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International Stem Cell Corporation Announces Third Quarter 2012 Financial Results


11/9/2012 9:28:38 AM

CARLSBAD, CA--(Marketwire - November 09, 2012) - International Stem Cell Corporation (OTCQB: ISCO) (www.internationalstemcell.com) ("ISCO" or "the Company") a California-based biotechnology company focused on therapeutic and research products, today announced financial results for the three months ended September 30, 2012.

Three Months Ended September 30, 2012

Revenue for the three months ended September 30, 2012 totaled $1.19 million compared to $0.84 million for the same period in 2011. Sales for Lifeline Skin Care (LSC) and Lifeline Cell Technology (LCT) increased by 46% and 37%, respectively. LSC and LCT accounted for 44% and 56% of total revenue in the three months ended September 30, 2012 compared to 43% and 57%, respectively, for the same period of 2011.

Research and development (R&D) expenses were $0.90 million for the three months ended September 30, 2012, compared to $1.13 million for the same period in 2011. The decrease was due primarily to lower stock-based compensation expense, lower personnel-related spending and lower consulting expenses, partially offset by higher stem cell line research and testing expenses and higher laboratory expenses associated with our Parkinson's disease program.

The Company continues to invest in its sales and marketing infrastructure. Marketing expenses for the three months ended September 30, 2012 were $0.48 million, compared to $0.37 million for the same period in 2011. The increase was primarily driven by investments to promote and build awareness of the Lifeline Skin Care brand and branded products. General and administrative expenses were $1.57 million, down 26% compared to the same period in 2011, as a result of ongoing operational efficiency initiatives.

Cash and cash equivalents totaled $2.38 million at September 30, 2012 compared to $1.34 million as of December 31, 2011 due primarily to two financing transactions totaling approximately $7.03 million completed in the first three months of 2012.

"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 we remain on track to publish the results in the first half of next year," stated Dr. Andrey Semechkin, ISCO's CEO and Co-Chairman. "In addition, our results for the third quarter reflect good progress by LSC and LCT both in terms of growing sales and implementing their strategies. Particularly pleasing is LSC's continued revenue growth as they aim to diversify their sales channels, and LCT's strong quarter on quarter performance. General and administrative expenses continued to decrease reflecting our increased focus on cost containment. Looking ahead to next year, we anticipate our R&D expenses to increase further as we expand our pharmacology and safety studies and our Parkinson's program moves closer to IND filing in early 2014."

Q3 2012 Highlights:

  • The Company was granted an important patent for the liver disease program. The patent represents a new method of creating pure populations of definitive endoderm, precursor cells to liver and pancreas cells, from human pluripotent stem cells in an efficient, cost effective and scalable manner.
  • Commenced rodent studies to measure the efficacy of candidate neuronal cells for the treatment of Parkinson's disease.
  • Announced the addition of two new regenerative medicine experts to our list of scientific advisors. Dr. Evan Snyder, the director of Sanford-Burnham's stem cell program and research center, and one of the pioneers of using stem cells to treat Parkinson's disease (PD), and Dr. Rosario Sánchez-Pernaute, a Harvard trained scientist, who has shown how parthenogenetic stem cells can be used in treating the symptoms of PD.
  • Lifeline Cell Technology began selling its primary human cell and optimized media products through Fisher Scientific's online catalog as an Encompass Preferred Supplier. Fisher Scientific is the world's largest supplier to the life science industry with sales of approximately $12 billion, $424 million of which came from e-catalog sales in 2011.
  • Lifeline Skin Care signed an agreement with Sinopharm Group to distribute LSC's anti-aging skin care products in China and made the first shipment. Sales of cosmetic products in mainland China is estimated to be approximately $8 billion and growing by over 10% per annum.

Conference Call and Webcast Details:

Date: Friday, November 9, 2012
Time: 11:00 a.m. Eastern Time

Conference Call Dial-in Numbers
Participants from US Domestic: 1 877 317-6776
Participants from International: 1 412 317-6776
Conference ID: 10020806
Webcast link: http://webcast.mzvaluemonitor.com/Home/Login/630

Replay of the conference call will be available for two week following 1 hour after the end of the conference call through end date: November 26, 2012 at 9:00 am ET.

Teleconference Replay Details:

US Domestic: 1-877-344-7529
International: 1-412-317-0088
Conference ID: 10020806

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.

To subscribe to receive ongoing corporate communications, please click on the following link: http://www.b2i.us/irpass.asp?BzID=1468&to=ea&s=0

To like our Facebook page or follow us on Twitter for company updates and industry related news, visit: www.facebook.com/InternationalStemCellCorporation and www.twitter.com/intlstemcell

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)                        
                   Condensed Consolidated Balance Sheets                    
                     (in thousands, except share data)                      
                                                                            
                                               September 30,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                (Unaudited)                 
Assets                                                                      
   Cash and cash equivalents                   $       2,380  $       1,337 
   Accounts receivable, net                              411            140 
   Inventory, net                                      1,122          1,268 
   Prepaid expenses and other current assets             293            274 
                                               -------------  ------------- 
                                                                            
       Total current assets                            4,206          3,019 
   Property and equipment, net                         1,238          1,420 
   Intangible assets, net                              1,652          1,282 
   Deposits and other assets                              20             16 
                                               -------------  ------------- 
                                                                            
       Total assets                            $       7,116  $       5,737 
                                               =============  ============= 
                                                                            
Liabilities, Redeemable Preferred Stock and                                 
 Stockholders' Equity                                                       
   Accounts payable                            $       1,056  $         777 
   Accrued liabilities                                   465            752 
   Deferred revenue                                      176            189 
   Related party payable                                  17            108 
   Advances                                              250            250 
   Warrants to purchase common stock                      --             38 
                                               -------------  ------------- 
                                                                            
       Total current liabilities                       1,964          2,114 
                                               -------------  ------------- 
                                                                            
Convertible Redeemable Series G Preferred                                   
 stock, $0.001 par value, 5,000,000 shares and                              
 0 were authorized, issued and outstanding at                               
 September 30, 2012 and December 31, 2011,                                  
 respectively, liquidation preferences of                                   
 $5,000 and $0 at September 30, 2012 and                                    
 December 31, 2011, respectively                       4,941             -- 
                                                                            
Commitments and contingencies                                               
                                                                            
Stockholders' Equity                                                        
Series D Preferred stock, $0.001 par value, 50                              
 shares authorized, 43 issued and outstanding                               
 at September 30, 2012 and December 31, 2011,                               
 liquidation preference of $4,320 at September                              
 30, 2012 and December 31, 2011                           --             -- 
Series A Preferred stock, $0.001 par value, 0                               
 and 5,000,000 shares authorized at September                               
 30, 2012 and December 31, 2011, respectively,                              
 0 and 500,000 issued and outstanding at                                    
 September 30, 2012 and December 31, 2011,                                  
 respectively, liquidation preferences of $0                                
 and $615 at September 30, 2012 and December                                
 31, 2011, respectively                                   --              1 
Series B Preferred stock, $0.001 par value,                                 
 5,000,000 shares authorized, 300,000 issued                                
 and outstanding at September 30, 2012 and                                  
 December 31, 2011, liquidation preferences of                              
 $381 and $367 at September 30, 2012 and                                    
 December 31, 2011, respectively                           0              0 
Series C Preferred stock, $0.001 par value,                                 
 3,000,000 shares authorized, 2,000,000 issued                              
 and outstanding at September 30, 2012 and                                  
 December 31, 2011, liquidation preferences of                              
 $2,480 and $2,387 at September 30, 2012 and                                
 December 31, 2011, respectively                           2              2 
Common stock, $0.001 par value, 300,000,000                                 
 and 200,000,000 shares authorized at                                       
 September 30, 2012 and December 31, 2011,                                  
 respectively, 87,388,815 and 80,036,315                                    
 issued and outstanding at September 30, 2012                               
 and December 31, 2011, respectively                      87             80 
Additional paid-in capital                            69,315         63,995 
   Deficit accumulated during the development                               
    stage                                            (69,193)       (60,455)
                                               -------------  ------------- 
                                                                            
   Total stockholders' equity                            211          3,623 
                                               -------------  ------------- 
                                                                            
   Total liabilities, redeemable preferred                                  
    stock and stockholders' equity             $       7,116  $       5,737 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
            International Stem Cell Corporation and Subsidiaries            
                       (A Development Stage Company)                        
              Condensed Consolidated Statements of Operations               
              (in thousands, except share and per share data)               
                                (Unaudited)                                 
                                                                            
                                                                  Inception 
                                                                   (August  
                                                                     17,    
                                                                    2001)   
                                                                   through  
                          Three Months Ended   Nine Months Ended  September 
                             September 30,       September 30,       30,    
                          ------------------  ------------------            
                            2012      2011      2012      2011       2012   
                          --------  --------  --------  --------  --------- 
Revenues                                                                    
  Product sales           $  1,187  $    842  $  3,320  $  3,471  $  10,951 
  Royalties and license         --        --        --        --        135 
                          --------  --------  --------  --------  --------- 
                                                                            
    Total revenue            1,187       842     3,320     3,471     11,086 
                          --------  --------  --------  --------  --------- 
                                                                            
Development expenses                                                        
  Cost of sales                320       361       957     1,152      4,291 
  Research and                                                              
   development                 900     1,130     2,702     3,262     20,996 
  Selling and marketing        477       365     1,521     1,029      5,395 
  General and                                                               
   administrative            1,570     2,108     5,364     6,477     37,048 
                          --------  --------  --------  --------  --------- 
                                                                            
    Total development                                                       
     expenses                3,267     3,964    10,544    11,920     67,730 
                          --------  --------  --------  --------  --------- 
                                                                            
Loss from development                                                       
 activities                 (2,080)   (3,122)   (7,224)   (8,449)   (56,644)
                          --------  --------  --------  --------  --------- 
                                                                            
Other income (expense)                                                      
  Settlement with related                                                   
   company                      --        --        --        --        (93)
  Miscellaneous expense         (1)       (5)      (55)      (16)      (236)
  Dividend income               --        --        --        --         94 
  Interest expense              --        --        --        --     (2,225)
  Sublease income               --         3         7         8        316 
  Change in market value                                                    
   of warrants                  --       559        38     1,908     (1,357)
                          --------  --------  --------  --------  --------- 
                                                                            
    Total other income                                                      
     (expense), net             (1)      557       (10)    1,900     (3,501)
                          --------  --------  --------  --------  --------- 
                                                                            
Loss before income taxes    (2,081)   (2,565)   (7,234)   (6,549)   (60,145)
Provision for income                                                        
 taxes                          --        --        --        --          7 
                          --------  --------  --------  --------  --------- 
                                                                            
      Net loss            $ (2,081) $ (2,565) $ (7,234) $ (6,549) $ (60,152)
                          ========  ========  ========  ========  ========= 
                                                                            
Deemed dividend on                                                          
 preferred stock          $     --  $     --  $ (1,375) $     --  $  (1,375)
Dividends on preferred                                                      
 stock                    $     93  $   (108) $   (129) $   (322) $  (8,096)
                          --------  --------  --------  --------  --------- 
Net loss attributable to                                                    
 common stockholders      $ (1,988) $ (2,673) $ (8,738) $ (6,871) $ (69,623)
                          ========  ========  ========  ========  ========= 
Net loss per common                                                         
 share-basic and diluted  $ (0 .02) $  (0.03) $  (0.10) $  (0.09)           
                          ========  ========  ========  ========            
Weighted average shares-                                                    
 basic and diluted          87,350    77,802    85,421    76,487            
                          ========  ========  ========  ========            
                                                                            

Contacts:

International Stem Cell Corporation
Dr. Simon Craw
Executive Vice President of Business Development
Phone: 760-940-6383
Email: Email Contact

Linh Nguyen
Chief Financial Officer
Phone: 760-940-6383
Email: Email Contact

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


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