NeoStem, Inc. Announces 2015 First Quarter Financial Results and Provides Corporate Update
May 05 2015 - 7:30AM
NeoStem, Inc. (Nasdaq:NBS) ("NeoStem" or the "Company"), a
biopharmaceutical company developing novel, cell-based
individualized medicine therapies, announced today 2015 first
quarter results and provided an update on its business.
"NeoStem has completed our transformation into a Phase 3
immuno-oncology company with the recent randomization of the first
patient in the pivotal Phase 3 Intus trial for NBS20. This is a
trial that has been granted a Special Protocol Assessment (SPA) by
the FDA. In addition, the NBS20 program has been granted Orphan
Drug and Fast Track designations by FDA, all based on compelling
published Phase 2 results. We look forward to advancing this
therapy towards addressing the significant unmet need of metastatic
melanoma treatment," said Dr. David J. Mazzo, Chief Executive
Officer of NeoStem.
Operational Highlights
In the year to date, NeoStem's operational highlights
included:
- Strengthened leadership with appointments of David J. Mazzo,
PhD as Chief Executive Officer, Robert S. Vaters as President and
Chief Financial Officer, and Peter G. Traber, MD to the Board of
Directors;
- Randomized the first patient in the Phase 3 Intus Study for
stage III recurrent and stage IV metastatic melanoma, an event
which defers the first principal payment for the Company's debt
facility until April 2016;
- Entered into a new Common Stock Purchase Agreement with Aspire
Capital Fund, LLC (Aspire), whereby Aspire is committed to purchase
up to an aggregate of $30 million of shares of NeoStem stock over a
24-month term, supplementing NeoStem's cash, cash equivalents and
marketable securities of $19.1 million as of end of the first
quarter;
- Received Advanced Therapeutic Medicinal Product classification
for the Company's most advanced product candidate, NBS20, from the
European Medicines Agency;
- Expanded office space at Irvine, CA facility to support the
clinical trial operations and manufacturing of NBS20 for the Intus
Study, and also added office space in Basking Ridge, NJ to
accommodate continued growth;
- Received grant subaward from University of California, Irvine
(CIRM), providing non-dilutive financing for discovery
research;
- Completed expansion in Allendale, NJ facility, adding
laboratory, clean room suites and support facilities, and in
Mountain View, CA facility, adding manufacturing capacity with
additional clean rooms, laboratory space and support
facilities;
- Announced an expanded cell therapy manufacturing relationship
with Kite Pharma that will serve as a model for future
collaborations with clients;
- Announced an agreement with Invetech Pty Ltd. to develop a
closed-processing system for cell therapy manufacturing, to provide
a flexible small-scale process suitable for GMP manufacturing of
autologous and other patient-specific products;
- Announced one-year follow-up results from the Company's Phase 2
PreSERVE study for patients with left ventricular dysfunction
post-ST elevation myocardial infarction (STEMI) supporting previous
observation of dose-dependent signals across multiple
endpoints.
2015 First Quarter Financial Highlights
Total revenue for the quarter was approximately $3.2 million
compared to $4.1 million for Q1 2014, a decrease of 22%, which was
primarily due to lower reported Clinical Services revenues. The
decline, however, was impacted by the net incremental deferral of
$1.2 million of additional revenue during the three months ended
March 31, 2015, based on our revenue recognition policy.
Accordingly, total non-GAAP Adjusted Revenue, which excludes the
impact of deferred revenue adjustments, was approximately $4.3
million for both Q1 2015 and Q1 2014, respectively (see below for
reconciliation), reflecting adjustments for numerous process
development contracts still in process that were not recognized
under the Company's revenue recognition policy.
Research and development expenses were approximately $6.8
million for the quarter compared to $4.8 million for Q1 2014. The
increase was primarily related to an increase in expenses for the
Company's immuno-oncology program, including the initiation of
activities to support the commencement of the Intus Phase 3
clinical trial for NBS20, as well as a minor increase in expenses
for the immune modulation program efforts to develop T Regulatory
cells (Tregs). In addition, there was a minor overall increase in
expenses for the ischemic repair program, whereby lower expenses
associated with the PreSERVE AMI Phase 2 clinical trial for the
Company's product candidate NBS10 were offset by higher expenses
associated with activities to support a potential critical limb
ischemia development program in Japan.
Selling, general and administrative expenses were approximately
$11.1 million for the quarter compared to $9.0 million for Q1 2014,
and included $3.2 million and $3.3 million, respectively, of
equity-based compensation. The increase was primarily related to
expenses associated with executive management changes in the first
quarter of 2015, including one-time new hire compensation-related
costs as well as separation-related costs. In addition, the
increase reflects additional operating activities in connection
with the acquisition in May 2014 of California Stem Cell, Inc.
These increases were partially offset by lower strategic and
corporate development activities in the first quarter of 2015
compared to Q1 2014.
Net loss for Q1 2015 was approximately $19.2 million compared to
net loss of $13.8 million for Q1 2014. Net loss for Q1 2015
excluding non-cash charges was $14.3 million, compared with $9.3
million for Q1 2014 (see below for reconciliation).
At March 31, 2015, NeoStem's cash, cash equivalents and
marketable securities totaled $19.1 million.
2015 Outlook
In 2015, NeoStem's management expects significant additional
achievements, principal among them are the following:
- Continued enrollment in the Intus Phase 3 trial for NBS20;
- Change of corporate name and brand identity in the coming weeks
to emphasize the Company's therapeutic development focus on immune
therapy and its integrated approach to cell therapy;
- Filing an IND in Japan for one or more programs under Japan's
new regenerative medicine law which enables an expedited path to
conditional approval for regenerative medicine products based on
the demonstration of sufficient safety evidence and signals of
efficacy;
- Finalization of decision on next development steps for NBS10
based on available PreSERVE results;
- Receipt of additional non-dilutive (i.e., grant) funding to
support development programs;
- Continued growth in the Company's client services (PCT)
business.
Use of Non-GAAP Financial Measures
The Company uses "Adjusted Revenues" and "Net Loss Excluding
Non-Cash Charges" as non-GAAP financial measures in evaluating its
performance.
- Adjusted Revenues represents GAAP revenues less the impact of
the change in unearned revenues. The Company believes that
providing this measure to investors provides important supplemental
information relating to its performance and permits investors and
management to evaluate the impact of the Company's
revenue-generating activities on its cash position. Additionally,
the Company believes this information is frequently used by
securities analysts, investors and other interested parties in the
evaluation of performance. Management uses, and believes that
investors benefit from, this non-GAAP financial measure in
assessing the Company's revenue-generating activities, as well as
in planning, forecasting and analyzing future periods.
- Net Loss Excluding Non-Cash Charges represents net loss, less
equity-based compensation, depreciation and amortization, and other
non-cash adjustments included in calculating net loss. The Company
believes that providing this measure to investors provides
important supplemental information relating to its performance and
permits investors and management to evaluate the core operating
performance and cash utilization of the Company by excluding the
use of these non-cash adjustments. Additionally, the Company
believes this information is frequently used by securities
analysts, investors and other interested parties in the evaluation
of performance. Management uses, and believes that investors
benefit from, this non-GAAP financial measure in assessing the
Company's operating results, as well as in planning, forecasting
and analyzing future periods.
These non-GAAP measures have limitations as an analytical tool,
and investors should not consider these measures in isolation, or
as a substitute for analysis of the Company's results as reported
under generally accepted accounting principles in the United States
("GAAP"). For example, Net Loss Excluding Non-Cash Charges does not
reflect the Company's cash expenditures, future requirements for
capital expenditures, contractual commitments or cash requirements
for working capital needs. Although depreciation and amortization
are non-cash charges, the assets being depreciated or amortized
often will have to be replaced in the future, and Net Loss
Excluding Non-Cash Charges does not reflect any cash requirements
for such replacements. Given these limitations, the Company relies
primarily on its GAAP results and uses the Net Loss Excluding
Non-Cash Charges measure only as a supplemental measure of its
financial performance and cash utilization.
GAAP to Non-GAAP
Reconciliation |
|
|
|
|
Adjusted Revenues Reconciliation
(unaudited) |
|
|
(in millions) |
For the three months ended March 31,
2015 |
For the three months ended March 31,
2014 |
Revenues |
$3.17 |
$4.06 |
Change in Unearned Revenue |
1.17 |
0.21 |
Adjusted Revenues |
$4.34 |
$4.27 |
|
|
|
|
Net Loss Excluding Non-Cash Charges
Reconciliation (unaudited) |
|
|
(in millions) |
For the three months ended March 31,
2015 |
For the three months ended March 31,
2014 |
Net loss |
$ (19.2) |
$ (13.8) |
Equity-based compensation |
3.7 |
3.9 |
Depreciation and amortization |
0.6 |
0.4 |
Changes in acquisition-related contingent
consideration |
0.6 |
0.2 |
Other |
0.0 |
0.0 |
Net Loss Excluding Non-Cash Charges |
$ (14.3) |
$ (9.3) |
|
About NeoStem, Inc.
NeoStem is a biopharmaceutical company pursuing the preservation
and enhancement of human health globally through the development of
novel cell based individualized medicine therapeutics that prevent,
treat or cure disease. The Company is developing therapies based on
three platform technologies (immuno-oncology, ischemic repair and
immunomodulation) with a focus on its lead, Phase 3 clinical
program for NBS20 in immuno-oncology. The combination of a rich
therapeutics pipeline and an externally recognized in-house center
for cell therapy process development and manufacturing has created
an organization with unique capabilities for accelerated and
efficient product development. www.neostem.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements reflect management's current
expectations, as of the date of this press release, and involve
certain risks and uncertainties. Forward-looking statements include
statements herein with respect to the successful execution of the
Company's business strategy, the Company's ability to develop and
grow its business, the successful development of cellular therapies
with respect to the Company's research and development and clinical
evaluation efforts in connection with the Company's Immuno-Oncology
Program, Ischemic Repair Program, Immune Modulation Program and
other cell therapies, the future of the regenerative medicine
industry and the role of stem cells and cellular therapy in that
industry, and the performance and planned expansion of the
Company's wholly-owned subsidiary and its center of excellence for
cell therapy process development, engineering and manufacturing,
PCT, as well as its efforts to expand its capabilities into the
cell therapy tools market. The Company's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of various factors. Factors that could cause
future results to materially differ from the recent results or
those projected in forward-looking statements include the "Risk
Factors" described in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission ("SEC") on March
2, 2015, and in the Company's other periodic filings with the SEC.
The Company's further development is highly dependent on future
medical and research developments and market acceptance, which is
outside of its control.
CONTACT: NeoStem, Inc.
Eric Powers
Manager of Communications and Marketing
Phone: +1-212-584-4173
Email: epowers@neostem.com
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