SAN DIEGO, Aug. 6, 2010 (GLOBE NEWSWIRE) -- Cytori Therapeutics (Nasdaq:CYTX) reports second quarter and first half 2010 financial results. Further details, including progress of the Company's commercial activities and product development pipeline, are provided in the 'August 2010 Shareholder Letter', which may be accessed at http://ir.cytoritx.com.
Year-to-date, the Company has executed on the following stated business goals and objectives:
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Grew system installed-base in Europe, Asia and U.S., bringing cumulative revenue-generating units worldwide to 122;
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Achieved highest level of quarterly consumable shipments to date at 392, including 304 consumable re-orders in Q2;
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Expanded European Celution® regulatory approval includes multiple medical indications and improves sales opportunities to hospitals;
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Received regulatory approval for and launched PureGraft™ into the U.S. and European plastic and reconstructive surgery markets; and
- Reported positive results in two cardiac cell therapy trials; plans underway to begin a European approval trial for heart attack patients.
Financial Results
Product revenues were $2.1 million for the quarter and $4.4 million for the first six months in 2010, compared to $1.3 million and $3.2 million for the same time periods, respectively, in 2009. Gross margin was 58% with a gross profit of $1.2 million for the second quarter of 2010 and 58% and $2.5 million for the first half of 2010. This compares with a gross margin of 39% and a gross profit of $0.5 million for the second quarter of 2009, and a gross margin of 42% and a gross profit of $1.3 million for the first six months of 2009. Product revenues and gross profit grew 64% and 141% respectively comparing second quarter 2010 with the second quarter of 2009, due largely to increased direct sales and reduced reliance on distributors.
Total operating expenses were $6.3 million and $11.8 million for the second quarter and first six months of 2010, respectively, compared to $8.2 million and $14.6 million for the same periods, respectively in 2009. Compared to the same periods a year ago, the decline in total operating expenses are primarily due to a net reduction in non-cash expenses for changes in fair value of the warrant and option liabilities. We experienced a decrease in research and development expenses, partially offset by a greater investment into sales and marketing efforts as well as increased corporate costs.
Net cash used in operating activities was $4.5 million for the three months ended June 30, 2010 as compared to $6.0 million for the same period in 2009. Cash and cash equivalents as of June 30, 2010 were $38.1 million and we ended the quarter with $2.6 million in net accounts receivable. We believe that these amounts can fund our operations into the first quarter of 2012, including anticipated costs for initiating our pivotal European heart attack trial.
Outlook
Cytori continues to expand the number of Celution® and StemSource® products in the field while simultaneously investing to grow system adoption and consumable usage. Expanding the approved Celution® indications-for-use in Europe, which include new medical applications such as breast reconstruction and the repair of wounds, such as those resulting from Crohn's disease, positively impacts our ability to sell systems to hospitals. This immediately expands our market opportunity as sales efforts to date have been focused primarily on cosmetic surgery clinics. We anticipate that 12 month results from our RESTORE 2 breast reconstruction trial will support our efforts to gain reimbursement for breast reconstruction in Europe. In addition, PureGraft™ approval in the U.S. and Europe now expands our product portfolio to more comprehensively address the autologous fat grafting market. When combined, the importance of the expanded claims and PureGraft™ approvals support the Company's transformation from a primarily research and development organization to a multi-product, multi-market, sales-driven organization.
Conference Call & Shareholder Letter
Cytori will host a conference call and question and answer session at 10:30 AM Eastern Time today to further discuss these results. The audio webcast of the conference call may be accessed under "Webcasts" in the Investor Relations section of Cytori's website (www.cytori.com). The webcast will be available live and by replay two hours after the call and archived for 90 days.
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 statements, including, but not limited to, the expectation that expanded European regulatory approval for Celution® will improve our ability to sell systems to hospitals and expand our market opportunity, our ability to fund operations into 2012, the expectation that our breast reconstruction trial results will support our product reimbursement efforts , and our expectation that the US and European launch of PureGraft™ will support ongoing per-procedure revenues are all subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks and uncertainties include, but are not limited to, risks related to our history of operating losses, the need for further financing and our ability to access the necessary additional capital for our business, inherent risk and uncertainty in the protection of intellectual property rights, regulatory uncertainties regarding the collection and results of clinical data, uncertainties relating to the future success of our sales and marketing programs, dependence on third party performance, as well as other risks and uncertainties described under the "Risk Factors" in Cytori's Securities and Exchange Commission Filings on Form 10-K and Form 10-Q. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||
| (UNAUDITED) | ||
|
As of June 30, 2010 |
As of December 31, 2009 |
|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 38,100,000 | $ 12,854,000 |
|
Accounts receivable, net of allowance for doubtful accounts of $566,000 and $751,000 in 2010 and 2009, respectively |
2,573,000 | 1,631,000 |
| Inventories, net | 2,555,000 | 2,589,000 |
| Other current assets | 581,000 | 1,024,000 |
| Total current assets | 43,809,000 | 18,098,000 |
| Property and equipment, net | 1,220,000 | 1,314,000 |
| Investment in joint venture | 555,000 | 280,000 |
| Other assets | 456,000 | 500,000 |
| Intangibles, net | 524,000 | 635,000 |
| Goodwill | 3,922,000 | 3,922,000 |
| Total assets | $ 50,486,000 | $ 24,749,000 |
| Liabilities and Stockholders' Equity (Deficit) | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $ 5,251,000 | $ 5,478,000 |
| Current portion of long-term obligations | 1,978,000 | 2,705,000 |
| Total current liabilities | 7,229,000 | 8,183,000 |
| Deferred revenues, related party | 5,512,000 | 7,634,000 |
| Deferred revenues | 2,435,000 | 2,388,000 |
| Warrant liability | 2,644,000 | 6,272,000 |
| Option liability | 1,340,000 | 1,140,000 |
| Long-term obligations, less current portion | 17,226,000 | 2,790,000 |
| Total liabilities | 36,386,000 | 28,407,000 |
| Commitments and contingencies | ||
| Stockholders' equity (deficit): | ||
|
Preferred stock, $0.001 par value; 5,000,000 shares authorized; -0- shares issued and outstanding in 2010 and 2009 |
— | — |
|
Common stock, $0.001 par value; 95,000,000 shares authorized; 45,900,581 and 40,039,259 shares issued and 45,900,581 and 40,039,259 shares outstanding in 2010 and 2009, respectively |
46,000 | 40,000 |
| Additional paid-in capital | 204,385,000 | 178,806,000 |
| Accumulated deficit | (190,331,000) | (182,504,000) |
| Total stockholders' equity (deficit) | 14,100,000 | (3,658,000) |
| Total liabilities and stockholders' equity (deficit) | $ 50,486,000 | $ 24,749,000 |
| CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
| (UNAUDITED) | ||||
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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| 2010 | 2009 | 2010 | 2009 | |
| Product revenues: | ||||
| Related party | $ — | $ 9,000 | $ 9,000 | $ 573,000 |
| Third party | 2,091,000 | 1,268,000 | 4,347,000 | 2,616,000 |
| 2,091,000 | 1,277,000 | 4,356,000 | 3,189,000 | |
| Cost of product revenues | 883,000 | 776,000 | 1,813,000 | 1,863,000 |
| Gross profit | 1,208,000 | 501,000 | 2,543,000 | 1,326,000 |
| Development revenues: | ||||
| Development, related party | — | 7,250,000 | 2,122,000 | 7,250,000 |
| Research grant and other | 7,000 | 14,000 | 28,000 | 22,000 |
| 7,000 | 7,264,000 | 2,150,000 | 7,272,000 | |
| Operating expenses: | ||||
| Research and development | 2,301,000 | 2,919,000 | 4,546,000 | 6,388,000 |
| Sales and marketing | 2,425,000 | 1,463,000 | 4,424,000 | 2,748,000 |
| General and administrative | 3,052,000 | 2,309,000 | 6,271,000 | 4,803,000 |
| Change in fair value of warrant liability | (1,461,000) | 2,133,000 | (3,628,000) | 1,112,000 |
| Change in fair value of option liability | (60,000) | (630,000) | 200,000 | (420,000) |
| Total operating expenses | 6,257,000 | 8,194,000 | 11,813,000 | 14,631,000 |
| Operating loss | (5,042,000) | (429,000) | (7,120,000) | (6,033,000) |
| Other income (expense): | ||||
| Interest income | 2,000 | 4,000 | 3,000 | 18,000 |
| Interest expense | (254,000) | (374,000) | (530,000) | (774,000) |
| Other expense, net | (49,000) | (16,000) | (125,000) | (108,000) |
| Equity loss from investment in joint venture | (34,000) | (11,000) | (55,000) | (27,000) |
| Total other expense | (335,000) | (397,000) | (707,000) | (891,000) |
| Net loss | $ (5,377,000) | $ (826,000) | $ (7,827,000) | $ (6,924,000) |
| Basic and diluted net loss per common share | $ (0.12) | $ (0.02) | $ (0.18) | $ (0.21) |
| Basic and diluted weighted average common shares | 45,295,965 | 35,077,783 | 43,772,219 | 33,732,954 |
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||
| (UNAUDITED) | ||
| For the Six Months Ended June 30, | ||
| 2010 | 2009 | |
| Cash flows from operating activities: | ||
| Net loss | $ (7,827,000) | $ (6,924,000) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 553,000 | 876,000 |
| Amortization of deferred financing costs and debt discount | 199,000 | 386,000 |
| Warranty provision | — | (23,000) |
| Provision for doubtful accounts | 567,000 | 300,000 |
| Change in fair value of warrants | (3,628,000) | 1,112,000 |
| Change in fair value of option liabilities | 200,000 | (420,000) |
| Share-based compensation expense | 1,468,000 | 1,276,000 |
| Equity loss from investment in joint venture | 55,000 | 27,000 |
| Increases (decreases) in cash caused by changes in operating assets and liabilities: | ||
| Accounts receivable | (1,509,000) | (496,000) |
| Inventories | 34,000 | 282,000 |
| Other current assets | 289,000 | 78,000 |
| Other assets | — | 51,000 |
| Accounts payable and accrued expenses | (227,000) | (1,153,000) |
| Deferred revenues, related party | (2,122,000) | (7,250,000) |
| Deferred revenues | 47,000 | (7,000) |
| Long-term deferred rent | — | (168,000) |
| Net cash used in operating activities | (11,901,000) | (12,053,000) |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (348,000) | (18,000) |
| Investment in joint venture | (330,000) | — |
| Net cash used in investing activities | (678,000) | (18,000) |
| Cash flows from financing activities: | ||
| Principal payments on long-term obligations | (5,454,000) | (803,000) |
| Proceeds from long term obligations | 20,000,000 | — |
| Debt issuance costs and loan fees | (559,000) | — |
| Proceeds from exercise of employee stock options and warrants | 7,042,000 | 21,000 |
| Proceeds from sale of common stock and warrants | 17,314,000 | 11,189,000 |
| Costs from sale of common stock and warrants | (518,000) | (960,000) |
| Proceeds from sale of treasury stock | — | 3,933,000 |
| Net cash provided by financing activities | 37,825,000 | 13,380,000 |
| Net increase (decrease) in cash and cash equivalents | 25,246,000 | 1,309,000 |
| Cash and cash equivalents at beginning of period | 12,854,000 | 12,611,000 |
| Cash and cash equivalents at end of period | $ 38,100,000 | $ 13,920,000 |