides in advancing our position as a fully integrated regenerative medicine company as we achieved a number of key milestones that position us for future growth. In addition, our commercial products posted record quarterly sales and we made important advances with our products and pipeline.

"The agreement to end the exclusivity period and cease negotiations for an AutoloGel distribution agreement is not a reflection of the clinical or commercial value of AutoloGel in wound care, but rather is a result of a unique set of circumstances with the potential partner that precluded arriving at a favorable outcome. I want to emphasize that the decision is in no way tied to the final CMS determination for CED. Moreover, we received $4.50 million in non-dilutive financing for providing the exclusivity period and are now in a position to reengage in discussions with other interested potential partners. We are encouraged by the interest in PRP in wound care since the CMS final decision was published. With the early release of the exclusivity period, we will accelerate discussions with potential experienced wound care partners.

"We were very pleased that CMS reversed its long-standing non-coverage decision for autologous PRP and has now agreed to coverage through its CED program. This provides for an appropriate research study with practical study designs we are confident will demonstrate that patients treated with AutoloGel consistently experience clinically significant health outcomes. Importantly, payment for the product under CED is expected to be sufficient to cover the anticipated cost of collecting the evidence. We have already begun our interaction with CMS following the release of the final decision memo and look forward to further defining the specifics of the protocols for the research studies and clinical questions to be answered through the CED program."

Commenting on clinical progress with the Company's ALDH bright cell technology, Mr. Rosendale said, "Our Phase II RECOVER-Stroke trial has expanded to new sites and we look forward to our next milestone, which will be the DSMB safety assessment following the treatment of the initial 30 patients. We reasonably expect this to occur during the fourth quarter and continue to maintain that the ALDH bright cell population offers a novel and differentiated cell population with significant clinical upside. In addition we were pleased to report the initiation of a Phase I collaboration with the Duke University Medical Center with funding from the Robertson Clinical & Translational Cell Therapy Program. We expect to announce and initiate another sponsor-funded Phase II clinical study by year end in a peripheral arterial disease indication. These studies are intended to leverage our positive clinical experiences in critical limb ischemia and stroke.

"The first half of the year was marked by significant progress in areas that are important to our strategic plan. We expect the second half of the year to be equally productive as we work toward achieving a number of value-creating clinical and corporate milestones," concluded Mr. Rosendale.

Second Quarter Financial Results

Total revenues for the three months ended June 30, 2012 increased 164% to $3.69 million compared with total revenues of $1.39 million for the comparable period in 2011. The increase was largely attributable to the recognition of $1.82 million in license revenue from the $4.50 million in total non-refundable exclusivity fees received in connection with the potential agreement with a global pharmaceutical company, as well as from higher sales of the Angel® and AutoloGel Systems.

Total product sales increased 30% to $1.81 million. Sales from the Angel product line increased 27% to $1.63 million from $1.29 million in the 2011 second quarter. Despite limited sales promotion, the Company again posted record quarterly AutoloGel System sales of $170,000, an increase of 55% compared with the 2011 second quarter.

Gross profit for the second quarter of 2012 increased 258% to $2.71 million from $755,000 for the same period in 2011, primarily due to the aforementioned license revenue that had no related cost of revenue. Gross profit on product sales increased 11% to $839,000.

Gross margin on product sales for the three months ended June 30, 2012 was 46% compared with 54% for the comparable 2011 period, due solely to increased sales of lower-margin Angel machines to international distributors. These machine sales are expected to drive future growth in disposable sales to non-US customers.

Second quarter 2012 cash margin on product sales, excluding $137,000 in patent amortization and depreciation expense, was 54%. Cash margin on disposable products in the second quarter of 2012 was 62%, in line with 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 for the second quarter 2012 increased to $5.05 million from $2.00 million in the second quarter 2011. This increase was primarily attributable to Aldagen operating expenses of $1.8 million mentioned above, bonus expense, increased headcount and higher costs related to reimbursement, regulatory and marketing initiatives.

Other expense for the second quarter of 2012 of $5.10 million compared with other income of $452,000 for the second quarter of 2011. The change was primarily due to a $4.34 million non-cash expense related to the increase in the fair value of the contingent consideration mainly due to the change in the Company's stock price, approximately $200,000 of non-cash interest costs, and a $471,000 non-cash charge due to the settlement of a contingency. The latter expense was a result of a contingency reached during the quarter that will result in 325,000 common shares issued over a period of 15 months to certain pre-bankruptcy preferred shareholders as outlined in the Company's plan of reorganization in 2002. In addition, there was a gain of $577,000 recognized in 2011 related to the Company's renegotiation of the note payable due to Sorin.

The net loss to common stockholders for second quarter of 2012 was $7.46 million or $0.09 per share, compared with a net loss to common stockholders of $878,000 or $0.02 per share for the same period in 2011.

Year-to-Date Results

Total revenues for the first six months of 2012 were $6.70 million, up 143% from total revenues of $2.76 million for the first six months of 2011. Total product sales of $3.50 million were up 27% from $2.76 million. Gross margin on product sales for the first half of 2012 declined to 48% from 53% in the same period in 2011. Operating expenses for the first six months of 2012 increased to $9.94 million from $4.20 million for the first six months of 2011.

The net loss to common stockholders for the first half of 2012 was $12.19 million or $0.17 per share, compared with a net loss to common stockholders for the first half of 2011 of $2.37 million or $0.05 per share.

Cash and Liquidity

Cash and cash equivalents as of June 30, 2012 were $8.55 million, compared with $2.25 million as of December 31, 2011. The Company used $3.77 million in cash to fund operating activities during the second quarter of 2012 including a $0.50 million increase in inventory-related items.

Andrew Maslan, Cytomedix's Chief Financial Officer, commented, "During the second quarter we realized $4.43 million from financing activities. Our cash usage was higher than experienced in this year's first quarter as a consequence of a full quarter of Aldagen-related expenses including the operation's clinical development costs, expanded operational expenses, and the build-up of Angel inventory as we prepare for anticipated growth in sales.

"Importantly, we are pleased to report a significant increase in shareholders' equity to over $42 million from just over $3 million at year-end 2011. Our equity balance is now substantially in excess of any required listing minimums and is an important consideration in any potential decision to pursue an up-listing of our shares to a national securities exchange," added Mr. Maslan.

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

Conference Call

Cytomedix management will hold a conference call to discuss these results and answer questions beginning at 9:00 a.m. Eastern time on Wednesday, August 15, 2012. Shareholders and other interested parties may participate in the call by dialing 800-798-2801 (domestic) or 617-614-6205 (international) and entering passcode 39362501. 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 August 22, 2012 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 15244694. 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 innovative platelet separation systems and developing adult stem cell 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. The Company's 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 its proprietary ALDH Bright Cell ("ALDH") technology to isolate a unique, biologically active population of a patient's own stem cells. A Phase 2 trial evaluating the use of ALDH 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, 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 list its securities on a national stock exchange, 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 and other subsequent filings. These filings are available at www.sec.gov.

                              CYTOMEDIX, INC.                               
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                                                                            
                                                   June 30,    December 31, 
                                                     2012          2011     
                                                ------------- ------------- 
                     ASSETS                                                 
                                                                            
Current assets                                                              
  Cash (including $4.7 million of cash in 2012                              
   dedicated for clinical trials and related                                
   matters)                                     $   8,544,617 $   2,246,050 
  Short-term investments, restricted                   53,176        52,840 
  Accounts and other receivable, net                1,944,003     1,480,463 
  Inventory                                           899,195       548,159 
  Prepaid expenses and other current assets           791,716       695,567 
  Deferred costs, current portion                     136,436       136,436 
                                                ------------- ------------- 
Total current assets                               12,369,143     5,159,515 
                                                                            
Property and equipment, net                         2,135,085       978,893 
Deferred costs                                        249,001       317,219 
Intangible assets, net                             34,318,454     2,916,042 
Goodwill                                            1,323,649       706,823 
                                                ------------- ------------- 
Total assets                                    $  50,395,332 $  10,078,492 
                                                ============= ============= 
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                                                            
Current liabilities                                                         
  Accounts payable and accrued expenses         $   3,193,289 $   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                           3,193,289     3,137,854 
                                                                            
Note payable                                        2,100,000     2,100,000 
Derivative and other liabilities                    2,230,520     1,559,055 
                                                ------------- ------------- 
                                                            -             - 
Total liabilities                                   7,523,809     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 - 90,688,450                                
     shares;                                                                
    2011 issued and outstanding - 55,536,292                                
     shares                                             9,068         5,554 
  Common stock issuable                               471,250            -- 
  Additional paid-in capital                      105,752,831    54,458,170 
  Accumulated deficit                             (63,361,626)  (51,182,158)
                                                ------------- ------------- 
Total stockholders' equity                         42,871,523     3,281,583 
                                                ------------- ------------- 
Total liabilities and stockholders' equity      $  50,395,332 $  10,078,492 
                                                ============= ============= 
                                                                            
                                                                            
                                                                            
                               CYTOMEDIX, INC                               
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                                                                            
                         Three Months Ended           Six Months Ended      
                              June 30,                    June 30,          
                     --------------------------  -------------------------- 
                         2012          2011          2012          2011     
                     ------------  ------------  ------------  ------------ 
Revenues                                                                    
  Product Sales      $  1,813,972  $  1,394,294  $  3,500,364  $  2,759,907 
  License Fees          1,824,360            --     3,154,722            -- 
  Royalties                47,021            --        47,021            -- 
                     ------------  ------------  ------------  ------------ 
Total revenues          3,685,353     1,394,294     6,702,107     2,759,907 
                     ------------  ------------  ------------  ------------ 
                                                                            
Cost of revenues                                                            
  Cost of sales           974,910       639,227     1,823,346     1,284,611 
  Cost of royalties         5,116            --         5,116            -- 
                     ------------  ------------  ------------  ------------ 
Total cost of                                                               
 revenues                 980,026       639,227     1,828,462     1,284,611 
                     ------------  ------------  ------------  ------------ 
Gross profit            2,705,327       755,067     4,873,645     1,475,296 
                     ------------  ------------  ------------  ------------ 
                                                                            
Operating expenses                                                          
  Salaries and wages    1,779,095       733,410     3,841,223     1,459,473 
  Consulting                                                                
   expenses               454,296       298,751     1,283,343       635,233 
  Professional fees       203,464       213,230       666,501       450,151 
  Research,                                                                 
   development,                                                             
   trials and                                                               
   studies              1,091,258        42,107     1,448,566       102,053 
  General and                                                               
   administrative                                                           
   expenses             1,525,724       705,547     2,701,951     1,549,091 
Total operating                                                             
 expenses               5,053,837     1,993,045     9,941,584     4,196,001 
                     ------------  ------------  ------------  ------------ 
Loss from operations   (2,348,510)   (1,237,978)   (5,067,939)   (2,720,705)
                     ------------  ------------  ------------  ------------ 
                                                                            
Other income                                                                
 (expense)                                                                  
  Interest, net          (267,987)     (121,712)     (535,132)     (372,093)
  Change in fair                                                            
   value of                                                                 
   derivative                                                               
   liabilities            (26,207)           --      (246,521)      378,125 
  Change in fair                                                            
   value of                                                                 
   contingent                                                               
   consideration       (4,334,932)           --    (4,334,932)           -- 
  Gain on debt                                                              
   restructuring               --       576,677            --       576,677 
  Inducement expense       (1,223)           --    (1,513,371)           -- 
  Settlement of                                                             
   contingency           (471,250)           --      (471,250)           -- 
  Other                    (1,105)       (3,348)       (1,105)      (53,585)
                     ------------  ------------  ------------  ------------ 
Total other income                                                          
 (expenses)            (5,102,704)      451,617    (7,102,311)      529,124 
                     ------------  ------------  ------------  ------------ 
Loss before                                                                 
 provision for                                                              
 income taxes          (7,451,214)     (786,361)  (12,170,250)   (2,191,581)
Income tax provision        4,609         5,000         9,218        10,000 
                     ------------  ------------  ------------  ------------ 
Net loss               (7,455,823)     (791,361)  (12,179,468)   (2,201,581)
                                                                            
Preferred dividends:                                                        
  Series A preferred                                                        
   stock                       --         2,242            --         4,441 
  Series B preferred                                                        
   stock                       --         1,526            --         3,022 
  Series D preferred                                                        
   stock                       --        82,875        13,562       165,750 
                     ------------  ------------  ------------  ------------ 
Net loss to common                                                          
 stockholders        $ (7,455,823) $   (878,004) $(12,193,030) $ (2,374,794)
                     ============  ============  ============  ============ 
                                                         

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