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TOPIC: Q3 Report 2015

Q3 Report 2015 05 Nov 2015 15:23 #5419

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SAN DIEGO--(BUSINESS WIRE)-- Cytori Therapeutics (NASDAQ: CYTX) today announced its third quarter financial results and provided updates on its corporate activity and clinical development.

Third quarter 2015 net income allocable to common stockholders was $1.5 million, or a net loss of $5.8 million and $0.04 per share when excluding a non-cash charge of $7.3 million related to the change in fair value of warrant liabilities. Cytori continued to reduce its operating cash burn, spending approximately $6.1 million in the third quarter 2015. Cytori ended the second quarter of 2015 with $19 million of cash and cash equivalents.

“This has been a good quarter for us; our trials are progressing on schedule and we have a number of anticipated milestones over the next 12 months related to our lead programs in scleroderma and osteoarthritis,” said Dr. Marc H. Hedrick, President and CEO of Cytori Therapeutics. “In parallel, we are preparing for commercial success through expansion of our market access activities in Europe for scleroderma, broadening our business development efforts and strengthening our leadership team. Also, we are analyzing additional opportunities to cost effectively expand our clinical pipeline and better develop the technology platform upon which it is based.”

Select Q3 Highlights:

Publication of extended follow-up data showing sustained benefit of results in pilot/phase I/II trial for scleroderma hand dysfunction
Initiated enrollment in two late stage trials for scleroderma hand dysfunction in both the US (STAR trial) and Europe (SCLERADEC-II trial)
Initiated enrollment of Japanese pivotal/phase III trial for stress urinary incontinence (ADRESU trial)
Publication of twelve-month follow up data in patients with intractable inflammatory bowel disease
Q3 and Year-To-Date Financial Performance

Q3 and year-to-date operating cash burn of $6.1 million and $15.9 million, compared to $7.2 million and $25.4 million for the same periods in 2014, respectively.
Cash and debt principal balances at September 30, 2015 of approximately $19 million and $17.7 million, respectively.
Q3 and year-to-date product revenues of $0.8 million and $3.3 million, compared to $0.5 million and $2.5 million for the same periods in 2014, respectively.
Q3 and year-to-date contribution (profit/loss) from our sales and marketing organization, excluding share based compensation, of a loss of $0.3 million and $1.1 million, compared to a loss of $1.2 million and $4.0 million for the same periods in 2014, respectively.
Q3 and year-to-date contract revenue of $1.7 million and $5.0 million, compared to $0.6 million and $1.3 million for the same periods in 2014, respectively.
Q3 and year-to-date net loss/income allocable to common stockholders was a net income of $1.5 million (or $0.01 per share, or a net loss of $5.8 million and $0.04 per share when excluding a non-cash charge of $7.3 million related to the change in fair value of warrant liabilities) and a net loss of $16.6 million (or $0.12 per share, or $21.6 million and $0.16 per share when excluding a non-cash charge of $5 million related to the change in fair value of warrant liabilities), compared to a net loss of $9.4 million (or $0.12 per share, or $9.5 million and $0.12 per share when excluding a non-cash charge of $0.1 million related to the change in fair value of warrant liabilities) and $31.6 million (or $0.41 per share, or $31.7 million and $0.41 per share when excluding a non-cash charge of $0.1 million related to the change in fair value of warrant liabilities) for the same periods in 2014, respectively.
“We continue to seek to hold the overall cash burn down while expanding the overall spending in research and development,” said Tiago Girao, VP of Finance and CFO of Cytori Therapeutics. “We have been successful at this thus far through the implementation of ‘across-the-board’ operational efficiencies, tighter management of working capital, better support from key stakeholders and service providers, and ultimately by maintaining a clear company-wide focus on only those activities than management feels will bring shareholder value in the most compressed time frame possible.”

Upcoming Near Term Catalysts:

Evaluate and release 24-week data from 94 patient US pilot/phase IIb ACT-OA trial (anticipated Q1 2016) and identify partner for late stage US clinical development
Complete enrollment of US STAR trial (anticipated mid 2016) for scleroderma hand dysfunction
Complete enrollment of EU pivotal/phase III SCLERADEC-II trial (anticipated mid 2016) for scleroderma hand dysfunction
Complete enrollment of Japanese pivotal/phase III ADRESU trial (anticipated 2017) for stress urinary incontinence
Work with FDA to plan a burn wound therapy trial related to contract with BARDA (anticipated in 2016)

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Q3 Report 2015 05 Nov 2015 15:28 #5420

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From a financial perspective meets my expectations, since I did not have any :joy:

However does not come anywhere near to what analysts had ... :whistle:

See nothing about ATHENA, and do not know if I want to stay up for the CC.... :write:

Have fun chewing :nice:

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Q3 Report 2015 05 Nov 2015 15:30 #5421

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Just wants to make you vomit. Wow as expected more savings from cost cutting. Should have thought about that years ago instead of spending money like a drunken sailor. :puke:

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Q3 Report 2015 05 Nov 2015 15:37 #5422

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766K in product revenue :woohoo: :puke: DOV you may not want a year end revenue update.

Com'on Fas...you don't think Hedrick has a big ATHENA presentation waiting to share...LOL !!!! :grin: :evil:

I may miss some of the call as well.

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Q3 Report 2015 05 Nov 2015 15:37 #5423

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Fas, not much happens for people here. ATHENA has always been a hidden problem. The sales number remain low.

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Q3 Report 2015 05 Nov 2015 16:32 #5425

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It is clear Lorem has yet to purchase any of the $5 million commitment milestone. With 9 month product revenue at $3,282,000, how much will they force Lorem to buy in the 4th quarter.

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Q3 Report 2015 05 Nov 2015 20:37 #5428

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DOV, didn't they say last Q that the did ship some to Lorem....just revenue hasn't been recognized yet. Isnt this correct ?

Best part about tonight's call may be we don't hear from them for 4 months now.

Scleroderma "on track" what ever that means because "on track" history is delay after delay. No treated number update.

CTX2 now second half ...that's a delay right...I mean "on track"

ATHENA data....or should I say what data? They basically said nothing and will present 6 and 12 month data sometime in the future. Right "on track"

Burning through cash with about 9 months left which means they have 6 months to make something happen to get more. "on track"

Hedrick disappointed in revenues from Japan...I guess we should ask what revenues...LOL. This was "off track" New guy brought in to improve. The burning SUI app will take up to 2 years to enroll. Wait until Hedrick sees how disappointing those revenues are...LOL

Stonegate analyst only one who asked a real question that I heard and I cant even remember what that was. Yes, it was that interesting of a call for me.

After 2 reasonably decent calls I have to Grade this one as a "D-"

Whoops almost forgot about BARDA...which might as well be French for delay.
Also discussion of the time limits of scleroderma treatment and future need for retreatments.
Missed the end of the call if others have more to offer.

DOV, you are still far to high on your 2020 estimates imho !!!!!!

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Q3 Report 2015 05 Nov 2015 20:50 #5430

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IHedge, although there was not much new, I thought the call was well done. Its all about OA now and it is interesting how Tiago was the one to talk about solving the balance sheet with an OA partnership. De ja vu all over again as Yogi Berra said? ..or will this new management team finally deliver? That is the question.

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Q3 Report 2015 06 Nov 2015 01:38 #5431

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I just glanced quickly over the transcript which Seeking Alpha already has, so..key is:

We are actively working on partnering activities with a goal to identify a global partner for osteoarthritis and an European partner for sclera that, if successful, would provide additional liquidity for the foreseeable future. Operationally, we are focused on the execution of our key clinical objective with continued emphasis on our U.S. trials for scleroderma and osteoarthritis.


Anything else except money has no impact on Wallstreet anyway.. :whistle:

Link to transcript: Seeking Alpha Transcript

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Q3 Report 2015 06 Nov 2015 10:31 #5434

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FAS, I do agree with you and many others here that Hedrick and Tiago Girao have done a great job in reporting the 3rd Q progress report.

At this time, it appears to me that regardless how good they have done their job, a selloff in the stock always follows. What a pity?

I think the key question is How and where extra money is coming to support all the ongoing progresses ? I think we may (or may not) know the answer during the first Q next year.

Last night, AP had a heading: CYTORI 3rd Q PROFIT (1 cent or 1.5 million). I went back and look at the 2nd Q company business report, they di better last time regarding the so called PROFIT or NET INCOME (3-4 cents ). So the so called NET INCOME has gone down in the past Q.

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Q3 Report 2015 06 Nov 2015 19:41 #5437

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We know OA is a waiting game but really was hoping more for scleroderma than "on track"

Thanks Fas for adding the final comments on the other thread.

As far as cardiac...expected little and got little. Agree it shouldn't be the focus now anyway.

No one commented on my Lorem statement / question...didn't they say last Q they made a shipment to Lorem under the contract terms ?

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Q3 Report 2015 07 Nov 2015 08:56 #5442

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Lorem has purchased some product from Cytori after the Chinese approval. Roughly $600,000 in Q2 and $100,000 in Q3. Based on unchanged guidance, I do not believe Lorem will fulfill the entire milestone purchase in calendar year 2015. If they did, 4th quarter revenues from product sales would be $4,300,000 from Lorem alone plus other customers/distributors who could add $2 million or so. If Cytori actually sold $6.3 million in the 4th quarter that would extend their available cash for two to three months. Gross margins were 34.5% in Q3. They have on occasion been as high as 59%.

From the April 6, 2015 press release:

In November 2013, Cytori Therapeutics and Lorem Vascular entered into a 30-year exclusive licensing agreement to commercialize Cytori Celution System in China, Hong Kong, Malaysia, Singapore, and Australia. As part of that agreement, Lorem Vascular agreed to pay up to $500 million in fees to Cytori for a 30-year exclusive license for all indications, excluding alopecia, in the licensed territories following specific revenue milestones, as well as royalties of 30% on gross profits from Lorem’s operations in China, Malaysia and Hong Kong. Furthermore, following today’s news, Lorem Vascular placed an opening order of 23 Celution Devices and 1,100 Celution Consumable Sets, which is anticipated to be fulfilled throughout 2015. Following this opening order, Lorem Vascular has agreed to purchase annually a minimum of fifty (50) Celution Devices and fifty (50) Celution Consumable Sets for each of the Celution Devices for the next three years from CFDA clearance.

The three year commitment mentioned should be worth anywhere between $5,750,000 and $10,750,000 in annual revenues depending on pricing of the consumables. I have always heard the price point target for the CTX2 was $15,000, but that hasn't been mentioned in a couple of years. I wonder how much Lorem is paying for the Celution 800 devices? I remember the manufacturing cost was around $40,000. I would drag my feet as long as possible too!

As we all know well, gaining approval to sell the Celution device in a country has little to do with treating patients and using consumables. Obviously, the devices have to be out there first. Is there any reason to think a communist government would reimburse procedures faster than a capitalist government based solely on anecdotal evidence of efficacy? KT Lim's ROI depends on a faster ramp up than we have seen in the first two years of the venture.

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Q3 Report 2015 07 Nov 2015 09:11 #5443

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From the original press release Nov 2013

Lorem Vascular will pay up to $500 million in fees for a 30-year exclusive license to Cytori Cell Therapy for all indications, excepting alopecia and aesthetics, in the licensed territories in the form of revenue milestones. In addition, Lorem Vascular agrees to purchase the Cytori Celution® System and consumables under a product supply agreement. Cytori will receive $24 million in exchange for 8 million shares of Cytori common stock at $3.00 per share. Equity purchased will be closed in two installments; a $12 million payment that will be paid within 7 days and a second $12 million payment that will be made within 60 days. In addition, Lorem Vascular will order $7 million in Celution® devices and consumables with a $2 million order placed immediately and a $5 million order to be placed following regulatory approval in China. Lorem and Cytori have implemented a regulatory plan in China and anticipate approval in 2014.

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Q3 Report 2015 07 Nov 2015 11:16 #5444

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Hedge,

I am down to $.72 eps in 2020 on revenues of $340MM. I probably will not make any more changes to 2020 until phase II and phase III data is available and/or a partnership sheds light on that far out. I have a loss of $.17 this year and a loss of $.07 for 2016.

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Q3 Report 2015 07 Nov 2015 12:36 #5445

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DOV

Thanks for the 2020 update.
I'm still sticking with $0.19 which was a small revision I made last Q from my $0.17 to $0.18 range that was dependent on share count. I felt I was too light with what Lorem revenues could provide,
I agree we need more info before further refinement.

A few personal assumptions:
While still a unknown if CYTX will get a higher reimbursement rate for scleroderma my view point is the start and the steepness of the ramp may be slower than hoped.
OA really a wild card with still another trial phase to be completed and unknown partnership possibilities and contributions. The rate of enrollment was very encouraging though. Could be the real value driver in Wall St's eyes vs scleroderma. We'll see.
I did breakout Lorem and Okyanos but consider everything else small potatoes through at least 2020.

Was there one standout for your reduction ?

I do like that we are getting closer in our estimates.
I cant say it adds validity to either one but one does what one can I guess...LOL

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Q3 Report 2015 07 Nov 2015 14:22 #5447

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A few adjustments: lowered treatment sites for Scleroderma from 35 to 25 in 2019 and 2020. I am using $25,000 per treatment and that may prove to be way too high. I am more optimistic on the number of patients willing to be first after reimbursement. I am using 3,125 patients in 2019 and 2020. I think this could end up being quite low given the strong Scleroderma foundation and communication. For now, it is fine.

I left Lorem the same, but lowered "other countries" which includes Okyanos to $1 million per year in the out years. Okyanos has had terrific results, but they have a pricing strategy that asks "what's your quality of life worth." I have heard this from a number of unconnected sources. It is also becoming easier to get treated in the US with the Celution system using a one time IRB application. Still expensive, but less than Okyanos by a wide margin. I don't know enough to elaborate.

I think it is worth separating as many identifiable revenue sources as possible mainly because each one of them have a different path to success: (different laws, different trials, different fields of medicine and doctors). Anyway, it is a time filler while we wait, if nothing else.

On OA, if our partner ends up being one of the major suppliers of artificial knee joints, the ramp could be surprising on the upside. There are 760,000 knee joint procedures annually in the U.S. Johnson and Johnson, Stryker, and Zimmer call on almost all of the doctors who perform these operations. There must be close to 8,000 orthopedic surgeons as potential customers. The ideal patient for the stem cell injections are in stage two OA and I would think this number would be far greater than those stage four patients who get new joints. On the other hand, if our future partner is Chris Calhoun (I am not serious except to establish a category), then, well I don't have to say it. We should know something in the next six months. If not, the Phase III trial will not start next year.

To pat you and myself on the back, I think we have done a better job thinking this through than Jason Kolbert.

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Q3 Report 2015 08 Nov 2015 09:00 #5450

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DOV, how likely do you really think it is for a BP device company to promote a therapy (Celution/SVF) that will cannibalize its existing lucrative device sales ? We have seen how Medtronic a BP company dealt with Macropore/Cytori in the past. Certainly if the data is compelling then they will be forced to face the realization that this technology can devastate their business and they may well rush to buy in. Hopefully, to take a leading position vis a vis their existing competitors, and not to suppress it. It is inevitable that SVF will eventually change the dynamics of medical care. What I am afraid of is that they may try to delay the introduction of this technology/treatment.

The reason is not due to the cannibalization so much. Rather I am concerned that they are not sure what it is that they would be buying into. Imagine if you will these questions and then consider the various scenarios that may arise :

1. Who owns the device? If I am BP and I sign a deal how do I deal with the fact that I don't control the device, particularly given that the new generation device is anticipated to fall in price considerably and could conceivably become ubiquitous? If there is a Celution device in a hospital which can be used by a number of departments for a wide range of conditions how do you charge the various partners/users? I assume that it is per consumable, which raises the question of how is each consumable priced given that they are essentially the same irregardless of the indication being treated.

2. How do you differentiate pricing for what is essentially the same consumable (Celase). There may be differences in the volume of Celase required for different indications but I doubt that there are varying degrees of purity for the product. Government reimbursement policies may conceivably understand the benefit of the treatment in high value procedures and be prepared to pay optimal pricing but would find it difficult to justify if the same product is approved at a lower price for lower value but higher volume indications. Given the range of indications this product can potentially treat the range in pricing is also conceivably very broad. In Europe and the USA you cannot have too many partners in different indications as they will be running into each other and it will be difficult to have a consistent strategy vis a vis government and health care providers.

3. In the end the drug is the patients own cells so there may well be pressure by many countries to try and presure for low product pricing, particularly if the product (Celution) does have the possibilty of becoming ubiquitous. Preemptively trying for low reimbursement may be very important to reduce health care costs in the longer term. Patent protection becomes paramount which leads to the question "how strong is our position" , (1) from when does the patent clock start to tick, (2) have subsequent refinements in the machinery/process warrant extention and if so by how long ......... none of this has been tested.

4. How easy is this product to replicate. BP would be most reticent to facilitate the approval of the product through funding trials to only find that they cannot control (prohibit) access to the treatment offered by others, as is already the case throughout the USA, even if the others service/product is inferior to Cytori's and unsubstantiated. Why provide the proof (trials) and run the risk of others taking away your patients.

I tend to think that we need someone with very deep pockets who does not have to defend vested interests. Olympus was one such company.
Perhaps someone like GE Medical could be an alternative although I fear that they would go for a takeover rather than a joint venture/partnerhip deal. Thankfully, slowly but surely governments are coming to the party by funding trials, SUI -Japan, BARDA-burns, and France- scleroderma.
All it will take is one approval however small to totally change the perception of the value of SVF. The question is will we still own it ......... and will we be able to control it.?

I believe that Dean was sincere when he talked about 10XWD and double down. Obviously CC didn't deliver. Why exactly we do not know. I wanted him to "show me the money" but I think he realised that it was not going to happen quickly and that there was a considerable amount of reputational risk in staying.........that's why he left.

Even if clinically successful there are many lingering issues such as those mentioned above that make this a difficult investment. I firmly believe in the efficacy of the treatment and am sure that eventually it will change the face of medicine. It would be nice to make some money ......... just in case management is listening. :KO:

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Q3 Report 2015 08 Nov 2015 17:13 #5453

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Rongside,

The Act-OA trial criteria excluded patients with stage 3 and stage 4 OA of the knee. A lady who works in my office tried to be treated in the trial, but was turned down because she has stage 4 OA. (the only other reason to turn her down would be because management would not like DOV to have inside information on the trial - I think I am kidding). It is my belief that someday orthopedic surgeons will treat stage one, two and maybe stage three patients with stem cells. It remains to be seen if the cells can repair stage four. Since all of this is progressive, if all future people are treated at stage one or two, in theory there would be very few people who progress to the point of needing a total knee replacement. This will also apply to hips and shoulders. The way I see it, if your business is to manufacture artificial joints, you better add biologics to your product line or face going out of business.

The question about patents is a very good one. If J&J partners with Cytori, what will Stryker and Zimmer and the others do? Cytori will be first to get an approval and reimbursement. All other stem cell processing methods will have to go through the same process (we all hope that will be the case, BUT...). The second movers will invest in competing methods to isolate cells and get them approved and reimbursed as a cost competitive method to the Cytori JV. This is where the patents will be tested. The year will probably be 2022 or so.

I, too, am skeptical about the true differences between the cell mixture for treatment of Scleroderma versus OA of the knee versus enhanced fat grafting, versus XXX. I think the pricing mechanisms can be worked out for each end use. Drugs sell at vastly different prices based on insurance company reimbursement, Medicare reimbursement, country involved, etc.

I think one of your points was that these topics must be thoroughly thought through by any potential partner in the near future before Cytori will be able to secure a quality partner. Since we have no financial strength, we can only rely on the strength of the data. I think we are 16 weeks away from knowing the results (March 1, 2016 is my bet). (45 real working days after the last patient undergoes their 6 month testing)

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