SOURCE: Cytori Therapeutics, Inc.

Cytori Therapeutics, Inc.

March 08, 2012 16:05 ET

Cytori Provides Strategic Outlook, Near Term Objectives and Reports Year-End 2011 Results

SAN DIEGO, CA--(Marketwire - Mar 8, 2012) - In 2011, Cytori Therapeutics (NASDAQ: CYTX) achieved important objectives towards validating Celution® technology in multiple large market indications, clarified the U.S. cardiovascular pathway with FDA, and raised cash to fund 2012 objectives. In particular, the Company reported positive long-term outcomes from two clinical trials, initiated a European pivotal heart attack trial, and in January 2012 received FDA approval to initiate a U.S. clinical trial for chronic myocardial ischemia (CMI).

2012 Objectives

  • Advance product pipeline: Begin enrollment in our ATHENA U.S. CMI trial, broaden European CE Mark indications to include no-option CMI, expand the number of clinical trial centers enrolling patients in ADVANCE, and submit for a formal medical technology assessment in the UK for breast reconstruction to support reimbursement efforts;

  • Build commercial business toward profitability: Grow product revenue to at least $9 million, lower Sales & Marketing expenses, increase gross profit and expand market access;

  • Reduce operating expenses: Approximately $6 million reduction in Sales & Marketing and G&A expenses in 2012 to support an estimated $3 million increase in R&D to fund our cardiac cell therapy clinical trials;

  • Strengthen corporate foundation: Establish at least one new strategic partnership, obtain minimally dilutive or non-dilutive capital, and add new regulatory approvals.

"Cytori's progress in 2011 has resulted in several visible milestones early in 2012, including approval to initiate our U.S. ATHENA trial, strengthening of our global patent position, and positive guidance by a UK reimbursement authority regarding breast reconstruction," said Christopher J. Calhoun, chief executive officer of Cytori. "For 2012, our priorities will be to invest in our cardiac development pipeline, build market access for breast reconstruction, manage our commercial business toward growth and profitability, and strengthen our capital position through strategic partnerships."

2011 Financial Results

Product revenues were $8.0 million in 2011 compared to $8.3 million in 2010. Gross profit on product sales was $4.1 million in 2011 compared to $4.3 million in 2010. Total operating expenses were $35.6 million in 2011, compared to $32.0 million in 2010. For the fourth quarter 2011, total operating expenses were $7.9 million, compared with $10.0 million in the fourth quarter of 2010. Net loss was $32.5 million, or ($0.61) per share, in 2011 compared to $27.5 million, or ($0.60) per share, for 2010. Net loss for the fourth quarter of 2011 was $6.9 million, or ($0.12) per share, compared to $9.3 million, or ($0.18) per share, in the fourth quarter of 2010. At the end of 2011, Cytori had $36.9 million in cash and cash equivalents, $2.3 million in accounts receivable, net of reserves, and added $4.0 million of additional cash subsequent to the end of the year from sales of common stock and option exercises.

"We implemented cost conserving measures in the second half of 2011, which were reflected in the reduction of total operating expenses in the fourth quarter," said Mark E. Saad, chief financial officer. "These changes will result in lower Sales & Marketing and G&A costs in 2012, which will be partially offset by a planned increase in clinical expenses. Our commercial team will continue to build the foundation for formal product launches while targeting full year revenue growth. We anticipate continued variability in quarterly revenues and margins, and expect the majority of growth to occur in the second half of 2012."

Conference Call Information and Shareholder Letter

Cytori will host a management conference call at 5:00 p.m. Eastern Time today to further discuss these results. The live audio webcast of the conference call may be accessed under "Webcasts" in the Investor Relations section of Cytori's website (http://ir.cytoritx.com). The webcast will be available live and by replay two hours after the call and archived for one year. More details on our business are contained in the 'March 2012 Shareholder Letter' which is 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 a clinical trial of the Company's Celution® System for chronic myocardial ischemia, and our efforts to expand our CE Mark and reduce operating expenses and increase revenues. Such statements are 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 risk of natural disasters and other occurrences that may disrupt the normal business cycles in areas of our global operations, 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, successful implementation of our sales and marketing strategy, and other risks and uncertainties described under the "Risk Factors" section 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.

CONSOLIDATED BALANCE SHEETS
As of December 31,
2011
(Unaudited)
2010
Assets
Current assets:
Cash and cash equivalents $ 36,922,000 $ 52,668,000
Accounts receivable, net of reserves of $474,000 and of $306,000 in 2011 and 2010, respectively 2,260,000 2,073,000
Inventories, net 3,318,000 3,378,000
Other current assets 837,000 834,000
Total current assets 43,337,000 58,953,000
Property and equipment, net 1,711,000 1,684,000
Restricted cash and cash equivalents 350,000 350,000
Investment in joint venture 250,000 459,000
Other assets 1,772,000 566,000
Intangibles, net 192,000 413,000
Goodwill 3,922,000 3,922,000
Total assets $ 51,534,000 $ 66,347,000
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses $ 5,334,000 $ 6,770,000
Current portion of long-term obligations 2,487,000 6,453,000
Total current liabilities 7,821,000 13,223,000
Deferred revenues, related party 3,520,000 5,512,000
Deferred revenues 5,244,000 4,929,000
Warrant liability 627,000 4,987,000
Option liability 1,910,000 1,170,000
Long-term deferred rent 504,000 398,000
Long-term obligations, net of discount, less current portion 21,962,000 13,255,000
Total liabilities 41,588,000 43,474,000
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $0.001 par value; 5,000,000 shares authorized; -0- shares issued and outstanding in 2011 and 2010 -- --
Common stock, $0.001 par value; 95,000,000 shares authorized; 56,594,683 and 51,955,265 shares issued and 56,594,683 and 51,955,265 shares outstanding in 2011 and 2010, respectively 57,000 52,000
Additional paid-in capital 252,338,000 232,819,000
Accumulated deficit (242,449,000 ) (209,998,000 )
Total stockholders' equity 9,946,000 22,873,000
Total liabilities and stockholders' equity $ 51,534,000 $ 66,347,000

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three Months Ended December 31, For the Years Ended December 31,
2011
(Unaudited)
2010
(Unaudited)
2011
(Unaudited)
2010
Product revenues
Related party $ -- $ 9,000 $ -- $ 590,000
Third party 2,076,000 2,369,000 7,983,000 7,664,000
2,076,000 2,378,000 7,983,000 8,254,000
Cost of product revenues 944,000 1,175,000 3,837,000 3,908,000
Gross profit (loss) 1,132,000 1,203,000 4,146,000 4,346,000
Development revenues:
Development, related party 761,000 -- 1,992,000 2,122,000
Research grants and other 1,000 158,000 21,000 251,000
762,000 158,000 2,013,000 2,373,000
Operating expenses:
Research and development 1,956,000 2,661,000 10,904,000 9,687,000
Sales and marketing 3,000,000 3,684,000 13,560,000 11,040,000
General and administrative 3,498,000 3,240,000 14,727,000 12,570,000
Change in fair value of warrants (646,000 ) 540,000 (4,360,000 ) (1,285,000 )
Change in fair value of option liabilities 60,000 (150,000 ) 740,000 30,000
Total operating expenses 7,868,000 9,975,000 35,571,000 32,042,000
Operating loss (5,974,000 ) (8,614,000 ) (29,412,000 ) (25,323,000 )
Other income (expense):
Interest income 3,000 3,000 9,000 9,000
Interest expense (861,000 ) (763,000 ) (2,784,000 ) (2,052,000 )
Other income (expense), net (18,000 ) 174,000 (55,000 ) 23,000
Equity loss from investment in joint venture (56,000 ) (53,000 ) (209,000 ) (151,000 )
Total other income (932,000 ) (639,000 ) (3,039,000 ) (2,171,000 )
Net loss (6,906,000 ) (9,253,000 ) (32,451,000 ) (27,494,000 )
Basic and diluted net loss per common share $ (0.12 ) $ (0.18 ) $ (0.61 ) $ (0.60 )
Basic and diluted weighted average common shares 55,664,792 50,207,187 53,504,030 45,947,966

CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31,
2011
(Unaudited)
2010
Cash flows from operating activities:
Net loss $ (32,451,000 ) $ (27,494,000 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 855,000 931,000
Amortization of deferred financing costs and debt discount 711,000 703,000
Increase (reduction) in allowance for doubtful accounts 483,000 460,000
Change in fair value of warrants (4,360,000 ) (1,285,000 )
Change in fair value of option liability 740,000 30,000
Stock-based compensation 3,316,000 3,055,000
Equity loss from investment in joint venture 209,000 151,000
Increases (decreases) in cash caused by changes in operating assets and liabilities:
Accounts receivable (670,000 ) (902,000 )
Inventories 60,000 (777,000 )
Other current assets (3,000 ) 36,000
Other assets (1,206,000 ) (110,000 )
Accounts payable and accrued expenses (1,436,000 ) 811,000
Deferred revenues, related party (1,992,000 ) (2,122,000 )
Deferred revenues 315,000 2,541,000
Long-term deferred rent 106,000 398,000
Net cash used in operating activities (35,323,000 ) (23,574,000 )
Cash flows from investing activities:
Purchases of property and equipment (560,000 ) (610,000 )
Cash invested in restricted cash -- (350,000 )
Investment in joint venture -- (330,000 )
Net cash used in investing activities (560,000 ) (1,290,000 )
Cash flows from financing activities:
Principal payments on long-term obligations (4,529,000 ) (5,454,000 )
Proceeds from long-term obligations 9,444,000 20,000,000
Debt issuance costs and loan fees (719,000 ) (559,000 )
Proceeds from exercise of employee stock options and warrants 2,849,000 7,128,000
Proceeds from sale of common stock 13,286,000 45,486,000
Costs from sale of common stock (194,000 ) (1,923,000 )
Net cash provided by financing activities 20,137,000 64,678,000
Net increase (decrease) in cash and cash equivalents (15,746,000 ) 39,814,000
Cash and cash equivalents at beginning of year 52,668,000 12,854,000
Cash and cash equivalents at end of year $ 36,922,000 $ 52,668,000

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