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Cytori Therapeutics, Inc. (CYTX) Provides Business Update and Reports Second Quarter and First Half 2012 Results  
8/9/2012 9:32:05 AM

SAN DIEGO, CA--(Marketwire - August 08, 2012) - During the second quarter and first half of 2012, Cytori Therapeutics (NASDAQ: CYTX) made key advancements in its cardiac cell therapy pipeline, achieved important commercial and regulatory milestones, carefully managed its financial resources and remained on plan to achieve $9 million in revenue for the year. The Company has achieved or made measurable progress in the following milestones, year-to-date:

Clinical Pipeline

  • Received approval from the FDA to begin the U.S. ATHENA IDE trial for chronic myocardial ischemia in refractory heart failure patients. Patient screening is active and the first patient is expected to be treated shortly;
  • Published positive six month outcomes from the APOLLO heart attack trial in the Journal of the American College of Cardiology;

Commercial Business

  • Expanded Celution® CE Mark certification to include broader wound healing and ischemia related indications-for-use;
  • Received regulatory approval for Celution® in Russia and Croatia and obtained multiple additional Puregraft® approvals worldwide;
  • Applied for formal approval of the Celution® System for breast reconstruction from the Medical Technology Assessment Committee in the U.K;
  • Published positive 12 month outcomes from the RESTORE 2 trial in the European Journal of Surgical Oncology;
  • Advanced negotiations to expand our Celution® CE Mark into cardiovascular and ischemic indications;

Operations & Financial Performance

  • Reduced net cash used in operating activities in the first half of 2012 compared to the first half of 2011, with related reductions in sales, general and administrative expenses;
  • Received a U.S. composition patent for soft tissue defects and a U.S. device patent for accelerating the healing of wounds;
  • Made tangible progress in several of our active partnership opportunities;

"Our cardiovascular disease pipeline progressed in the first half of 2012," said Christopher J. Calhoun, chief executive officer for Cytori Therapeutics. "In the U.S., our refractory heart failure trial (ATHENA) is actively screening patients, our EU acute heart attack trial (ADVANCE) protocol has been revised and is back in front of key regulators, and progress has been made in leveraging our cardiovascular clinical data to expand our European market access. We are also broadening our global footprint of approvals and indications-for-use, which directly expands our access to new markets and presents commercial opportunities which can be addressed with existing resources. Lastly, we continued to improve operations by lowering our quarterly cash utilization rate, while maintaining our investment in clinical development and remaining on plan to achieve 2012 revenue guidance."

Financial Results

Total revenues were $4.4 million and $5.9 million for the second quarter and first half of 2012, respectively, which includes $2.4 million in development revenue recognized in the second quarter of 2012. This compares to $2.4 million and $5.0 million for the same periods of 2011, respectively, which includes $1.2 million in development revenue recognized in the first quarter of 2011.

Product revenues were $1.9 million and $3.4 million for the second quarter and first half of 2012, compared with $2.4 million and $3.8 million for the same periods in 2011. Gross profit was $0.9 million and $1.5 million for the second quarter and first half of 2012, compared to $1.3 million and $1.8 million for the second quarter and first half of 2011, respectively. As previously reported, product sales will be weighted toward the second half of 2012, due in part to realizing the impact of new country approvals and expanded indications-for-use mentioned above.

Research and development expenses remained relatively stable at $3.2 million and $6.0 million for the second quarter and first half of 2012, compared to the same periods in 2011. In contrast, sales, general and administrative expenses were reduced to $6.4 million and $12.7 million in the second quarter and first half of 2012, a decrease of 19% and 13%, respectively, compared to the same periods in 2011. This improvement was achieved in part by targeted reductions in headcount and external consulting costs.

Net loss was $7.9 million, or ($0.13) per share, and $17.2 million, or ($0.30) per share, for the second quarter and first half of 2012, respectively. This compares to $5.1 million, or ($0.10) per share, and $17.2 million, or ($0.33) per share for the second quarter and first half of 2011, respectively. Net loss for the second quarter and first half of 2011 includes non-cash credit of $5.2 million and $2.1 million respectively related to the change in the fair value of warrant and option liabilities compared to non-cash expense of $0.7 million and $0.6 million for the same periods in 2012. At the end of the second quarter of 2012, Cytori had $25.8 million in cash and cash equivalents and $2.0 million in accounts receivable, net of reserves.

Management Conference Call Webcast and Shareholder Letter Information

Cytori will host a management conference call at 5:00 p.m. Eastern Time today to further discuss the company's progress. The webcast will be available live and by replay two hours after the call and may be accessed under "Webcasts" in the Investor Relations section (http://ir.cytori.com) of Cytori's website. If you are unable to access the webcast, you may dial in to the call at +1.866.791.6247, Passcode: 4549443. More details on our business are contained in the 'August 2012 Shareholder Letter' posted on the homepage of our Investor Relations website.

About Cytori

Cytori Therapeutics is developing cell therapies based on autologous adipose-derived regenerative cells (ADRCs) to treat cardiovascular disease and repair soft tissue defects. Our scientific data suggest ADRCs improve blood flow, moderate the immune response and keep tissue at risk of dying alive. As a result, we believe these cells can be applied across multiple "ischemic" conditions. These therapies are made available to the physician and patient at the point-of-care by Cytori's proprietary technologies and products, including the Celution® system product family. www.cytori.com

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding events, trends and business prospects, which may affect our future operating results and financial position, such as the successful initiation of the ATHENA clinical trial of the Company's Celution® system for chronic myocardial ischemia, our efforts to expand our CE Mark, achieve our revenue projection for 2012, and execute a commercialization partnership agreement. Such statements are subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks include clinical and regulatory uncertainties, such as those associated with the ATHENA clinical trial, including risks in the collection and results of clinical data, final clinical outcomes, dependence on third party performance, performance and acceptance of our products in the marketplace, and other risks and uncertainties described under "Risk Factors" in Cytori's Securities and Exchange Commission Filings. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.

                                                                            
                         CYTORI THERAPEUTICS, INC.                          
                   CONSOLIDATED CONDENSED BALANCE SHEETS                    
                                (UNAUDITED)                                 
                                                                            
                                               -------------  ------------- 
                                                                  As of     
                                                 As of June    December 31, 
                                                  30, 2012         2011     
                                               -------------  ------------- 
Assets                                                                      
Current assets:                                                             
  Cash and cash equivalents                    $  25,771,000  $  36,922,000 
  Accounts receivable, net of reserves of                                   
   $220,000 and of $474,000 in 2012 and 2011,                               
   respectively                                    1,983,000      2,260,000 
  Inventories, net                                 3,108,000      3,318,000 
  Other current assets                             1,115,000        837,000 
                                               -------------  ------------- 
                                                                            
    Total current assets                          31,977,000     43,337,000 
                                                                            
Property and equipment, net                        2,255,000      1,711,000 
Restricted cash and cash equivalents                 350,000        350,000 
Investment in joint venture                          164,000        250,000 
Other assets                                       1,755,000      1,772,000 
Intangibles, net                                      81,000        192,000 
Goodwill                                           3,922,000      3,922,000 
                                               -------------  ------------- 
                                                                            
    Total assets                               $  40,504,000  $  51,534,000 
                                               =============  ============= 
                                                                            
Liabilities and Stockholders' Equity (Deficit)                              
Current liabilities:                                                        
  Accounts payable and accrued expenses        $   5,066,000  $   5,334,000 
  Current portion of long-term obligations         7,338,000      2,487,000 
                                               -------------  ------------- 
                                                                            
    Total current liabilities                     12,404,000      7,821,000 
                                                                            
Deferred revenues, related party                   1,107,000      3,520,000 
Deferred revenues                                  5,296,000      5,244,000 
Warrant liability                                  1,008,000        627,000 
Option liability                                   2,100,000      1,910,000 
Long-term deferred rent                              600,000        504,000 
Long-term obligations, net of discount, less                                
 current portion                                  17,441,000     21,962,000 
                                               -------------  ------------- 
                                                                            
    Total liabilities                             39,956,000     41,588,000 
                                                                            
Commitments and contingencies                                               
Stockholders' equity:                                                       
  Preferred stock, $0.001 par value; 5,000,000                              
   shares authorized; -0- shares issued and                                 
   outstanding in 2012 and 2011                           --             -- 
  Common stock, $0.001 par value; 95,000,000                                
   shares authorized; 58,706,856 and                                        
   56,594,683 shares issued and outstanding in                              
   2012 and 2011, respectively                        59,000         57,000 
  Additional paid-in capital                     260,146,000    252,338,000 
  Accumulated deficit                           (259,657,000)  (242,449,000)
                                               -------------  ------------- 
                                                                            
    Total stockholders' equity                       548,000      9,946,000 
                                               -------------  ------------- 
                                                                            
    Total liabilities and stockholders' equity $  40,504,000  $  51,534,000 
                                               =============  ============= 
                                                                            
                                                                            
                         CYTORI THERAPEUTICS, INC.                          
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS               
                                (UNAUDITED)                                 
                                                                            
                         For the Three Months        For the Six Months     
                            Ended June 30,             Ended June 30,       
                       ------------------------  -------------------------- 
                           2012         2011         2012          2011     
                       -----------  -----------  ------------  ------------ 
                                                                            
Product revenues       $ 1,947,000  $ 2,411,000  $  3,427,000  $  3,773,000 
                                                                            
Cost of product                                                             
 revenues                1,032,000    1,109,000     1,885,000     1,950,000 
                       -----------  -----------  ------------  ------------ 
                                                                            
    Gross profit           915,000    1,302,000     1,542,000     1,823,000 
                       -----------  -----------  ------------  ------------ 
                                                                            
Development revenues:                                                       
  Development, related                                                      
   party                 2,413,000           --     2,413,000     1,231,000 
  Research grant and                                                        
   other                    16,000       11,000        19,000        15,000 
                       -----------  -----------  ------------  ------------ 
                         2,429,000       11,000     2,432,000     1,246,000 
                       -----------  -----------  ------------  ------------ 
Operating expenses:                                                         
  Research and                                                              
   development           3,224,000    3,071,000     6,060,000     6,118,000 
  Sales and marketing    2,581,000    3,716,000     4,956,000     6,942,000 
  General and                                                               
   administrative        3,788,000    4,147,000     7,712,000     7,692,000 
  Change in fair value                                                      
   of warrant                                                               
   liability               251,000   (5,649,000)      381,000    (2,178,000)
  Change in fair value                                                      
   of option liability     460,000      400,000       190,000       110,000 
                       -----------  -----------  ------------  ------------ 
                                                                            
    Total operating                                                         
     expenses           10,304,000    5,685,000    19,299,000    18,684,000 
                       -----------  -----------  ------------  ------------ 
                                                                            
    Operating loss      (6,960,000)  (4,372,000)  (15,325,000)  (15,615,000)
                       -----------  -----------  ------------  ------------ 
                                                                            
Other income                                                                
 (expense):                                                                 
  Interest income            1,000        1,000         2,000         4,000 
  Interest expense        (860,000)    (696,000)   (1,726,000)   (1,434,000)
  Other income                                                              
   (expense), net          (27,000)     (15,000)      (73,000)      (62,000)
  Equity loss from                                                          
   investment in joint                                                      
   venture                 (37,000)     (56,000)      (86,000)     (102,000)
                       -----------  -----------  ------------  ------------ 
                                                                            
    Total other income                                                      
     (expense)            (923,000)    (766,000)   (1,883,000)   (1,594,000)
                       -----------  -----------  ------------  ------------ 
                                                                            
    Net loss           $(7,883,000) $(5,138,000) $(17,208,000) $(17,209,000)
                       -----------  -----------  ------------  ------------ 
                                                                            
Basic and diluted net                                                       
 loss per common share $     (0.13) $     (0.10) $      (0.30) $      (0.33)
                       ===========  ===========  ============  ============ 
                                                                            
Basic and diluted                                                           
 weighted average                                                           
 common shares          58,676,092   52,411,642    58,080,541    52,204,348 
                       ===========  ===========  ============  ============ 
                                                                            
                                                                            
                         CYTORI THERAPEUTICS, INC.                          
              CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
                                (UNAUDITED)                                 
                                                                            
                                                 For the Six Months Ended   
                                                         June 30,           
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
Cash flows from operating activities:                                       
Net loss                                       $ (17,208,000) $ (17,209,000)
Adjustments to reconcile net loss to net cash                               
 used in operating activities:                                              
  Depreciation and amortization                      453,000        400,000 
  Amortization of deferred financing costs and                              
   debt discount                                     470,000        471,000 
  Provision for doubtful accounts                     19,000        235,000 
  Change in fair value of warrants                   381,000     (2,178,000)
  Change in fair value of option liabilities         190,000        110,000 
  Share-based compensation expense                 1,977,000      1,721,000 
  Equity loss from investment in joint venture        86,000        102,000 
  Increases (decreases) in cash caused by                                   
   changes in operating assets and                                          
   liabilities:                                                             
    Accounts receivable                              258,000       (623,000)
    Inventories                                      210,000       (513,000)
    Other current assets                            (278,000)       (15,000)
    Other assets                                      17,000       (905,000)
    Accounts payable and accrued expenses           (268,000)        92,000 
    Deferred revenues, related party              (2,413,000)    (1,231,000)
    Deferred revenues                                 52,000         35,000 
    Long-term deferred rent                           96,000        (24,000)
                                               -------------  ------------- 
                                                                            
      Net cash used in operating activities      (15,958,000)   (19,532,000)
                                               -------------  ------------- 
                                                                            
Cash flows from investing activities:                                       
Purchases of property and equipment                 (886,000)      (433,000)
                                               -------------  ------------- 
                                                                            
      Net cash used in investing activities         (886,000)      (433,000)
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
Principal payments on long-term obligations         (140,000)    (2,230,000)
Proceeds from exercise of employee stock                                    
 options                                             951,000      2,756,000 
Proceeds from sale of common stock                 4,946,000             -- 
Costs from sale of common stock                      (64,000)            -- 
                                               -------------  ------------- 
                                                                            
      Net cash provided by financing                                        
       activities                                  5,693,000        526,000 
                                               -------------  ------------- 
                                                                            
      Net decrease in cash and cash                                         
       equivalents                               (11,151,000)   (19,439,000)
                                                                            
Cash and cash equivalents at beginning of                                   
 period                                           36,922,000     52,668,000 
                                               -------------  ------------- 
                                                                            
Cash and cash equivalents at end of period     $  25,771,000  $  33,229,000 
                                               =============  ============= 
                                                                            

Contact:
Investors
Tom Baker
tbaker@cytori.com
+1.858.875.5258

Media
Megan McCormick
mmccormick@cytori.com
+1.858.875.5279


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