UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8, 2012
CYTORI THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-34375
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33-0827593
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(State or Other Jurisdiction of Incorporation)
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(Commission File
Number)
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(I.R.S. Employer Identification Number)
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3020 Callan Road, San Diego, California 92121
(Address of principal executive offices, with zip code)
(858) 458-0900
(Registrant's telephone number, including area code)
n/a
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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On November 8, 2012 Cytori Therapeutics, Inc. (Company) issued a press release announcing its financial results for the third quarter ended September 30, 2012. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In addition, on the same date, the Company has posted further insight into those results of operations in an open letter to its stockholders and other interested parties in the blog on the Investor Relations section of its website. A copy of the letter is attached hereto as exhibit 99.2.
The information disclosed under this Item 2.02 in this report, including Exhibits 99.1 and 99.2 hereto, are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as expressly set forth in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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Exhibit No.
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Description
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99.1
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Cytori Therapeutics, Inc. Press Release, dated November 8, 2012 *
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99.2
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Cytori Therapeutics, Inc. Shareholder Letter, dated November 8, 2012 *
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*
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Exhibits 99.1 and 99.2 hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as expressly set forth in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CYTORI THERAPEUTICS, INC.
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Date: November 8, 2012
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By: /s/ Mark E. Saad
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Mark E. Saad
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Chief Financial Officer
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November 8, 2012
Cytori Provides Business Update and Reports Third Quarter and Nine Month 2012 Results
SAN DIEGO, CA -- During the third quarter and first nine months of 2012, Cytori Therapeutics (NASDAQ: CYTX) advanced its cardiac cell therapy pipeline and achieved important strategic commercial and regulatory milestones. Additionally, Cytori reaffirmed its $9 million revenue guidance for the year. The Company accomplished the following objectives since the end of the second quarter:
Strategic
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·
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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 million 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.
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Clinical Pipeline
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·
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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.
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·
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Resumed enrollment in ADVANCE, a European acute myocardial infarction trial; primary emphasis of the trial continues to be completion of country and site clearances.
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Commercial Business
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·
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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.
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·
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Expanded Celution® CE Mark certification to include indications-for-use in wound healing and tissue ischemia.
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Operations & Financial Performance
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·
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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 sales, general and administrative expenses.
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“This quarter we made significant progress on both the clinical and commercial fronts which will help drive our growth in 2013 and beyond,” said Christopher J. Calhoun, chief executive officer for Cytori Therapeutics. “Throughout the rest of the year and into 2013, we will look to continue to expand enrollment in our ongoing clinical trials, achieve additional strategic partnerships and secure more approvals that drive revenue growth.”
Financial Results
Product revenues were $1.3 million and $4.7 million for the third quarter and first nine months of 2012, respectively, compared with $2.1 million and $5.9 million for the same periods in 2011. Additionally, based on the receipt of the Japan commercial operational license and Class 1 device clearance late in the third quarter of 2012, Cytori shipped an additional $1.7 million of systems and consumables that we expect to recognize as product revenue in a subsequent quarter. Cytori reaffirms its $9 million revenue guidance for 2012 based on already achieved shipments and anticipated orders.
Gross profit was $0.6 million and $2.2 million for the third quarter and first nine months of 2012, compared to $1.2 million and $3.0 million for the same periods of 2011, respectively.
Research and development expenses increased to $3.6 million and $9.6 million for the third quarter and first nine months of 2012, compared to $2.8 million and $8.9 million, the same periods respectively in 2011. This planned increase is principally associated with the emergence of the ATHENA trial. In contrast, sales, general and administrative expenses were reduced to $6.2 million and $18.9 million in the third quarter and first nine months of 2012, a decrease of 13% compared to both the third quarter of 2011 ($7.2 million) and the first nine months of 2011 ($21.8 million) respectively.
Net cash used in operating activities for the third quarter of 2012 was $7.9 million compared to $7.9 million for the same period in 2011 and $8.2 million in the second quarter of 2012. Net loss was $11.2 million, or ($0.19) per share, and $28.5 million, or ($0.49) per share, for the third quarter and first nine months of 2012, respectively. This compares to $8.3 million, or ($0.15) per share, and $25.5 million, or ($0.48) per share for the third quarter and first nine months of 2011, respectively. Net loss for the third quarter and first nine months of 2012 includes a net non-cash charge of $1.2 million and $1.7 million respectively related to the change in the fair value of warrant and option liabilities compared to non-cash credit of $1.0 million and $3.0 million for the same periods, respectively in 2011.
At the end of the third quarter of 2012, Cytori had $17.6 million of cash and cash equivalents and $3.2 million of accounts receivable and expected revenue from the additional product shipments in the third quarter.
Management Conference Call Webcast and Shareholder Letter Information
Cytori will host a management conference call at 5:00 p.m. Eastern Time today to further discuss the company's progress. The webcast will be available live and by replay two hours after the call and may be accessed under "Webcasts" in the Investor Relations section (http://ir.cytori.com) of Cytori's website. If you are unable to access the webcast, you may dial in to the call at +1.877.402.3914, Conference ID: 42763342. More details on our business are contained in the 'November 2012 Shareholder Letter' posted on the homepage of our Investor Relations website.
About Cytori
Cytori Therapeutics is developing cell therapies based on autologous adipose-derived regenerative cells (ADRCs) to treat cardiovascular disease and repair soft tissue defects. Our scientific data suggest ADRCs improve blood flow, moderate the immune response and keep tissue at risk of dying alive. As a result, we believe these cells can be applied across multiple “ischemic” conditions. These therapies are made available to the physician and patient at the point-of-care by Cytori’s proprietary technologies and products, including the Celution® system product family. www.cytori.com
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements regarding events, trends and business prospects, which may affect our future operating results and financial position, such as our expectation of completion of enrollment of the ATHENA clinical trial by mid-2013, and our revenue guidance of $9 million for the year. Such statements are subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks include clinical and regulatory uncertainties, such as those associated with the ATHENA clinical trial, including risks in the collection and results of clinical data, final clinical outcomes, dependence on third party performance, performance and acceptance of our products in the marketplace, and other risks and uncertainties described under the "Risk Factors" in Cytori's Securities and Exchange Commission Filings. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.
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Contact:
Investors Media
Tom Baker Megan McCormick
tbaker@cytori.com mmccormick@cytori.com
+1.858.875.5258 +1.858.875.5279
CYTORI THERAPEUTICS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
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As of September 30, 2012
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As of December 31, 2011
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|||||||
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Assets
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||||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$ | 17,628,000 | $ | 36,922,000 | ||||
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Accounts receivable, net of reserves of $455,000 and of $474,000 in 2012 and 2011, respectively
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1,463,000 | 2,260,000 | ||||||
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Inventories, net
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3,411,000 | 3,318,000 | ||||||
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Other current assets
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1,090,000 | 837,000 | ||||||
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Total current assets
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23,592,000 | 43,337,000 | ||||||
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Property and equipment, net
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2,242,000 | 1,711,000 | ||||||
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Restricted cash and cash equivalents
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350,000 | 350,000 | ||||||
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Investment in joint venture
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122,000 | 250,000 | ||||||
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Other assets
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1,756,000 | 1,772,000 | ||||||
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Intangibles, net
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26,000 | 192,000 | ||||||
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Goodwill
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3,922,000 | 3,922,000 | ||||||
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Total assets
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$ | 32,010,000 | $ | 51,534,000 | ||||
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Liabilities and Stockholders’ Equity (Deficit)
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Current liabilities:
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Accounts payable and accrued expenses
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$ | 5,588,000 | $ | 5,334,000 | ||||
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Current portion of long-term obligations
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9,767,000 | 2,487,000 | ||||||
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Total current liabilities
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15,355,000 | 7,821,000 | ||||||
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Deferred revenues, related party
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1,107,000 | 3,520,000 | ||||||
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Deferred revenues
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5,147,000 | 5,244,000 | ||||||
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Warrant liability
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1,871,000 | 627,000 | ||||||
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Option liability
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2,400,000 | 1,910,000 | ||||||
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Long-term deferred rent
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684,000 | 504,000 | ||||||
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Long-term obligations, net of discount, less current portion
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15,178,000 | 21,962,000 | ||||||
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Total liabilities
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41,742,000 | 41,588,000 | ||||||
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Commitments and contingencies
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Stockholders’ equity (deficit):
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||||||||
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Preferred stock, $0.001 par value; 5,000,000 shares authorized; -0- shares issued and outstanding in 2012 and 2011
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— | — | ||||||
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Common stock, $0.001 par value; 95,000,000 shares authorized; 58,720,627 and 56,594,683 shares issued and outstanding in 2012 and 2011, respectively
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59,000 | 57,000 | ||||||
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Additional paid-in capital
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261,113,000 | 252,338,000 | ||||||
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Accumulated deficit
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(270,904,000 | ) | (242,449,000 | ) | ||||
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Total stockholders’ equity (deficit)
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(9,732,000 | ) | 9,946,000 | |||||
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Total liabilities and stockholders’ equity (deficit)
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$ | 32,010,000 | $ | 51,534,000 | ||||
CYTORI THERAPEUTICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For the Three Months
Ended September 30,
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For the Nine Months
Ended September 30,
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|||||||||||||||
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2012
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2011
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2012
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2011
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Product revenues
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$ | 1,314,000 | $ | 2,134,000 | $ | 4,741,000 | $ | 5,908,000 | ||||||||
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Cost of product revenues
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703,000 | 942,000 | 2,588,000 | 2,893,000 | ||||||||||||
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Gross profit
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611,000 | 1,192,000 | 2,153,000 | 3,015,000 | ||||||||||||
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Development revenues:
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Development, related party
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— | — | 2,413,000 | 1,231,000 | ||||||||||||
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Research grant and other
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2,000 | 5,000 | 21,000 | 19,000 | ||||||||||||
| 2,000 | 5,000 | 2,434,000 | 1,250,000 | |||||||||||||
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Operating expenses:
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Research and development
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3,555,000 | 2,830,000 | 9,615,000 | 8,948,000 | ||||||||||||
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Sales and marketing
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2,450,000 | 3,618,000 | 7,406,000 | 10,560,000 | ||||||||||||
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General and administrative
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3,777,000 | 3,538,000 | 11,489,000 | 11,230,000 | ||||||||||||
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Change in fair value of warrant liability
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863,000 | (1,536,000 | ) | 1,244,000 | (3,714,000 | ) | ||||||||||
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Change in fair value of option liability
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300,000 | 570,000 | 490,000 | 680,000 | ||||||||||||
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Total operating expenses
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10,945,000 | 9,020,000 | 30,244,000 | 27,704,000 | ||||||||||||
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Operating loss
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(10,332,000 | ) | (7,823,000 | ) | (25,657,000 | ) | (23,439,000 | ) | ||||||||
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Other income (expense):
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Interest income
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— | 3,000 | 3,000 | 7,000 | ||||||||||||
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Interest expense
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(857,000 | ) | (489,000 | ) | (2,582,000 | ) | (1,923,000 | ) | ||||||||
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Other income (expense), net
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(17,000 | ) | 25,000 | (91,000 | ) | (36,000 | ) | |||||||||
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Equity loss from investment in joint venture
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(42,000 | ) | (51,000 | ) | (128,000 | ) | (153,000 | ) | ||||||||
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Total other income (expense)
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(916,000 | ) | (512,000 | ) | (2,798,000 | ) | (2,105,000 | ) | ||||||||
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Net loss
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$ | (11,248,000 | ) | $ | (8,335,000 | ) | $ | (28,455,000 | ) | $ | (25,544,000 | ) | ||||
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Basic and diluted net loss per common share
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$ | (0.19 | ) | $ | (0.15 | ) | $ | (0.49 | ) | $ | (0.48 | ) | ||||
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Basic and diluted weighted average common shares
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58,713,036 | 53,900,250 | 58,292,911 | 52,775,861 | ||||||||||||
CYTORI THERAPEUTICS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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For the Nine Months Ended September 30,
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2012
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2011
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|||||||
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Cash flows from operating activities:
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Net loss
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$ | (28,455,000 | ) | $ | (25,544,000 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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712,000 | 621,000 | ||||||
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Amortization of deferred financing costs and debt discount
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706,000 | 471,000 | ||||||
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Provision for doubtful accounts
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99,000 | 274,000 | ||||||
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Change in fair value of warrant liability
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1,244,000 | (3,714,000 | ) | |||||
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Change in fair value of option liability
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490,000 | 680,000 | ||||||
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Share-based compensation expense
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2,907,000 | 2,578,000 | ||||||
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Equity loss from investment in joint venture
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128,000 | 153,000 | ||||||
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Increases (decreases) in cash caused by changes in operating assets and liabilities:
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Accounts receivable
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698,000 | (168,000 | ) | |||||
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Inventories
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(93,000 | ) | (775,000 | ) | ||||
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Other current assets
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(253,000 | ) | 132,000 | |||||
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Other assets
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16,000 | (764,000 | ) | |||||
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Accounts payable and accrued expenses
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254,000 | (396,000 | ) | |||||
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Deferred revenues, related party
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(2,413,000 | ) | (1,231,000 | ) | ||||
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Deferred revenues
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(97,000 | ) | 189,000 | |||||
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Long-term deferred rent
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180,000 | 70,000 | ||||||
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Net cash used in operating activities
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(23,877,000 | ) | (27,424,000 | ) | ||||
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Cash flows from investing activities:
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Purchases of property and equipment
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(1,077,000 | ) | (458,000 | ) | ||||
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Net cash used in investing activities
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(1,077,000 | ) | (458,000 | ) | ||||
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Cash flows from financing activities:
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Principal payments on long-term debt
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(210,000 | ) | (4,460,000 | ) | ||||
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Proceeds from long-term debt
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— | 9,444,000 | ||||||
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Debt issuance costs and loan fees
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— | (719,000 | ) | |||||
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Proceeds from exercise of employee stock options and warrants
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988,000 | 2,849,000 | ||||||
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Proceeds from sale of common stock
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4,946,000 | 9,038,000 | ||||||
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Costs from sale of common stock
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(64,000 | ) | (135,000 | ) | ||||
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Net cash provided by financing activities
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5,660,000 | 16,017,000 | ||||||
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Net decrease in cash and cash equivalents
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(19,294,000 | ) | (11,865,000 | ) | ||||
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Cash and cash equivalents at beginning of period
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36,922,000 | 52,668,000 | ||||||
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Cash and cash equivalents at end of period
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$ | 17,628,000 | $ | 40,803,000 | ||||
November 8, 2012
Dear Shareholders,
In the third quarter of 2012, we continued to execute on our three principal business areas: advancing our clinical pipeline, managing the commercial business, and meeting our stated operational and financial objectives.
Product Pipeline
In the third quarter of 2012, we entered into a major contract with the U.S. Health and Human Service’s Biomedical Advanced Research Authority (BARDA) to develop new treatments for thermal burns. As a result, we now have a defined and funded path to market in the U.S. for soft tissue injury repair. Additionally, we made progress with our U.S. and European cardiovascular disease clinical trials.
Thermal Burns Combined with Radiation Injury
Our most notable achievement during the third quarter was the award of our BARDA contract for up to $106 million in development funding for Cytori’s cell therapy as a treatment for thermal burns combined with radiation injury. It is an important accomplishment that serves as recognition of the value of our technology and leadership position, expands and accelerates our U.S. product pipeline and provides a very achievable path to substantial non-dilutive funding.
From a strategic perspective, this contract complements our ongoing efforts in soft tissue repair indications, specifically wound healing. The aim of the contract is to create a new medical countermeasure for thermal injuries resulting from a mass casualty event, for example, a terrorist attack involving detonation of an improvised nuclear device in a major metropolitan area, which according to the Government Accountability Office, could inflict thermal injuries on more than 10,000 people.
To be awarded the contract, our science and technology underwent a rigorous and extensive review process by BARDA that spanned more than a year and ultimately we were selected as the first cell therapy company to be awarded a contract in this area. Having established this position, we believe there are additional contract opportunities both in the U.S. and other countries for bio-defense applications for which we may be selected in the future.
As part of the contract terms, there will be a two-year base period, which is extendable up to five years through three established contract options. The total award over the five-year period will support all preclinical, clinical, regulatory and technology development activities needed to obtain a medical device-based approval by the FDA under an IDE/PMA pathway for use in thermal injury.
The base period is a guaranteed $4.7 million, and it has two primary aims. The first objective of the base contract is preclinical research to establish proof of concept. The second is to accelerate Cytori's ongoing development of our next-generation cell therapy device technology, the Celution® System. This next-generation device will make the processing more efficient in terms of time and yield and have a smaller overall footprint as a desktop device with significantly lower cost of goods. We have a beta version of this device that requires additional investment to bring to completion, which the base period of the contract funds. Already we have qualified and expect to be reimbursed for certain expenses under the contract, which we will begin to realize in the fourth quarter of 2012.
Achieving these specified milestones will allow BARDA to execute the first two of three Contract Options, under which Cytori would receive up to approximately $55 million in additional funding. The third contract option would be eligible for an additional $45 million. If completely executed, this contract would bring the technology through FDA approval for an indication that could, based on final allowed claims, encompass thermal injury as just one of the potential commercial uses under a device-based regulatory process, which would be expected to be much more rapid than a drug pathway.
We are confident that we will establish the required proof-of-concept data in the base period and qualify for subsequent Contract Options. Our confidence is based on the substantial body of preclinical and clinical work around the world in related areas with ADRCs, using the cells to treat a variety of conditions including radiation-related wounds, thermal burns, fistula and diabetic ulcers.
ATHENA – U.S. Refractory Heart Failure Trial
Enrollment was initiated in our ATHENA trial during the third quarter of 2012 at the Minneapolis Heart Institute Foundation, where Dr. Timothy Henry treated the first patient in the trial. We currently have two sites actively screening patients with three more sites scheduled to be initiated before the end of the month. Many patients have been screened and qualified and enrollment appears to be on schedule to be completed by mid-2013.
ADVANCE – European Pivotal Heart Attack Trial
In our European pivotal trial ADVANCE, the trial protocol has been amended and we have submitted for country and hospital approvals under the revised trial design in several target countries. The amended design reconciles varying diverse cell therapy regulatory guidelines within a G6 country focus, incorporates additional clinical outcomes to support reimbursement, modifies inclusion and exclusion criteria to accelerate enrollment, and incorporates a single treatment dose. The first center in Poland is enrolling patients. The trial is anticipated to enroll up to 216 patients in up to 35 hospitals in the G6, Canada and the Netherlands. The focus remains on gaining additional country and local approvals to expand the number of active sites. We will provide guidance on the enrollment period once we have the majority of centers actively treating patients.
Commercial Business
We reaffirm our $9 million product revenue target for 2012. While we were not able to formally recognize all of the third quarter shipments as revenue in the quarter, the total orders and shipments were $3 million and represent our best quarter to date. We expect the $1.7 million in product shipments will be recognized as revenue in the subsequent quarter. This growth was primarily driven by new orders in Japan under our Class 1 clearance received late in September. We expect an equally strong fourth quarter in addition to the revenue carry over.
Class I Device Clearance in Japan
We recently attained Class I device clearance for the Celution® technology in Japan, which marks an important achievement for our commercial business. In addition, Puregraft®, StemSource® and multiple ancillary products have been registered as Class 1 devices in Japan.
This clearance is expected to facilitate sales growth in Japan and it is anticipated that demand will come mostly from researchers at academic hospitals seeking to perform investigator-initiated and funded studies using Cytori’s cell therapy. In addition to the revenue impact, these studies have even greater strategic value through the investigator relationships that are built, clinical data that is compiled and the global visibility of these studies. Collectively, they contribute to establishing Cytori as the leading brand in Cell Therapy.
As a case in point, six investigator-initiated studies have been approved by MHLW under the Cell Therapy Guidelines and are being sponsored and funded by our customers at academic hospitals across Japan. This accounts for approximately 20% of the clinical studies approved under the cell therapy guidelines by Japan’s Ministry of Health.
The approved studies to date include indications for: stress urinary incontinence, treatment of intractable fistulas after gastrointestinal surgery, breast reconstruction following partial mastectomy, peripheral artery disease, liver cirrhosis, and ischemic heart failure.
We also announced during the quarter that an investigator led study for scleroderma has been approved and fully funded in France by ANSM, the Agency for the Safety of Medicines and Health Products.
European CE Mark and Expanded Indications-for-Use
Our application to add claims for no-option chronic myocardial ischemia patients to our existing CE Mark is still under review. In parallel, we are seeking a CE Mark on our Intravase® product. Intravase® enables the safe delivery of cells into the blood stream. While our current CE Mark indications already include re-infusion, the approval of Intravase® is essential to allow the safe administration of these cells into the vasculature.
New CE Mark indications-for-use were added during the third quarter. These new indications are based on a growing body of clinical evidence and include the following:
General Surgery Procedures to facilitate healing in patients with:
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·
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Cryptoglandular fistula
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·
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Deficiency or injury of: skin, fat, muscle and fascia
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·
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Soft tissue wounds, ulcers or fistula associated with trauma, diabetes, ischemia or radiation injury
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·
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Tissue ischemia
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Based on our discussions with our notified body and these expanded claims, our commercial team continues to take steps to expand the market for Celution® for use in these broadened indications and for intravascular reinfusion. We expect to receive the CE Mark for Intravase® before the end of this year.
Operational and Financial Performance
The company generated $4.7 million and $1.3 million in product sales in the first nine months and three months ended September 30, 2012. During the third quarter, Cytori shipped $3.0 million in products, which includes $1.7 million of systems in Japan under our recently awarded device clearance, which we expect to recognize as revenue in a subsequent quarter. Based on already achieved and anticipated orders, Cytori reaffirms its $9 million revenue guidance for 2012.
Net cash used in operating activities in the third quarter was $7.9 million compared to $7.9 million for the same period in 2011 and $8.2 million in the second quarter of 2012. We are making slightly higher investments in research and development due to clinical trial activities related to ATHENA. In contrast, sales, general and administrative expenses were reduced to $6.2 million and $18.9 million in the third quarter and first nine months of 2012, a decrease of 13% compared to both the third quarter of 2011 ($7.2 million) and the first nine months of 2011 ($21.8 million) respectively.
We ended the quarter with $17.6 million in cash and cash equivalents and $3.2 million of accounts receivable and expected revenue from the additional product shipments in the third quarter.
The revenue growth we are achieving in alignment with our lower operating costs will lead to an overall reduction in cash burn. Contributions from the BARDA contract will additionally off-set some of our ongoing development costs. Based on our long-range plan and pro-forma budgets, we project the company will require an additional $20 to $30 million to become cash flow positive. Revenue growth next year will accelerate as we leverage the new CE Mark claims and regulatory approvals in multiple new markets we have either expanded or opened up this year.
To bring in the required capital to reach profitability, the company has been actively negotiating with several potential strategic partners. Strategic partners will continue to play an important role in growing our business, through potential licensing, co-development agreements and additional government contracts. There are several deals that we believe are at or near the final stages of completion and our primary goal is to bring at least one of these to closure before the end of the year.
Summary
Significant clinical, regulatory, commercial and corporate accomplishments set the stage for several value drivers in the second half of the year. The key value drivers that we have achieved or expect to achieve include the following:
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Recent & Upcoming Milestones
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Completed
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Approval to initiate ATHENA
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P
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Publish APOLLO primary endpoints (6-months)
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P
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Publish RESTORE 2 12-month results
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P
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Thermal burn BARDA contract (up to $106MM)
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P
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Initiated patient enrollment in ATHENA
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P
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Execute strategic partnership
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BARDA, more pending
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Additional country approvals / expanded claims
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P
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UK breast reconstruction medical technology assessment application
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In process
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Intravascular delivery CE Mark expansion
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In process
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Publish APOLLO long-term (18-mo) outcomes
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In process
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Publish PRECISE primary & long-term outcomes
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In process
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Achieve $9 million revenue target for 2012
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On track
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As we’ve outlined, we continue to execute on our three core areas of our product pipeline, commercial business and on our operational performance. We thank you again for your ongoing interest and support in helping us continue our growth in new markets.
Regards,
Christopher J. Calhoun
Chief Executive Officer
Cautionary Statement Regarding Forward-Looking Statement
This shareholder letter includes forward-looking statements regarding events, trends and business prospects, which may affect our future operating results and financial position. Such statements, including, but not limited to, those regarding our ability to achieve: our revenue guidance for 2012 and acceleration of revenue growth in 2013, required proof-of-concept data to qualify for BARDA contract options, European CE Mark approval for Intravase®, resumption of enrollment in the ADVANCE trial, additional publications for APOLLO and PRECISE trials, completion of enrollment in the ATHENA trial by mid-2013, growth in the number of Investigator initiated trials, recognition of deferred product revenues in Q4 2012, and completion of further strategic corporate partnerships, are all subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks and uncertainties include, but are not limited to, risks related to our history of operating losses, the need for further financing and our ability to access the necessary additional capital for our business, regulatory uncertainties regarding the collection and results of clinical data, our ability to obtain sufficient data to support regulatory approvals and reimbursement, uncertainties relating to the success of our sales and marketing programs, changing and unpredictable regulatory environments, dependence on third party performance and the risk of natural disasters and other occurrences that may disrupt the normal business cycles in areas of our global operations, as well as other risks and uncertainties described under "Risk Factors" in Cytori's Securities and Exchange Commission Filings on Forms 10-K and 10-Q. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made.