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International Stem Cell Corporation Announces Fourth Quarter 2012 Financial Results and Provides Business Update


3/27/2013 10:23:29 AM

CARLSBAD, CA--(Marketwire - March 27, 2013) - International Stem Cell Corporation (OTCQB: ISCO) (www.internationalstemcell.com) ("ISCO" or "the Company"), a California-based biotechnology company focused on therapeutic and biomedical products, today announced financial results for the three and twelve months ended December 31, 2012.

FY 2012 Highlights:

  • Made significant progress in Parkinson's program including the development of a new highly-efficient manufacturing method for generating neuronal cells and conducted preliminary toxicology and pharmacology studies in animals.
  • Added world-recognized neurobiologist, Dr. Evan Y. Snyder, head of the FDA's Cellular, Tissue and Gene Therapies Advisory Committee, Director of the Stem Cells and Regenerative Biology Program at Sanford Burnham Medical Research Institute, as an non-compensated member of our Board of Advisors.
  • Expanded stem cell bank to a total of fifteen human lines by adding three new cGMP-grade stem cell lines, derived in the ISCO's California facility, capable of immune-matching millions of individuals.
  • Developed a new protein-based technology to derive iPS cells without the use of viruses as in traditional methods.
  • Received a key patent issued by the USPTO covering the creation of liver and pancreas precursor cells. Performed hybrid toxicology/pharmacology study in a rodent model of Crigler-Najjar disease.
  • Progressed the Cornea program by the development of endothelial-like cells for 3D corneal structures as part of our Indian collaboration.
  • Realized 14% increase in sales in Lifeline Cell Technologies to $2.38 million for 2012.
  • Significantly expanded marketing activities, brand awareness, diversified sales channels and launched new eye firming serum in Lifeline Skin Care, all of which lead to higher sales in second half of the year.
  • Raised $7.03 million and reduced G&A expenses by 11% compared with 2011.

Three Months Ended December 31, 2012

Revenue for the three months ended December 31, 2012 totaled $1.25 million compared to $1.06 million for the same period in 2011. Sales for Lifeline Skin Care (LSC) and Lifeline Cell Technology (LCT) increased by 39% and 3%, respectively. LSC and LCT accounted for 48% and 52% of total revenue in the three months ended December 31, 2012.

Development expenses decreased by 8% to $3.65 million due primarily to reductions in cost of sales and consulting expenses relating to our research and development projects, partially offset by an increase in sales and marketing spending. General and administrative expenses were $1.89 million, reflecting relatively constant expense compared to the fourth quarter of 2011.

Twelve Months Ended December 31, 2012

Sales for the twelve months ended December 31, 2012 were $4.57 million compared to $4.53 million in 2011. LCT sales were $2.38 million, up 14% from 2011, representing 52% of total revenue in 2012. LSC revenues were $2.19 million compared to $2.45 million in 2011 reflecting a decrease of 11%.

Cost of sales was $1.27 million, or 28% of revenue, compared to $1.62 million or 36% of revenue in 2011. The Company successfully implemented efficiencies in its manufacturing and supply chain management for both LSC and LCT.

Net loss from development activities was $9.81 million, compared to $11.36 million in 2011 reflecting a reduction of $1.55 million or 14% primarily due to favorable reductions in cost of sales, research and development and general and administrative expenses.

Cash and cash equivalents totaled $0.65 million at December 31, 2012 compared to $1.34 million at December 31, 2011.

Cash outflows from operations was $6.69 million for the twelve months ended December 31, 2012, down approximately $0.27 million from the prior year. The Company received approximately $4.94 million, net of stock issuance costs, from the issuance of 5,000,000 shares of Series G Preferred Stock in 2012. Additionally, we raised $2.09 million from the issuance of 5,000,000 shares of common stock to Aspire Capital Group and paid dividends of $237,000 to our preferred stockholders. In October 2012, holders of all of the outstanding shares of Series D and Series G Preferred Stock irrevocably waived their right to receive any and all accrued but unpaid dividends and interest on or after September 30, 2012 on the Series D and Series G Preferred Stock.

"We have made excellent progress in our therapeutic development programs, being able to start our non-human primate study in our Parkinson's disease program earlier than anticipated, and report top line data at the American Academy of Neurology Annual Meeting," stated Dr. Andrey Semechkin, ISCO's CEO and Co-Chairman. "In addition, our results for the fourth quarter reflect good progress by LSC and LCT both in terms of growing sales and implementing their strategies. Particularly pleasing is LSC's continued quarterly revenue growth as they aim to diversify their sales channels, and LCT's strong annual results. General and administrative expenses continued to decrease reflecting our increased focus on cost containment. Looking ahead to the next twelve months, we anticipate our R&D expenses to increase as we expand our pharmacology and safety studies and our Parkinson's program moves closer to our targeted IND filing in early 2014."

Business Updates:

Subsequent to the end of 2012, ISCO announced several operational milestones, including:

  • On February 4, 2013 and March 20, 2013, ISCO announced positive results from its pre-clinical in vivo Parkison's Disease ("PD") studies. The results demonstrate the safety, tolerability and potential therapeutics benefits of neuronal cells derived from hpSC line in both rodent and non-human primate models of PD.
  • On March 15, 2013, publication of a breakthrough method of deriving neuronal cells for the treatment of Parkinson's disease in Scientific Reports, a primary research publication from the publishers of Nature.
  • On February 12, 2013, positive top line efficacy results from its pre-clinical in vivo liver study. The ISCO study results demonstrate that the human parthenogenetic stem cell (hpSC)-derived hepatocytes in the livers of Gunn rats behave in a similar manner to primary human hepatocytes.

Conference Call and Webcast Details:

Date: Thursday, March 28, 2013
Time: 11:00 a.m. Eastern Time

Conference Call Dial-in Numbers
Participants from US Domestic: 1-877-941-2068
Participants from International: 1-480-629-9712
Conference ID: 4610666
Webcast link: http://public.viavid.com/player/index.php?id=104040

Please log in at least 10 minutes before the start time to ensure timely participation.

A playback of the call will be available from 2:00 p.m. ET on March 28, 2013 to 11:59 p.m. ET on April 11, 2013.

Teleconference Replay Details:

US Domestic: 1-877-870-5176
International: 1-858-384-5517
Conference ID: 4610666

About International Stem Cell Corporation

International Stem Cell Corporation is focused on the therapeutic applications of human parthenogenetic stem cells (hpSCs) and the development and commercialization of cell-based research and cosmetic products. ISCO's core technology, parthenogenesis, results in the creation of pluripotent human stem cells from unfertilized oocytes (eggs). hpSCs avoid ethical issues associated with the use or destruction of viable human embryos. ISCO scientists have created the first parthenogenic, homozygous stem cell line that can be a source of therapeutic cells for hundreds of millions of individuals of differing genders, ages and racial background with minimal immune rejection after transplantation. hpSCs offer the potential to create the first true stem cell bank, UniStemCell™. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology (www.lifelinecelltech.com), and stem cell-based skin care products through its subsidiary Lifeline Skin Care (www.lifelineskincare.com). More information is available at www.internationalstemcell.com.

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Safe harbor statement

Statements pertaining to anticipated developments, expected changes in R&D expenses, potential sales growth, new products and distribution channels and other opportunities for the company and its subsidiaries, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates,") should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products and the management of collaborations, regulatory approvals, need and ability to obtain future capital, application of capital resources among competing uses, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the company's business, particularly those mentioned in the cautionary statements found in the company's Securities and Exchange Commission filings. The company disclaims any intent or obligation to update forward-looking statements.

                                                                            
                                                                            
            International Stem Cell Corporation and Subsidiaries            
                       (A Development Stage Company)                        
                        Consolidated Balance Sheets                         
                     (in thousands, except share data)                      
                                                                            
                                                 December 31,  December 31, 
                                                     2012          2011     
                                                 ------------  ------------ 
Assets                                                                      
  Cash and cash equivalents                      $        654  $      1,337 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $4 and $0 at December                               
   31, 2012 and 2011, respectively                        273           140 
  Inventory, net                                        1,199         1,268 
  Prepaid expenses and other current assets               456           274 
                                                 ------------  ------------ 
    Total current assets                                2,582         3,019 
  Property and equipment, net                           1,134         1,420 
  Intangible assets, net                                1,634         1,282 
  Deposits and other assets                                20            16 
                                                 ------------  ------------ 
    Total assets                                 $      5,370  $      5,737 
                                                 ============  ============ 
Liabilities, Redeemable Preferred Stock and                                 
 Stockholders' Equity (Deficit)                                             
  Accounts payable                               $        969  $        777 
  Accrued liabilities                                     730           752 
  Deferred revenue                                        233           189 
  Related party payable                                     5           108 
  Advances                                                250           250 
  Warrants to purchase common stock                        --            38 
                                                 ------------  ------------ 
    Total current liabilities                           2,187         2,114 
                                                 ------------  ------------ 
Convertible Redeemable Series G Preferred stock,                            
 $0.001 par value, 5,000,000 shares and 0 were                              
 authorized, issued and outstanding at December                             
 31, 2012 and 2011, respectively, liquidation                               
 preferences of $5,000 and $0 at December 31,                               
 2012 and 2011, respectively                            4,941            -- 
                                                                            
Commitments and contingencies                                               
                                                                            
Stockholders' Equity (Deficit)                                              
Series D Preferred stock, $0.001 par value, 50                              
 shares authorized, 43 issued and outstanding at                            
 December 31, 2012 and 2011, liquidation                                    
 preference of $4,320 at December 31, 2012 and                              
 2011                                                      --            -- 
Series A Preferred stock, $0.001 par value, 0                               
 and 5,000,000 shares authorized at December 31,                            
 2012 and 2011, respectively, 0 and 500,000                                 
 issued and outstanding at December 31, 2012 and                            
 2011, respectively, liquidation preferences of                             
 $0 and $615 at December 31, 2012 and 2011,                                 
 respectively                                              --             1 
Series B Preferred stock, $0.001 par value,                                 
 5,000,000 shares authorized, 300,000 issued and                            
 outstanding at December 31, 2012 and 2011,                                 
 respectively, liquidation preferences of $385                              
 and $367 at December 31, 2012 and 2011,                                    
 respectively                                               0             0 
Series C Preferred stock, $0.001 par value,                                 
 3,000,000 shares authorized, 2,000,000 issued                              
 and outstanding at December 31, 2012 and 2011,                             
 respectively, liquidation preferences of $2,507                            
 and $2,387 at December 31, 2012 and 2011,                                  
 respectively                                               2             2 
Common stock, $0.001 par value, 300,000,000 and                             
 200,000,000 shares authorized at December 31,                              
 2012 and 2011, respectively, 87,388,815 and                                
 80,036,315 issued and outstanding at December                              
 31, 2012 and 2011, respectively                           87            80 
Additional paid-in capital                             69,945        63,995 
  Deficit accumulated during the development                                
   stage                                              (71,792)      (60,455)
                                                 ------------  ------------ 
  Total stockholders' equity (deficit)                 (1,758)        3,623 
                                                 ------------  ------------ 
  Total liabilities, redeemable preferred stock                             
   and stockholders' equity (deficit)            $      5,370  $      5,737 
                                                 ============  ============ 
                                                                            
                                                                            

                                                                            
                                                                            
            International Stem Cell Corporation and Subsidiaries            
                       (A Development Stage Company)                        
                   Consolidated Statements of Operations                    
                   (in thousands, except per share data)                    
                                                                            
                                                                            
                                                                Inception   
                                                               (August 17,  
                                   Year Ended December 31,        2001)     
                                                                 through    
                                                               December 31, 
                                ----------------------------                
                                     2012           2011           2012     
                                                                            
                                -------------  -------------  ------------- 
Revenues                                                                    
  Product sales                 $       4,567  $       4,532  $      12,198 
  Royalties and license                    --             --            135 
                                -------------  -------------  ------------- 
    Total revenue                       4,567          4,532         12,333 
                                -------------  -------------  ------------- 
Development expenses                                                        
  Cost of sales                         1,272          1,618          4,606 
  Research and development              3,599          4,434         21,893 
  Selling and marketing                 2,065          1,475          5,939 
  General and administrative            7,444          8,360         39,128 
                                -------------  -------------  ------------- 
    Total development expenses         14,380         15,887         71,566 
                                -------------  -------------  ------------- 
Loss from development                                                       
 activities                            (9,813)       (11,355)       (59,233)
                                -------------  -------------  ------------- 
Other income (expense)                                                      
  Settlement with related                                                   
   company                                 --             --            (93)
  Miscellaneous expense                   (65)          (163)          (245)
  Dividend income                          --              1             94 
  Interest expense                         --             --         (2,225)
  Sublease income                           7             11            316 
  Change in market value of                                                 
   warrants                                38          2,335         (1,357)
                                -------------  -------------  ------------- 
    Total other income                                                      
     (expense), net                       (20)         2,184         (3,510)
                                -------------  -------------  ------------- 
Loss before income taxes               (9,833)        (9,171)       (62,743)
Provision for income taxes                 --             --              7 
                                -------------  -------------  ------------- 
      Net loss                  $      (9,833) $      (9,171) $     (62,750)
                                =============  =============  ============= 
Deemed dividend on preferred                                                
 stock                          $      (1,375) $          --  $      (1,375)
Dividends on preferred stock    $        (129) $        (430) $      (8,097)
                                -------------  -------------  ------------- 
Net loss attributable to common                                             
 stockholders                   $     (11,337) $      (9,601) $     (72,222)
                                =============  =============  ============= 
Net loss per common share-basic                                             
 and diluted                    $       (0.13) $       (0.12)               
                                =============  =============                
Weighted average shares-basic                                               
 and diluted                           85,936         77,320                
                                =============  =============                
                                                                            
                                                                            

Contacts:
International Stem Cell Corporation
Dr. Simon Craw
Executive Vice President of Business Development
Phone: 760-940-6383
Email: ir@intlstemcell.com

Linh Nguyen
Chief Financial Officer
Phone: 760-940-6383
Email: lnguyen@intlstemcell.com

Investor Relations:
MZ Group
Mark McPartland
Senior Vice President
Phone: 212-301-7130
Email: markmcp@mzgroup.us
Web: www.mzgroup.us


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