SOURCE: Cytori Therapeutics, Inc.

Cytori Therapeutics, Inc.

March 10, 2011 16:05 ET

Cytori Grows Product Revenues 41% Year-Over-Year, Advances Cardiac Device Product Pipeline

SAN DIEGO, CA--(Marketwire - March 10, 2011) - Cytori Therapeutics (NASDAQ: CYTX) grew product sales 41% and made substantial progress in advancing its cardiovascular device product pipeline during 2010. An overview of the Company's 2010 financial results is below and a review of its business plans for 2011 is provided in the '2010 Results Shareholder Letter,' which may be accessed at http://ir.cytoritx.com.

Key highlights for 2010 and through the beginning of 2011 include the following:

--  Grew product revenues 41% year-over-year. Revenue generating units
    increased by 48 to a cumulative total of 149 and nearly 1,400
    consumables were shipped during 2010;

--  Reported improved heart function in two cardiovascular disease clinical
    trials and initiated our European pivotal heart attack trial. Cytori is
    seeking EU approval for use in no-option chronic myocardial ischemia
    patients;

--  Achieved European approval of the Celution System in breast
    reconstruction, reported 12 month data from our RESTORE-2 trial and
    successfully launched PureGraft™ into the U.S. and European plastic
    and reconstructive surgery markets;

--  Made progress towards getting into the U.S. market with multiple
    submissions underway for FDA approval or clearance of Celution® as
    part of a comprehensive US regulatory strategy intended to achieve
    market entry; and

--  Strengthened our cash and cash equivalents balance with $52.7 million
    at the end of 2010 compared with $12.9 million at the end of 2009. Part
    of this increase resulted from a $10 million equity investment from
    Astellas Pharma, including certain negotiating rights to a potential
    liver disease partnership.

Product revenues were $8.3 million for 2010, compared to $5.8 million for 2009, which includes $2.4 million in fourth quarter 2010 product sales. Gross profit improved to $4.3 million for 2010 compared to $2.4 million in 2009, including $1.2 million in gross profit in the fourth quarter 2010. Product revenue growth is attributable mostly to increased sales of systems to private pay plastic surgery clinics, academic centers performing independent investigator-initiated studies and the sale of two StemSource® Cell Banks. Toward the end of the year, Cytori also started to see increased impact from PureGraft™ sales for body contouring procedures.

Cytori ended the year with 149 revenue generating units compared to 101 at the start of year, with 1,392 consumables shipped in 2010 compared to 1,205 shipped in 2009. This includes a record 437 consumables shipped during the fourth quarter of 2010, of which 350 were re-orders. The percentage of re-orders increased in 2010 to 77% compared to 64% for 2009, a positive trend reflecting the recurring revenue opportunity once a system is installed. Separately, 1,847 PureGraft consumables were shipped in 2010, a sign that Cytori is penetrating the growing fat grafting market in the United States and abroad.

Net cash used in operations was $23.6 million in 2010 compared to $23.8 million in 2009, including $4.8 million in the fourth quarter of 2010. During the year, there was a decrease in research and development expenses related to clinical trial costs, offset with, among other items, an increase in SG&A, as we expanded our sales efforts worldwide.

Outlook

"Our key initiatives for 2011 will be to drive enrollment in the ADVANCE heart attack trial, seek approval for no option chronic myocardial ischemia patients in Europe, execute our U.S. regulatory and development strategy, and grow the commercial business," said Christopher J. Calhoun, chief executive officer of Cytori. "The pieces are coming together for accelerating revenue growth, with expanded indications, longer-term data, and pursuit of country level payment in key geographies. We anticipate the impact from recent RESTORE-2 data to have a greater effect on revenue growth toward the latter half of the year."

About Cytori

Cytori is a leader in providing patients and physicians around the world with medical technologies that harness the potential of adult regenerative cells from adipose tissue. The Celution® System family of medical devices and instruments is being sold into the European and Asian cosmetic and reconstructive surgery markets but is not yet available in the United States. Our StemSource® product line is sold globally for cell banking and research applications. Our PureGraft™ products are available in North America and Europe for fat grafting procedures. 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 statements, including, but not limited to, those regarding our belief in the recurring revenue opportunities for sales of our consumable products, our ability to continue to penetrate the fat grafting market with our PureGraft™ products, our ability to obtain regulatory approval for our products both in the United States and abroad and our ability to accelerate revenue growth, 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, the quality and effectiveness of our products, the effectiveness of our regulatory and sales and marketing programs, the acceptance of our clinical data, 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 Balance Sheets

                                                   As of December 31,
                                                --------------------------
                                                    2010          2009
                                                (Unaudited)
                                                ------------  ------------
Assets
Current assets:
   Cash and cash equivalents                    $ 52,668,000  $ 12,854,000
   Accounts receivable, net of reserves of
    $306,000 and of $751,000 in 2010 and 2009,
    respectively                                   2,073,000     1,631,000
   Inventories, net                                3,378,000     2,589,000
   Other current assets                              834,000     1,024,000
                                                ------------  ------------

     Total current assets                         58,953,000    18,098,000

Property and equipment, net                        1,684,000     1,314,000
Restricted cash and cash equivalents                 350,000            --
Investment in joint venture                          459,000       280,000
Other assets                                         566,000       500,000
Intangibles, net                                     413,000       635,000
Goodwill                                           3,922,000     3,922,000
                                                ------------  ------------

     Total assets                               $ 66,347,000  $ 24,749,000
                                                ============  ============

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
   Accounts payable and accrued expenses        $  6,770,000  $  5,478,000
   Current portion of long-term obligations        6,453,000     2,705,000
                                                ------------  ------------

     Total current liabilities                    13,223,000     8,183,000

Deferred revenues, related party                   5,512,000     7,634,000
Deferred revenues                                  4,929,000     2,388,000
Warrant liability                                  4,987,000     6,272,000
Option liability                                   1,170,000     1,140,000
Long-term deferred rent                              398,000            --
Long-term obligations, net of discount, less
 current portion                                  13,255,000     2,790,000
                                                ------------  ------------

     Total liabilities                            43,474,000    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; 51,955,265 and
    40,039,259 shares issued and 51,955,265 and
    40,039,259 shares outstanding in 2010 and
    2009, respectively                                52,000        40,000
   Additional paid-in capital                    232,819,000   178,806,000
   Accumulated deficit                          (209,998,000) (182,504,000)
   Treasury stock, at cost                                --            --
                                                ------------  ------------

     Total stockholders' equity (deficit)         22,873,000    (3,658,000)
                                                ------------  ------------

     Total liabilities and stockholders' equity
      (deficit)                                 $ 66,347,000  $ 24,749,000
                                                ============  ============




       CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

                           Three Months Ended       For the Years Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                            2010         2009         2010         2009
                        (Unaudited)  (Unaudited)  (Unaudited)
                        -----------  -----------  -----------  -----------
Product revenues
   Related party        $     9,000  $     9,000  $   590,000  $   591,000
   Third party            2,369,000    1,253,000    7,664,000    5,246,000
                        -----------  -----------  -----------  -----------
                          2,378,000    1,262,000    8,254,000    5,837,000

Cost of product
 revenues                 1,175,000      749,000    3,908,000    3,394,000
                        -----------  -----------  -----------  -----------

     Gross profit
      (loss)              1,203,000      513,000    4,346,000    2,443,000
                        -----------  -----------  -----------  -----------

Development revenues:
   Development, related
    party                        --    1,590,000    2,122,000    8,840,000
   Research grants and
    other                   158,000       26,000      251,000       53,000
                        -----------  -----------  -----------  -----------

                            158,000    1,616,000    2,373,000    8,893,000
                        -----------  -----------  -----------  -----------
Operating expenses:
   Research and
    development           2,661,000    3,226,000    9,687,000   12,231,000
   Sales and marketing    3,684,000    2,213,000   11,040,000    6,583,000
   General and
    administrative        3,240,000    3,129,000   12,570,000   10,415,000
   Change in fair value
    of warrants             540,000    3,016,000   (1,285,000)   4,574,000
   Change in fair value
    of option
    liabilities            (150,000)    (360,000)      30,000     (920,000)
                        -----------  -----------  -----------  -----------

     Total operating
      expenses            9,975,000   11,224,000   32,042,000   32,883,000
                        -----------  -----------  -----------  -----------

     Operating loss      (8,614,000)  (9,095,000) (25,323,000) (21,547,000)
                        -----------  -----------  -----------  -----------

Other income (expense):
   Interest income            3,000           --        9,000       20,000
   Interest expense        (763,000)    (307,000)  (2,052,000)  (1,427,000)
   Other income
    (expense), net          174,000      (79,000)      23,000     (218,000)
   Equity loss from
    investment in joint
    venture                 (53,000)      (9,000)    (151,000)     (44,000)
                        -----------  -----------  -----------  -----------

     Total other income    (639,000)    (395,000)  (2,171,000)  (1,669,000)
                        -----------  -----------  -----------  -----------

     Net loss            (9,253,000)  (9,490,000) (27,494,000) (23,216,000)
                        ===========  ===========  ===========  ===========

Basic and diluted net
 loss per common share  $     (0.18) $     (0.24) $     (0.60) $     (0.65)
                        ===========  ===========  ===========  ===========

Basic and diluted
 weighted average
 common shares           50,207,187   39,043,024   45,947,966   35,939,260
                        ===========  ===========  ===========  ===========




                   Consolidated Statement of Cash Flows

                                                  For the Years Ended
                                                      December 31,
                                              ----------------------------
                                                  2010            2009
                                               (Unaudited)
                                              -------------  -------------
Cash flows from operating activities:
Net loss                                      $ (27,494,000) $ (23,216,000)
Adjustments to reconcile net loss to net cash
 used in operating activities:
   Depreciation and amortization                    931,000      1,681,000
   Amortization of deferred financing costs
    and debt discount                               703,000        709,000
   Warranty provision (reversal)                         --        (23,000)
   Increase (reduction) in allowance for
    doubtful accounts                               460,000        663,000
   Change in fair value of warrants              (1,285,000)     4,574,000
   Change in fair value of option liability          30,000       (920,000)
   Stock-based compensation                       3,055,000      2,649,000
   Equity loss from investment in joint
    venture                                         151,000         44,000
   Increases (decreases) in cash caused by
    changes in operating assets and
    liabilities:
     Accounts receivable                           (902,000)      (986,000)
     Inventories                                   (777,000)      (446,000)
     Other current assets                            36,000         41,000
     Other assets                                  (110,000)        75,000
     Accounts payable and accrued expenses          811,000        413,000
     Deferred revenues, related party            (2,122,000)    (8,840,000)
     Deferred revenues                            2,541,000        (57,000)
     Long-term deferred rent                        398,000       (168,000)
                                              -------------  -------------

       Net cash used in operating activities    (23,574,000)   (23,807,000)
                                              -------------  -------------

Cash flows from investing activities:
Proceeds from the sale and maturity of
 short-term investments                                  --             --
Purchases of short-term investments                      --             --
Purchases of property and equipment                (610,000)      (221,000)
Cash invested in restricted cash                   (350,000)            --
Investment in joint venture                        (330,000)            --
                                              -------------  -------------

       Net cash used in investing activities     (1,290,000)      (221,000)
                                              -------------  -------------

Cash flows from financing activities:
Principal payments on long-term obligations      (5,454,000)    (2,053,000)
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                             7,128,000        531,000
Proceeds from sale of common stock               45,486,000     23,196,000
Costs from sale of common stock                  (1,923,000)    (1,336,000)
Proceeds from sale of treasury stock                     --      3,933,000
                                              -------------  -------------

       Net cash provided by financing
        activities                               64,678,000     24,271,000
                                              -------------  -------------

       Net increase in cash and cash
        equivalents                              39,814,000        243,000

Cash and cash equivalents at beginning of
 year                                            12,854,000     12,611,000
                                              -------------  -------------

Cash and cash equivalents at end of year      $  52,668,000  $  12,854,000
                                              =============  =============

Contact Information