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Henry McCusker
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Analyst, Journalist and Publisher ... Henry enters his tenth (10) year at Scimitar Equity -Regenerative Medicine Investors which aggregates, curates and creates bottom-line content weeding of regenerative medicine and cell therapy news to provide a customized, vetted selection of relevant and... More
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  • StemCells (STEM) Q1/13 Results – BUY 0 comments
    May 10, 2013 6:04 AM

    Net loss of $6.41 M, or $0.17 per share

    Net loss of $6.41 M, or $0.17 per share compared to a net loss of $10.22 M, or $0.45 per share for Q1/2012.

    Total revenue was $284 K, compared to $644 K in Q1/12 which included a 1X fee from a license agreement with genOway, for an exclusive license to IRES technology for use in the development and commercialization of genetically engineered mice. Revenue from product sales were $208 K, this 23% decline was primarily attributable to lower unit volumes compared to $271 K in Q1/12. Total operating expenses were $6.475 million, a 10% increase compared to Q1/12. This increase was driven by a 16% increase in R&D expenses, while SG&A expenses declined by 2% compared to Q1/12. The increase in R&D expenses was primarily attributable to higher external services expenses related to preclinical studies of HuCNS-SC cells and expenses related to QC, process development and manufacturing activities to support ongoing clinical trials. Loss from operations was $6'258 million, a 17% increase compared to the $5.326 million loss from operations in Q1/12.

    Other expense was $159 K, compared to $4.9 million in Q1/12. This decrease in other expense was primarily due to a decrease in the estimated fair value of warrant liability, with increases in the warrant liability shown as an expense and decreases shown as income. Net cash used in operating activities in the first quarter of 2013 was $6.65 million. Shares used in computing the net loss ere 38.26 million in Q1/13 versus 22.958 million in Q1/12.

    • STEM had a total of $7.23 M in cash, cash equivalents, and investments compared to $8.47 M at 12/31/12.

    Q1/13 Highlights

    • In 2/13, the first patient cohort in its P1/2 clinical trial with HuCNS-SC cells for chronic spinal cord injury completed the trial, and data from this first cohort showed that the multi-segment gains in sensory function observed at the 6 month assessment in 2 of the 3 patients had persisted to the 12 month assessment. The third patient remained stable;
    • In 3/13, STEM acquired certain patents and patent applications from NsGene A/S, a Danish company. These patents and patent applications claim a purified population of GFAP+ Nestin+ precursor cells in which one or more of the cells are capable of differentiating into neurons;
    • In 4/13, STEM added the Byers Eye Institute at Stanford as the second site for its P1/2 clinical trial with its HuCNS-SC cells in dry age-related macular degeneration (NYSE:AMD);
    • In 4/13, STEM closed a $10 million loan from Silicon Valley Bank (SVB). The loan has a 3 year term and the loan funds will be used for general corporate purposes.

    Bottom Line: A good conference call - the net loss dropped $3.8 million and the share loss dropped $0.28 with great progress on many ongoing projects.
    Beating or missing analysts expectations <Q1 EPS of -$0.17 misses by $0.04. Revenue of $284 K misses by $6 K> is irrelevant at this point.
    STEM is on track, and focused on accelerating enrollment in ongoing trials. The most recent data from the spinal cord injury trial showed gains in sensory function observed at the 6 month time point in 2 of 3 patients had persisted through the 12 month assessment, and that 1 of the 2 had converted from a complete injury to an incomplete injury classification. But, STEM has to be more focused on cash burn and expenditures - having reached agreement with the CIRM for $19.3 million in funding in the form of a … forgivable loan and with Silicon Valley Bank for a $10 million loan - still debt.

    Let's not forget - STEM entered into the …agreement with CIRM for $19.3 million to help fund … pre-clinical development and IND-enabling activities … of its HuCNS-SC cells for Alzheimer's disease, with the goal of filing an IND application within … 4 years <a long time>. The funding, which is in the form of a forgivable loan, was awarded under CIRM's Disease Team Therapy Development Award program (RFA 10-05). STEM declined a 2nd award under RFA 10-05 for cervical spinal cord injury.

    The order book for April was strong, however, getting STEM off to a positive start for Q2/13. One over-riding question - is there a succession planning process in place - love Marty but even I an - old.

    STEM closed at $1.90 on 4/9 up a penny from <$0.01> for 4/8/13. A BUY on the CIRM funding, anticipated IND filing and clinical data.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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