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Aastrom (ASTM) Q3/12 Achievements And 9 Month Results

A net loss of $7.3 M or $0.17

A net loss of $7.3 M or $0.17 per share compared to $1.9 M or $0.05 per share for Q3/11. The increase in net loss is primarily due to the non-cash change in the fair value of warrants, the non-cash accretion of convertible preferred stock and increases in R&D expenses.

R&D expenses for Q3/12 were $6.1 M versus $5.8 M for Q3/11. The increase in R&D expenses was primarily attributable to the P3 REVIVE clinical program for ixmyelocel-T in critical limb ischemia (NYSE:CLI) and the P2b ixCELL-DCM program in dilated cardiomyopathy (DCM), which included clinical site activation, ramp-up of patient enrollment and increased employee costs. G&A expenses for Q3/12 were $2.1 M compared to $1.7 M for Q3/11. The increase in G&A expenses for was primarily attributable to increases in non-cash stock-based compensation, legal and consulting expenses. Other income (expense) for Q3/12 was $2.3 M compared to $5.5 M in Q3/11. These fluctuations were due to non-cash changes in the fair value of ASTM's outstanding warrants. For Q3/12, cash used for operations was $7.7 M. The shares used in computing the net loss were 43.336 M.

  • As of 9/30/12, ASTM had $21.1 M in cash and cash equivalents, compared to $5.5 M in cash and cash equivalents at 12/31/11.

9 Month Review: The net loss was $25.6 M, or $0.63 per share, respectively, compared to $16.9 M, or $0.44 per share, for the 9 months and the same periods a year ago. The increase in net loss for both periods is primarily due to the non-cash change in the fair value of warrants, the non-cash accretion of convertible preferred stock and increases in R&D expenses. R&D expenses for nine months were $20 M versus $15.4 M for the same period a year ago. The increase in R&D expenses for the period was primarily attributable to the P3 REVIVE clinical program for ixmyelocel-T in critical limb ischemia (CLI) and the P2b ixCELL-DCM program in dilated cardiomyopathy (DCM), which included clinical site activation, ramp-up of patient enrollment and increased employee costs. G&A expenses for the nine months were $6.1 M, compared to $5.8 M for the same periods a year ago. The increase in G&A expenses was primarily attributable to increases in non-cash stock-based compensation, legal and consulting expenses. Other income (expense) for the nine months was $3.3 M, compared to $4.3 M for the same periods a year ago. These fluctuations were due to non-cash changes in the fair value of ASTM's outstanding warrants.

Q3/12 Highlights and Achievements:

  • Opened patient enrollment for the P2b ixCELL-DCM clinical study of ixmyelocel-T in patients with ischemic dilated cardiomyopathy;
  • Accelerated patient enrollment and continued to increase the number of clinical investigators and sites in the P3 REVIVE-CLI clinical study of ixmyelocel-T in patients with critical limb ischemia;
  • Completed the exchange of nearly 10 M warrants that were issued in 12/10 for approximately 4.8 M shares of common stock, thereby reducing the company's total number of fully diluted shares outstanding and the potential for further dilution;
  • Appointed Dan Orlando as chief commercial officer;
  • Robert L. Zerbe, M.D., chairman of the board;
  • Announced the retirement of Tim Mayleben as ASTM's president and CEO upon the appointment of his successor; and
  • Appointed Joyce L. Frey-Vasconcells, PhD, to ASTM's scientific advisory board.

The Bottom Line: ASTM continues to make significant progress for regulatory review and commercialization for ixmyelocel-T. ASTM closed at $1.49, down -$0.01 or -0.67% … without the difficulties that have faced "another" CLI disease state comparable … especially related to formulation, as well as the firmly established manufacturing process program. Considering all the positives … including the warrant take-out which set ASTM above their peers in cleaning-up their capital structure … I believe ASTM is hitting on all cylinders - cash is good and partnering activities are on-going with commercial officer Dan Orlando; Brian Gibson has become an extremely competent financial officer with great potential, the CSO Bartel and VP of clinical development Watling are top notch - no company could do better. Compared to one comparable … transparency is beyond - "being obligated"! ASTM is actively recruiting and enrolling patients in the DCM and CLI clinical programs, working in close collaboration with clinical sites. ASTM is taking the steps necessary to build commercial <partnering> capabilities and to have in place the leadership to need to move ASTM through the next levels of clinical, regulatory and commercial success in the months and years ahead.Continuing with a "Strong BUY" and a price target of $3.00 <at least> for end of year FY12.

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