Scimitar Equity Blog

   Net loss was $9.3M, or $0.16 per share

Net loss was $9.3M, or $0.16 per share, for Q1/12 compared to $12.1M, or $0.23 per share, for Q1/11.  

Q1/12 product revenues were $1.5M compared to $1.4M in Q1/11. Gross profits were $0.6M, compared to $0.5M for Q1/11. As stated in the 2011 year-end release, 2012 sales are expected to be weighted toward the second half of the year and based on internal quarterly projections. Development revenues were $3K

R&D expenses were $2.836M and S&M costs were $2.376M while G&A were $3.924M. Q1/12 total operating expenses were reduced by 31% to $9M, compared to $13M in Q1/11. Operating expenses include non cash costs associated with changes in the fair value of option and warrant liabilities. Net cash used in operating activities was reduced by 27% to $7.7M in Q1/12 compared to $10.6M in Q1/11. The improvement in total operating expenses and net cash used in operating activities for Q1/12 as compared to Q1/11 was due in part to reduced sales and marketing costs and slightly lower clinical trial expenditures. CYTX recently terminated its financing agreement withSeaside88, which raised a total of $18.2M since entering the agreement. The primary emphasis is to strengthen the balance sheet by executing 1 or more development and commercialization partnership agreement(s). The net loss was computed by basic and diluted shares of 57,484M.

• CYTX had $34.4M in cash and cash equivalents and $1.4M in account receivable, net of reserves. This compares to ending 2011 with $36.9M in cash and cash equivalents and $2.3M in accounts receivable, net of reserves;
• Cytori reaffirms guidance of $9M in product revenue.

Q1/12 Highlights:

Pipeline

• Received approval from the FDA to begin the US ATHENA IDE trial for chronic myocardial ischemia (CMI); all five centers have been identified and enrollment of the 1st patient is anticipated in the Q2;
• Published clinical data from 2 company-sponsored European trials: the APOLLO cardiac cell therapy heart attack pilot trial and the RESTORE 2 post-marketing breast reconstruction trial;
• Completed multiple meetings with the European regulatory body to review clinical data, specifics on claims and negotiate details on potential patient registry toward CE Mark approval for no-option CMI; providing additional data upon the Notified Body’s request; decision expected in 2012.

Commercial Business:

• Continued to build market access for breast reconstruction in Europe; submitted a medical technology assessment application in the UK;
• Grew commercial business; product revenues increased by 9% compared to Q1 2011; reaffirm $9M revenue guidance for 2012.

Operational and Financial Performance:

• Reduced total operating expenses by 31% and the operating cash burn rate by 27% as compared to Q1 2011;
• Ended the Q with $34.4M in cash and cash equivalents, compared with $36.9M as of year-end 2011;
• Received US composition patent for soft tissue defects and US device patent for accelerating healing of wounds, bringing the total number of issued patents worldwide to 46 with more than 75 applications under review;
• Continued to advance multiple near term partnerships, focused primarily on the two most advanced transactions.

The Bottom Line: The cardiac pipeline is now the greater emphasis in CYTX’s chronic applications platform, which include the potential CE Mark approval and the US ATHENA trial. CYTX has improved operational efficiencies for the commercial business, including year-over-year revenue growth and reduced sales and marketing expenses. Lastly, CYTX is advancing partnership negotiations, strengthening IP position and expanding country approvals. My ranking: STRONG  BUY!