Cytori Reports Second Quarter 2016 Business and Financial Results
Aug 04, 2016
SAN DIEGO--(BUSINESS WIRE)-- Cytori Therapeutics (NASDAQ: CYTX) (“Cytori” or the “Company”) today announced its second
quarter financial results and provided updates on its corporate activity and clinical development.
Second quarter 2016 net loss allocable to common stockholders was $6.4 million and $0.43 per share. Cytori continues to tightly
manage its operating cash burn, spending approximately $5.7 million in the second quarter 2016. Cytori ended the second quarter of2016 with $20 million of cash and cash equivalents.
“In the first half of the year, our team has advanced our development pipeline in the U.S. in multiple indications, most notablycompleting enrollment in our Phase 3 trial in scleroderma. Additionally, investigator-initiated studies are progressing in Europe andJapan, and we have continued to lay a sound foundation for early clinical adoption and profitable revenue growth in Japan and Europe,
which can provide near-term revenue and importantly build longer-term strategic value,” said Dr. Marc H. Hedrick, President and ChiefExecutive Officer for Cytori. “Corporate milestones over the next twelve months include the first readout from our US phase III
scleroderma trial in mid-2017, the initiation of an externally funded clinical trial in burn patients later this year, treatment of the firstscleroderma patients as part of our compassionate use program, and Japanese revenue growth.”
Select Recent Highlights:
Enrollment completion of US STAR phase III trial for scleroderma hand dysfunction
Report of 48-week US pilot/phase IIb ACT-OA trial preliminary topline data
Limited regulatory approval received by a Cytori customer regarding use of Cytori® Cell Therapy™ for osteoarthritis of the knee at
its clinics in Japan
Completion of rights offering for gross proceeds of $17.1 million
Broad orphan drug designation granted by European Commission, and small or medium-size enterprise (SME) status granted by
European Medicines Agency
Q2 and Year-to-date 2016 Financial PerformanceQ2 2016 and year-to-date operating cash burn of $5.6 million and $10.7 million, compared to $4.8 million and $9.8 million for thesame periods in 2015, respectively.
Cash and debt principal balances at June 30, 2016 of approximately $20 million and $17.7 million, respectively.
Q2 2016 and year-to-date total revenues of $2.8 million and $5.7 million, compared to $3.5 million and $5.8 million for the same
periods in 2015, respectively.
Q2 2016 net loss allocable to common stockholders of $6.4 million or $0.43 per share, compared to a net income of $4.5 million or$0.45 per share (or a net loss of $8.7 million and $0.94 per share when excluding a non-cash credit charge of $13.1 million related
to the change in fair value of warrant liabilities) for the same period in 2015.
Year-to-date net loss allocable to common stockholders of $11.7 million or $0.84 per share, compared to $18.2 million or $2.22 pershare (or a net loss of $15.2 million or $1.86 per share, which excludes a non-cash charge of $2.3 million related to the change infair value of warrant liabilities and a beneficial conversion feature charge for convertible preferred stock of $0.7 million) for the same
period in 2015.
“We reduced our net losses by over 25% from Q2’15 to Q2’16, despite substantial development progress that includes completion ofenrollment in our U.S. Phase III scleroderma trial,” said Tiago Girao, VP of Finance and CFO of Cytori Therapeutics. “Our current
projections indicate that the net proceeds from our Q2 financing activities coupled with ongoing downward pressure on expenses
coupled with revenue growth, will provide liquidity for at least the next 12 months of operations.”
Summary of ACT-OA trial and topline 48-week results:
The ACT-OA trial was a randomized double blind phase II trial comparing a single administration of either low or high doses of ECCO50 autologous cellular therapeutic placed into the intraarticular space of one knee in 94 patients with knee osteoarthritis of moderateseverity. This pilot trial was designed to establish safety, feasibility and explore a number of efficacy endpoints for a more definitive trial
with appropriate statistical powering. Topline results concluded:

Intraarticular application of a single dose of ECCO-50 is feasible in an outpatient day-surgery setting; no serious adverse eventswere reported related to the fat harvest, cell injection or to the cell therapy.
Consistent trends observed in most secondary endpoints at 12, 24 and 48 weeks in the target knee of the treated group relative toplacebo control group; as reported in Q1, 12 week primary endpoint of single pain on walking question did not achieve statisticalsignificance.
Consistent trends observed in all 6 pre-specified MRI Osteoarthritis Knee Score (MOAKS) classification scores suggesting
decrease in target knee joint pathologic features at 48 weeks for the treated group relative to placebo control group.
“The safety and feasibility goal of this first trial in OA was substantially achieved,” said Dr. Mark Marino, Cytori Senior Vice President ofClinical Affairs. “Additionally, even though this first randomized controlled trial was not statistically powered to test for a specifictherapeutic hypothesis, it showed evidence of a potential cell effect including in the joint imaging data. Further analysis is ongoing on
specific patient subsets and in-depth anatomic assessment of the MRI data.”
Anticipated Forthcoming Milestones:
Clarity for European Union Conditional Market Approval in scleroderma hand dysfunction
File IDE and obtain approval for burn wound therapy trial related to contract with BARDA (anticipated in 2016)
Report of 48-week US pivotal/phase III trial data for scleroderma hand dysfunction2016 Reiterated Financial Guidance
Operating cash burn within a range of $18 million to $20 million
Total revenues (product and contract) within a range of $12 million to $14 million
Management Conference Call Webcast
Cytori will host a management conference call at 5:30 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 of Cytori's website. If you are unable to access the webcast, you may dial in to the call at +1.877.402.3914, Conference ID:
54687177.
About Cytori
Cytori Therapeutics is a late stage cell therapy company developing autologous cell therapies from adipose tissue to treat a variety ofmedical conditions. Data from preclinical studies and clinical trials suggest that Cytori Cell Therapy™ acts principally by improving
blood flow, modulating the immune system, and facilitating wound repair. As a result, Cytori Cell Therapy™ may provide benefits acrossmultiple disease states and can be made available to the physician and patient at the point-of-care through Cytori’s proprietary
technologies and products. For more information: visit www.cytori.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements that involve known and unknown risks and uncertainties. All statements, otherthan historical facts are forward looking statements. Such statements, including, without limitation, statements regarding having at least
12 months’ liquidity (based upon expected expense containment and revenue growth), potential prolonged symptomatic improvement in
the target knee of the treated patient group relative to placebo control group in the Company’s ACT-OA trial, evidence of a potential celleffect (including in the joint imaging data), status of SCLERADEC II enrollment, status of the Company’s efforts regarding a proposed
burn wound trial, anticipated receipt and disclosure of 48-week STAR data, and reiterated financial guidance (projected operating cash
burn and total revenues), are subject to risks and uncertainties that could cause our actual results and financial position to differ
materially. Some of these risks include clinical, pre-clinical and regulatory uncertainties, such as those associated with the ACT-OA,STAR, SCLERADEC-I, SCLERADEC-II and possible BARDA wound trial (including risks relating to failure to achieve full enrollment ofSCLERADEC II or other Company-sponsored/supported trials, risks in the collection and results of ACT-OA, STAR, SCLERADEC II
and other clinical data and related final clinical outcomes), as well as achievement of financial goals (including 2016 operating cashburn and 2016 total revenues), dependence on third party performance and approvals (including performance of investigator-initiatedtrials, and outcome of FDA review of our proposed burn wound trial pursuant to our contract with BARDA), performance andacceptance of our products in clinical studies/trials and in the marketplace, material changes in the marketplace that could adverselyimpact revenue projections (including changes in market perceptions of our products, and introduction of competitive products),
unexpected costs and expenses that could adversely impact liquidity and shorten our current liquidity projections (which could in turnrequire us to seek additional debt or equity capital within the next 12 months), our reliance on key personnel, the right of the Federal
Government to cut or terminate further support of the thermal burn injury program (including any decision by BARDA not to proceedwith a wound trial in 2016), our abilities to capitalize on our internal restructuring and achieve break-even or profitability (or to continue
to reduce our operating losses), and other risks and uncertainties described under the "Risk Factors" in Cytori's Securities andExchange Commission Filings, included in our annual and quarterly reports.
There may be events in the future that we are unable to predict, or over which we have no control, and our business, financial condition,
results of operations and prospects may change in the future. We assume no responsibility to update or revise any forward-looking
statements to reflect events, trends or circumstances after the date they are made unless we have an obligation under U.S. Federal
securities laws to do so.

CYTORI THERAPEUTICS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS(UNAUDITED)As of
As of June 30, December 31,2016

2015

AssetsCurrent assets:
Cash and cash equivalents$ 20,042,000 $ 14,338,000

Accounts receivable, net of reserves of $785,000 and $797,000 in 2016 and 2015, respectively

911,000

1,052,000

Inventories, net

4,534,000

4,298,000

Other current assets

1,263,000

1,555,000

Total current assets

26,750,000

21,243,000

1,380,000

1,631,000

Property and equipment, net
Restricted cash and cash equivalents

350,000

350,000

Other assets

1,449,000

1,521,000

Intangibles, net

8,829,000

9,031,000

Goodwill

3,922,000

3,922,000

Total assets$ 42,680,000 $ 37,698,000

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
Current portion of long-term obligations, net of discount$6,585,000 $

6,687,000

3,494,000——

1,750,000

10,079,000

8,437,000

Deferred revenues

106,000

105,000

Long-term deferred rent and other

111,000

269,000

13,663,000

16,681,000

23,959,000

25,492,000——

20,00013,000386,845,000

368,214,000

617,000

996,000

Joint venture purchase obligation
Total current liabilities

Long-term obligations, net of discount, less current portion
Total liabilities
Commitments and contingencies
Stockholders’ equity (deficit):
Series A 3.6% convertible preferred stock, $0.001 par value; 5,000,000 shares authorized; 13,500
shares issued; no shares outstanding in 2016 and 2015
Common stock, $0.001 par value; 75,000,000 shares authorized; 20,492,601 and 13,003,893 sharesissued and outstanding in 2016 and 2015, respectively
Additional paid-in capital
Accumulated other comprehensive income

Accumulated deficit(368,761,000) (357,017,000)

Total stockholders’ equity

18,721,000

Total liabilities and stockholders’ equity

12,206,000$ 42,680,000 $ 37,698,000

CYTORI THERAPEUTICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME(UNAUDITED)

Product revenues

For the Three Months

For the Six Months

Ended June 30,

Ended June 30,

2016

2016

2015

2015

$ 1,126,000 $ 1,614,000 $ 2,459,000 $ 2,516,000

Cost of product revenues
Gross profit

585,000

1,296,000

1,152,000

1,894,000

541,000

318,000

1,307,000

622,000

1,699,000

1,847,0003,284,000

3,291,000

1,699,000

1,847,000

3,284,000

3,291,000

5,247,000

6,048,000

9,374,000

10,012,000

Development revenues:
Government contracts and other
Operating expenses:
Research and development
Sales and marketing

889,000

654,000

1,924,000

1,493,000

2,328,000

2,793,000

4,614,000

5,292,000—(13,122,000)—

2,322,000

Total operating expenses

8,464,000(3,627,000)

15,912,000

19,119,000

Operating (loss) income(6,224,000)

5,792,000(11,321,000) (15,206,000)

General and administrative
Change in fair value of warrant liabilities

Other income (expense):
Income (loss) on asset disposal—(1,000)

2,000

8,000

Loss on debt extinguishment—(260,000)—(260,000)Interest income

2,000

3,000

4,000

3,000

Interest expense(645,000)(936,000)(1,302,000)(2,007,000)

Other income (expense), net

462,000(148,000)

874,000(47,000)

Total other expense(181,000)(1,342,000)(422,000)(2,303,000)

Net (loss) income$ (6,405,000) $ 4,450,000 $ (11,743,000) $(17,509,000)

Beneficial conversion feature forconvertible preferred stock
Net (loss) income allocable to common stockholders———(661,000)$ (6,405,000) $ 4,450,000 $ (11,743,000) $(18,170,000)

Net income (loss) per share allocable to common stockholders
Basic
DilutedWeighted average shares used in calculating net income (loss) per shareallocable to common stockholders$(0.43) $$(0.43) $0.48 $(0.84) $(2.22)

0.45 $(0.84) $(2.22)

Basic14,778,616

9,266,141

13,932,496

8,179,403

Diluted14,778,616

9,824,538

13,932,496

8,179,403

Comprehensive (loss) income:Net (loss) income$ (6,405,000) $ 4,450,000 $ (11,743,000) $(17,509,000)

Other comprehensive (loss) income – foreign currency translationadjustments

215,000(130,000)

Comprehensive (loss) income(379,000)$ (6,535,000) $ 4,665,000 $(12,122,000) $(17,258,000)

CYTORI THERAPEUTICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(UNAUDITED)For the Six Months Ended June 30,2016

2015

Cash flows from operating activities:
Net loss(11,743,000) $(17,509,000)$

Depreciation and amortization

574,000

510,000

Amortization of deferred financing costs and debt discount468,000

500,000

Joint Venture acquisition obligation accretion

24,000307,000

Provision for expired inventory

26,000—Change in fair value of warrants—

2,322,000

645,000

1,146,000

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense
Loss on asset disposal
Loss on debt extinguishment

2,000

—

—

260,000

66,000544,000

Increases (decreases) in cash caused by changes in operating assets and liabilities:
Accounts receivable
Inventories(380,000)

730,000

Other current assets

137,000(106,000)

Other assets

34,000407,000(431,000)

1,089,000

1,000

151,000(158,000)(139,000)(10,735,000)(9,788,000)

Purchases of property and equipment(105,000)(497,000)

Expenditures for intellectual property—(13,000)(105,000)(510,000)

Principal payments on long-term obligations—(25,032,000)

Proceeds from long-term obligations—

17,700,000

Debt issuance costs and loan fees—

(1,854,000)

Joint Venture purchase payments(1,774,000)(1,123,000)—

4,986,000

18,179,000

24,930,000—(75,000)

16,405,000

19,532,000

Accounts payable and accrued expensesDeferred revenues
Long-term deferred rent
Net cash used in operating activities
Cash flows from investing activities:

Net cash used in investing activities
Cash flows from financing activities:

Proceeds from exercise of employee stock options and warrants
Proceeds from sale of common stock, net
Dividends paid on preferred stock
Net cash provided by financing activities

251,000

Effect of exchange rate changes on cash and cash equivalents

139,000(14,000)

Net increase in cash and cash equivalents

5,704,000

9,220,000

Cash and cash equivalents at beginning of period

14,338,000

14,622,000

20,042,000 $

23,842,000

Cash and cash equivalents at end of period$

View source version on businesswire.com: http://www.businesswire.com/news/home/20160804006439/en/
Source: Cytori Therapeutics
Cytori Therapeutics
Tiago Girao, 1.858.458.0900
ir@cytori.com