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Cytomedix (OTC: CMXI) Q1/13 Results – BUY, This Is The Year For Growth And Return!

Net loss of $5.33 M, or $0.05 per share

A net loss of $5.33 million or $0.05 per share in Q1/13 compared to a net loss of $4.73 million or $0.07 per share in Q1/12.

Total revenues were $2.3 million, a decrease of approximately $700 K compared to Q1/12 revenues of $3.016 million. The decrease was mostly due to license fee revenue of $1.3 million recognized in 2012 with respect to an option agreement with a top 20 global pharmaceutical company. Product sales in the quarter were $2.3 million, an increase of 34% compared $1.686 million in Q1/12.

Cost of revenues= cost of sales of $1.267 million versus $848.4 K in Q1/12 and royalties of $5.134 K compared with zero (o) in Q1/12 with a total cost of revenues of $1.272 million and resulting in a gross profit of $1.044 million compared with Q1/12 numbers of $2.168 million.

Gross margin on product sales decreased to 44% from 50%. Sales on lower margin products, specifically Angel machines sold to international distributors, made up a more significant portion of the product mix. The medical device excise tax took effect in 2013, resulting in a decrease in gross margin on product sales. Overall gross margin decreased to 45% from 72%. The license fee recorded in the first quarter of 2012 had no associated cost of revenue and was the primary reason for the decline in overall gross margin year over year.

Q1/13 cash margins on product sales were 52% while cash margins on disposable products were 56%. CMXI defines cash margin as gross margin exclusive of patent amortization and depreciation expense, and it is a significant performance metric used by management to indicate cash profitability on product sales.

R&D expenses were $900 K, an increase of $544 K or 152% year over year. The increase was primarily due to R&D costs related to the ALD-401 P2 clinical trial. SG&A expenses were $5.1 million, an increase of 14% over the $4.5 million from Q1/12.

Total operating expenses in the quarter were $6 million an increase of $1.1 million or 24% compared to $4.88 million in Q1/12. Thus a loss from operations was $5 million versus $2.719 million in Q1/12. Cash used in operating activities during Q1/13 was $4.2 million. Shares used in computing the net loss were 99.1 million in Q1/13 compared to 63.26 million in Q1/12. There were 104.3 million shares of common stock issued and outstanding as of 3/31/13.

  • Cash and cash equivalents were $7.2 million at 3/31/3.
  • In 2/13, CMXI entered into <several> financing transactions for up to $27.5 million overall, which included a tranched $7.5 million senior secured term loan facility, a $5 million equity raise, and a $15 million committed equity facility. Approximately $9.5 million of gross proceeds was received upon closing with commitments for up to an additional $18 million.

Q1/13 Highlights

  • The Centers for Medicare & Medicaid Services (NYSE:CMS) granted formal approval of the protocols for AutoloGel TM under Coverage with Evidence Development(CED). CMS issued coding and reimbursement claims instructions for AutoloGel in non-healing chronic wounds;
  • The Angel® Concentrated Platelet Rich Plasma (cPRP) System was approved for marketing in Australia;
  • A 3 year agreement with Vibra Healthcare, LLC, an owner and operator of Long Term Acute Care (LTAC) hospitals and Inpatient Rehabilitation Hospitals (NYSE:IRF). This agreement will facilitate the use of the AutoloGel System for the treatment of wounds at Vibra Healthcare facilities throughout the US;
  • Steven A. Shallcross, CPA, was appointed as EVP, CFO, Secretary and Treasurer.

The Bottom Line: Revenues decreased $700 K - a license fee recognition issue - happens. Cost of revenues increased resulting in gross margins decreased. But, SG&A expenses increased 14%. R&D jumped but on the basis of the ALD P2 trial costs which are important to the future. The cash raise was successful in traunches for $18 million. CMXI will have sufficient cash to sustain itself through 2013. This is a consolidation and focus quarter setting CMXI's gears to move exponentially forward. CMXI also expects to begin treating Medicare beneficiaries with AutoloGel shortly and will be recording revenues for those AutoloGel treatments soon after the CED implementation date of July 1st 2013.

Product sales continued a steady growth trend, with total sales of $2.3 million in Q1/13 - Angel sales of $2.1 million were particularly strong, up 40% year over year. Both Angel and AutoloGel achieved double digit increases sequentially over Q1/12 with more than 500 Angel Systems on a worldwide basis. Over 40,000 patients are currently being treated with the Angel System on an annualized basis. Reimbursement is the most important milestone for any device - AutoloGel will be covered initially by CMS under the CED program - when CMS formally approved the clinical outcomes in the protocols submitted in response to the NCD memo. CMS has also issued coding and reimbursement instructions to its regional contractors.

The Bright Cell technology pipeline continues to move forward; the clinical development plan includes completion of enrollment in the RECOVER-Stroke Trial with top-line data available in the first half of 2014, and beginning enrollment in the P2 PACE study with ALD-301 in patients with intermittent claudication. The RECOVER-Stroke trial is currently enrolling at 10 sites. The first 30 patients have been enrolled, and CMXI expects to have the planned DSMB review soon. On the whole I am giving credit to Martin and Ed - but caution on cost and expense containment - isn't that what a new CFO is for!

CMXI closed at $0.47 on 5/9/13. The 50 day moving average is $0.50 compared with the 200 day of $0.63 - the needle needs to be pushed! Investors should compare CMXI to Cytori (NASDAQ:CYTX) who is trading at $2.59 as a good hybrid comparable. Let's watch the statistics - short interest if low <at this price, it should be>! The issue is visibility which is being addressed in the upcoming Q's.Expectation is "murky" how perception will be - post earnings but I project a … BUY.

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