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Cytori (CYTX) Q3/12, Highlights And Achievements And 9 Month Results

Net loss was $11.2 M or ($0.19) per share

Net loss was $11.2 M or -$0.19 per share for Q3/12 as compared to $8.3 M or -$0.15 per share for Q3/11. Net loss for Q3/12 includes a net non-cash charge of $1.2 M related to the change in the fair value of warrant and option liabilities compared to non-cash credit of $1 M and $3 M for Q3/11.

Product revenues were $1.3 M for Q3/12 compared with $2.1 M in Q3/11. Additionally, based on the receipt of the Japan commercial operational license and Class 1 device clearance late in Q3/12, Cytori shipped an additional $1.7 M of systems and consumables to be recognized as product revenue in a subsequent quarter. Gross profit was $0.6 M for Q3/12 compared to $1.2 M in Q3/11. R&D expenses increased to $3.6 M in Q3/12, compared to $2.8 M compared to Q3/11. This planned increase is principally associated with the emergence of the ATHENA trial. SG&A expenses were reduced to $6.2 M in Q3/12, a decrease of 13% compared to Q3/11 of $7.2 M. Net cash used in operating activities for Q3/12 was $7.9 M compared to $7.9 M for Q3/11 and $8.2 M in Q2/12. Shares used to computing the net loss were 58.713 M.

  • CYTX had $17.6 M of cash and cash equivalents and $3.2 M of accounts receivable and expected revenue from the additional product shipments in Q3/12.

9 Month review: Net loss was $28.5 M or ($0.49) per share, for first nine months of 2012. This compares to $25.5 M or ($0.48) per share for first nine months of 2011. Net loss for first nine months of 2012 includes a net non-cash charge of $1.7 M related to the change in the fair value of warrant and option liabilities compared to non-cash credit of $3 M in in 2011. Product revenues were $4.7 M for the first nine months of 2012, compared with $5.9 M for the same periods in 2011. Gross profit was $2.2 M for first nine months of 2012, compared to $3 M for the same periods of 2011. R&D expenses increased to $9.6 M for the first nine months of 2012, compared to $8.9 M, for the same periods respectively in 2011. SG&A were reduced to $18.9 M in first nine months of 2012, and the first nine months of 2011 of $21.8 M. SG&A expenses were reduced to $18.9 M in the first nine months of 2012, a decrease of 13% compared to the first nine months of 2011 of $21.8 M. Reduced net cash used in operating activities in the first nine months of 2012 compared to the first nine months of 2011, driven by reductions in SG&A expenses.

Guidance: Cytori reaffirms its $9 M revenue guidance for 2012 based on already achieved shipments and anticipated orders.

Q3/12 Highlights and Achievements:

  • Awarded a U.S. Government contract with the Biomedical Advanced Research and Development Authority ("BARDA"), a division of the Department of Health and Human Services. The contract is valued at up to $106 M and will be used to develop Cytori's cell therapy for the treatment of thermal burns combined with radiation injury. Contract activities are currently underway including the initiation of key proof of concept studies in addition to accelerating development of the next generation Celution® system;
  • Initiated enrollment in ATHENA, the U.S. clinical trial of Cytori's cell therapy for refractory heart failure; the trial is on track to fully enroll by mid-2013;
  • Resumed enrollment in ADVANCE, a European acute myocardial infarction trial; primary emphasis of the trial continues to be completion of country and site clearances;
  • Expanded Japanese market access in the third quarter by obtaining a full commercial operational license for Cytori Therapeutics K.K. and Class 1 medical device clearance for the Celution® and Puregraft® based technologies. In combination, these resulted in the highest gross quarterly product shipments to date;
  • Expanded Celution® CE Mark certification to include indications-for-use in wound healing and tissue ischemia.

The Bottom Line: CYTX made significant progress on both the clinical and commercial fronts which will help drive growth in 2013 and beyond. Throughout the rest of the year and into 2013, CYTX will look to continue to expand enrollment in ongoing clinical trials, achieve additional strategic partnerships and secure more approvals that drive revenue growth. CYTX closed at $3.22 down $0.09 or -2.72%. Rated a "BUY" and I anticipate a +10 -20% rise in the share price through the next week!!

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