Scimitar Equity Blog

   Net loss of $20.59M or $0.15 per share

Net loss for Q2/12 was $20.59 or $0.15 compared to $10.77M or $0.13 per share in Q2/11.

NBS expects $12.3M in cash be added to the balance sheet and $35M in short and long-term debt obligations removed through the divestiture of Erye. $6.2M representing 50% of the cash price is now in the NBS and in escrow. The closing is expected to occur over the next 6-10 weeks.  NBS has raised through warrant exercises and equity sales $17.6M over the first 6 months of 2012.

Revenues from continuing operations for Q2/12 were $3.37M compared to $2.21M in Q2/11. Cost of revenues were $2.736M for a gross profit of $636.1K as compared to Q2/11 of cost of revenue of $1.79M and a gross profit of $420K. R&D expenses were $2.7145M as compared to $1.591m in Q2/11. SG&A expenses were $4.732M as compared to $8.868M in Q2/11.Total operating expenses in Q2/12 were 7.447M as compared to $10.459m in Q2/11.   The operating loss was $6.811M in Q2/12 versus $10.039M in Q2/11. Interest expense was $450.9K. The net loss was $33.422M as compared with $10.537M in Q2/11. The loss from continuing operations was $7.15M as compared to $10.07M in Q2/11 for a net loss attributable to shareholders was $20.59m as compared to $10.77M in Q2/11. The shares used in computing the net loss in Q2/12 were 134.4M as compared to 80.567M in Q2/11. NBS’s Q2/12 results include Erye, its Pharmaceutical Manufacturing – China segment, in discontinued operations. Loss from continuing interests (attributable to non-controlling interests) was $86.96K. Loss (income) from discontinued (non-controlled interests) operations was $12.8M with the net loss to NBS was $20.5M with preferred dividends of $88.39K for a net loss attributable to common shareholders of $20.593M.

• As of 6/30/12, NBS had cash and cash equivalents of $2.1M and an additional $2.5M in cash held in escrow. NBS has raised an additional $17.6M through warrant exercises and private placements of restricted securities since the end of Q2/12.  NBS expects to receive a total of $12.3M from the sale of its ownership in Erye, providing additional forecasted cash inflows of over $19M in the 2nd half of FY12 without further dilution

6 Month review:

The net loss for the 6 month period was $30M, or $0.24 per share, compared to $21.13M or $0.27 per share. The shares used in computing the net loss were 123.1M as compared to 77.11M in the 6 month period of FY11. Revenues were &.14m with a cost of revenues at $5.69M for a gross profit of $1.453M as compares to the corresponding 6 month period of $3.65M in revenue, cost of revenue of 43.46M and gross profit of $199K. R&D expenses were $4.66M as compared to $4.11M. SG&A expenses were 11.14M as compared to $15.31M. Operating expenses were $15.8M as compared to $19.4M for a operating loss of 14.35m compared to $19.2M.

Q2/12 Highlights:

• A definitive agreement to divest its majority holdings in its Erye, China pharmaceutical manufacturing segment and focus on its CDMO and cell therapy product development businesses, NBS’ Common Stock price has increased 53% raising its market cap to $108M as of 8/10/12;
• NeoStem is continuing to enroll patients into the PreSERVE™ P2 clinical trial in the US for post AMI (acute myocardial infarction) patients and anticipates completing enrolment in 2013 with 6 months initial data readout near the end of 2013;
• NeoStem has received directly or into escrow $6.2M representing 50% of the total $12.3M cash purchase price.  The divestiture of Erye will also return approximately 1,040,000 shares and cancel 1,170,000 options and 640,000 warrants;
• The divestiture will bolster NeoStem’s balance sheet by eliminating over $35M in short and long-term debt obligations. The divestiture transaction is expected to close in the next 6-10 weeks, subject to the satisfaction of various closing conditions including China regulatory approvals, the submission of which is already underway;
• The Erye divestiture allows NBS to hone its focus on its cell therapy clinical development programs and the Progenitor Cell Therapy (“PCT”) CDMO commercial business;
• NBS is currently conducting its PreSERVE™ P2 clinical trial in the US. NBS anticipates completing P2 patient enrolment in 2013 with 6 months initial data readout near the end of 2013. The Amorcyte AMR-001 product development program also extends to congestive heart failure (CHF). NBS is preparing to launch its CHF P1 clinical trials in early 2013. The worldwide CHF patient population is estimated to be 4x (times) larger than that of AMI.