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form8k.htm

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):  March 12, 2015

CYTORI THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
 

Delaware
001-34375
33-0827593
(State or Other Jurisdiction of Incorporation)
(Commission File
Number)
(I.R.S. Employer Identification Number)

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):
 
 
 □
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 □
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 □
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 □
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 
 

Item 2.02                      Results of Operations and Financial Condition

On March 12, 2015, Cytori Therapeutics, Inc. (Company) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information disclosed under this Item 2.02 in this report, including Exhibit 99.1 hereto, is 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

Exhibit No.     
Description
99.1
Cytori Therapeutics, Inc. Press Release, dated March 12, 2015 *

*
Exhibit 99.1 hereto is 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.



 
 
 

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.




 
CYTORI THERAPEUTICS, INC.
   
Date:  March 12, 2015
By: /s/ Tiago Girao
 
Tiago Girao
 
VP Finance and Chief Financial Officer










 
 

 
 
 

cytori_pr.htm
LOGO
 
CYTORI THERAPEUTICS CONTACT
Shawn Richardson
+1.858.875.5279
ir@cytori.com
 
 
Cytori Reports Fourth Quarter and Full Year 2014 Business and Financial Results
 
 
SAN DIEGO, March 12, 2015—Cytori Therapeutics (NASDAQ: CYTX) today announced its fourth quarter and year end 2014 business and financial results.
 
 
By virtue of a widespread cost reduction initiatives implemented in 2014, Cytori achieved substantial impact in tapering operating cash burn. Q4 operating cash burn decreased to $4.9 million, down from $7.2 million in Q3 2014, and $9.5 million a year ago in Q4 2013. We will continue to work to drive down expenses and increase operating efficiencies, and expect to deliver year-over-year operating cash burn savings of approximately $10 million from 2013 to 2015.  Specifically, the expected operating cash burn in 2015 will be approximately $25 million for the year, down from $35 million in 2013.  2014 cost reduction efforts have included eliminating and consolidating certain commercial and development activities and containing outside professional services.  Going forward, additional cost reductions will be derived primarily from changes to our fixed costs and physical locations.  These efforts will be complemented by diligently working with Cytori’s lenders to restructure and extend debt obligations.
 
 
Cytori achieved total revenues for the year and fourth quarter ended December 31, 2014 of $7.6 million and $3.8 million, respectively, compared to $12.2 million and $3.5 million, respectively, for the same periods in 2013. Total net loss allocable to common stock holders was $38.5 million in 2014 compared with $26.2 million in 2013. Cytori ended the year with $14.6 million of cash and cash equivalents.
 
In addition, Cytori received today written notification from the Nasdaq Stock Market LLC that it has regained full compliance with the Nasdaq Stock Market Listing Rules concerning the Company’s closing bid price, and previously received written notification indicating the Company regained compliance with the Nasdaq Stock Market Listing Rule regarding the market value of listed securities. The Company is pleased that each of the Nasdaq Stock Market compliance issues we previously reported in the latter part of 2014 have been resolved.
 
2014 Highlights:
 
 
2014 was a year of significant restructuring and refocusing of clinical programs, expense management, and sales and marketing activities and working to increase revenue opportunities through partnerships, and licensing our non-core activities. Below are some highlights from 2014 and the beginning of 2015.
“The company, quite deliberately, pivoted in 2014 in terms of clinical and operating focus,” said Dr. Marc H. Hedrick, President and CEO of Cytori Therapeutics. “We have initiated two new clinical programs and moved them into late stage trials here in the U.S. In parallel, we have reduced our operating burn substantially by focusing only on those activities that are best positioned in our view of improving shareholder value in the nearer term.”
 
Financial Performance and Guidance
 
2014 Financial Performance
Full-year 2015 Guidance
 
Scleroderma
 
In August 2014, data from Scleradec I, a pilot trial using Cytori Cell Therapy to treat disabling hand manifestations of scleroderma, were published in the Annals of Rheumatic Diseases. In the open label, 12 patient trial, data suggested that the treatment with Cytori Cell Therapy (ECCS-50) led to a concordant improvement in a number of clinical measures consistent with a disease modifying effect of the therapeutic.  Based on the promising clinical outcomes from Scleradec I, Cytori will support a follow up confirmatory trial in France, Scleradec II, which will be a multicenter, randomized, double-blind, and placebo controlled trial of a single dose of ECCS-50 or placebo in 40 patients.
 
Based on the Scleradec I data, in December 2014, the FDA gave conditional approval to Cytori to commence a phase III pivotal trial in scleroderma, the STAR trial. This conditional approval was finalized in January 2015.  In the next several months, we will begin enrollment of our 80 patient, randomized, double-blind, controlled STAR trial, which is approved for up to 20 sites.
 
Scleroderma is a rare autoimmune disorder.  It is a systemic disease that affects many major organs, but commonly causes changes in the skin and hands due to skin fibrosis and destructive changes in blood vessels, resulting in disability, diminished mobility, and pain. There are 50,000 - 75,000 scleroderma patients in the US, and over 90% of them struggle with hand dysfunction.  Scleroderma is considered an orphan indication, due to its prevalence, and using premium orphan pricing assumptions, the US market opportunity for an effective therapy is in excess of $1 Billion.
 
Osteoarthritis of the Knee
 
In February 2015, Cytori began enrolling patients in its Phase IIB ACT-OA Trial, approved by the FDA in September 2014.  This trial is a 90 patient, randomized, double-blind, placebo controlled, with up to 15 sites in the US.  The trial will evaluate 2 separate doses of ECCO-50 therapy (low dose and high dose) in treating osteoarthritis of the knee.  The study’s primary endpoint will be the pain on walking (KOOS) at 12 weeks.  Data is expected in 2016.
 
Osteoarthritis of the knee is a disease of the entire joint, involving the cartilage, joint lining, ligaments, and underlying bone.  The breakdown of tissues leads to pain and joint stiffness.  It is the most common form of arthritis with 13.9 % of adults over 25  years suffering the disease in the US, or an estimated 26.9 million US adults in 2005.  It is a disease of high prevalence and a market opportunity in excess of $3 Billion.
 
 
Primary 2015 Operating Objectives:
 
 
Management Conference Call Webcast and Shareholder Letter Information
 
Cytori will host a management conference call at 5:30 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 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: 4453849.
 
About Cytori
 
Cytori Therapeutics is a late stage cell therapy company developing autologous cell therapies from adipose tissue to treat a variety of medical conditions.  Data from preclinical studies and clinical trials suggest that Cytori Cell Therapy™ acts principally by improving blood flow, modulating the immune system, and facilitating wound repair.  As a result, Cytori Cell Therapy™ may provide benefits across multiple disease states and can be made available to the physician and patient at the point-of-care through Cytori’s proprietary technologies and products.  For more information: visit www.cytori.com.
 
Cautionary Statement Regarding Forward-Looking Statements
 
This press release includes forward-looking statements that involve known and unknown risks and uncertainties. All statements, other than historical facts, including statements regarding our expected $10 million cash burn savings year over in 2015, when compared to 2013, our expected 2015 product revenue of $5 million to $8 million depending on developments in China, Japan and Europe, our expected breakeven forecast for our sales and marketing organization of $100 thousand to $300 thousand, our expected 2015 contract revenue in the range from $6 million to $8 million, our expected data in 2016 from the ACT-OA Trial, and our expectation to initiate the STAR trial within the next several months are forward looking statements. 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 the level of future interest in our products by Japan research institutions, performance of our Japan distribution network, clinical, pre-clinical and regulatory uncertainties, such as those associated with the ACT-OA Trial and STAR clinical trials, 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, unexpected costs and expenses, our reliance on key personnel, the right of the Federal Government to cut or terminate further support of the thermal burn injury program, and other risks and uncertainties described under the "Risk Factors" in Cytori's Securities and Exchange Commission Filings, included in our annual and quarterly reports.
 
There may be events in the future that we are unable to predict, or over which we have no control, and our business, financial condition, results of operations and prospects may change in the future. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made unless we have an obligation under U.S. Federal securities laws to do so.
 

 
 
 

CYTORI THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

   
As of December 31,
  
   
2014
  
2013
    
             
Assets
            
Current assets:
            
Cash and cash equivalents
  
$   14,622,000
  
$   15,506,000
    
Accounts receivable, net of reserves of $1,523,000 and of $1,445,000 in 2014 and 2013, respectively
  
1,243,000
  
4,152,000
    
Inventories, net
  
4,829,000
  
3,694,000
    
Other current assets
  
992,000
  
1,225,000
    
             
Total current assets
  
21,686,000
  
24,577,000
    
             
Property and equipment, net
  
1,583,000
  
1,054,000
    
Restricted cash and cash equivalents
  
350,000
  
350,000
    
Other assets
  
1,763,000
  
2,812,000
    
Intangibles, net
  
9,415,000
  
9,345,000
    
Goodwill
  
3,922,000
  
3,922,000
    
             
Total assets
  
$   38,719,000
  
$   42,060,000
    
             
Liabilities and Stockholders’ (Deficit) Equity
            
Current liabilities:
            
Accounts payable and accrued expenses
  
$     5,546,000
  
$     6,077,000
    
Current portion of long-term obligations, net of discount
  
7,363,000
  
3,191,000
    
Termination fee obligation…………………………………………………………..
  
—
  
400,000
    
Puregraft divestiture obligation……………………………………………………...
  
—
  
547,000
    
Joint Venture purchase obligation…………………………………………………...
  
3,008,000
  
4,691,000
    
             
Total current liabilities
  
15,917,000
  
14,906,000
    
             
Warrant liability
  
9,793,000
  
—
    
Deferred revenues
  
112,000
  
212,000
    
Long-term deferred rent
  
558,000
  
710,000
    
Long-term obligations, net of discount, less current portion
  
18,041,000
  
23,100,000
    
             
Total liabilities
  
44,421,000
  
38,928,000
    
             
Commitments and contingencies
            
Stockholders’ equity:
            
Series A 3.6% convertible preferred stock, $0.001 par value; 5,000,000 shares authorized; 13,500 shares issued and 5,311 outstanding in 2014, and no shares issued and outstanding in 2013
  
—
  
—
    
Common stock, $0.001 par value; 145,000,000 shares authorized; 99,348,377 and 71,305,375 shares issued and outstanding in 2014 and 2013, respectively
  
99,000
  
71,000
    
Additional paid-in capital
  
331,772,000
  
303,710,000
    
Accumulated other comprehensive income…………………………………………
  
700,000
  
256,000
    
Accumulated deficit
  
(338,273,000
)
(300,905,000
)
  
             
Total stockholders’ (deficit) equity
  
(5,702,000)
  
3,132,000
    
             
Total liabilities and stockholders’ (deficit) equity
  
$   38,719,000
  
$   42,060,000
    


 

 
 
 

CYTORI THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE LOSS
(UNAUDITED)
 

 
   
For the Three Months
Ended December 31,
  
For the Twelve Months
Ended December 31,
  
   
2014
  
2013
  
2014
  
2013
  
                   
 Product revenues
  
$     2,469,000
  
$     2,706,000
  
$      4,953,000
  
$      7,122,000
  
                   
Cost of product revenues
  
1,416,000
  
1,126,000
  
2,940,000
  
3,421,000
  
                   
Gross profit
  
1,053,000
  
1,580,000
  
2,013,000
  
3,701,000
  
                   
Development revenues:
                  
Development, related party
  
—
  
—
  
—
  
638,000
  
Development
  
—
  
—
  
—
  
1,179,000
  
Government contract and other
  
1,301,000
  
754,000
  
2,645,000
  
3,257,000
  
   
1,301,000
  
754,000
  
2,645,000
  
5,074,000
  
Operating expenses:
                  
Research and development
  
2,999,000
  
5,072,000
  
15,105,000
  
17,065,000
  
Sales and marketing
  
1,074,000
  
2,573,000
  
6,406,000
  
9,026,000
  
General and administrative
  
2,831,000
  
3,807,000
  
15,953,000
  
16,031,000
  
Change in fair value of warrants
  
 (235,000
)
—
  
(369,000
)
(418,000
)
Change in fair value of option liability
  
—
  
—
  
—
  
(2,250,000
)
                   
Total operating expenses
  
          6,669,000
  
11,452,000
  
37,095,000
  
39,454,000
  
                   
Operating loss
  
(4,315,000
)
(9,118,000
)
(32,437,000
)
(30,679,000
)
                   
Other income (expense):
                  
Gain (loss) on asset disposal
  
57,000
  
—
  
42,000
  
(257,000
)
Loss on debt extinguishment
  
—
  
—
  
—
  
(708,000
)
Interest income
  
2,000
  
2,000
  
6,000
  
4,000
  
Interest expense
  
(1,086,000
)
(941,000
)
(4,371,000
)
(3,396,000
)
Other income (expense), net
  
(413,000
)
(45,000
)
(608,000
)
(438,000
)
Gain on Puregraft divestiture
  
—
  
61,000
  
—
  
4,453,000
  
Gain on previously held equity interest in Joint Venture
  
—
  
—
  
—
  
4,892,000
  
Equity loss from investment in Joint Venture
  
—
  
—
  
—
  
(48,000
)
                   
Total other income (expense)
  
(1,440,000
)
(923,000
)
(4,931,000)
  
4,502,000
  
Net loss
  
(5,755,000
)
(10,041,000
)
       (37,368,000
)
(26,177,000
)
Beneficial conversion feature for convertible preferred stock
  
(1,169,000)
  
—
  
(1,169,000)
  
—
  
                   
Net loss allocable to common stock holders
  
$      (6,924,000
)
$     (10,041,000
)
$     (38,537,000
)
$     (26,177,000
)
                   
Basic and diluted net loss per share allocable to common stock holders
  
$               (0.08
)
$                (0.14
)
$                (0.48
)
$                (0.39
)
                   
Basic and diluted weighted average shares used in calculating net loss per share allocable to common stockholders
  
91,925,991
  
69,662,038
  
80,830,698
  
67,781,364
  
 
Comprehensive loss:
Net loss……………………………………………………………
  
$     (5,755,000)
  
$   (10,041,000)
  
$   (37,368,000)
  
$   (26,177,000)
  
Other comprehensive income – foreign currency translation adjustments
  
 
243,000
  
 
398,000
  
 
444,000
  
 
256,000
  
                   
Comprehensive loss
  
$     (5,512,000
)
$     (9,643,000
)
$     (36,924,000
)
$     (25,921,000
)
                   

 

 

 
 
 

CYTORI THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

                   
   
For the Years Ended December 31,
    
   
2014
  
2013
    
Cash flows from operating activities:
              
Net loss
  
$      (37,368,000
)
$      (26,177,000
)
    
Adjustments to reconcile net loss to net cash used in operating activities:
              
Depreciation and amortization
  
779,000
  
1,630,000
      
Amortization of deferred financing costs and debt discount
  
1,220,000
  
893,000
      
Joint venture acquisition obligation accretion ………………………………….
  
579,000
  
204,000
      
Provision for doubtful accounts
  
1,084,000
  
1,141,000
      
Provision for expired enzymes
  
313,000
  
—
      
Change in fair value of warrants
  
(369,000
)
(418,000
)
    
Change in fair value of option liability
  
—
  
(2,250,000
)
    
Stock-based compensation
  
3,101,000
  
3,608,000
      
Equity loss from investment in joint venture
  
—
  
48,000
      
Loss on asset disposal ……………………………………………………………..
  
(33,000
)
257,000
      
Gain on previously held equity interest in Joint Venture …………………………
  
—
  
(4,892,000)
      
Gain on sale of assets ……………………………………………………………...
  
—
  
(4,453,000)
      
Loss on debt extinguishment ………………………………………………………
  
—
  
708,000
      
Increases (decreases) in cash caused by changes in operating assets and liabilities:
              
Accounts receivable
  
2,057,000
  
(1,209,000
)
    
Inventories
  
(815,000
)
(459,000)
      
Other current assets
  
510,000
  
(24,000
)
    
Other assets
  
11,000
  
(854,000
)
    
Accounts payable and accrued expenses
  
(1,147,000
)
(409,000)
      
Deferred revenues, related party
  
—
  
(638,000
)
    
Deferred revenues
  
(100,000
)
(1,223,000
)
    
Long-term deferred rent
  
(152,000
)
(46,000
)
    
               
Net cash used in operating activities
  
(30,330,000
)
(34,563,000
)
    
               
Cash flows from investing activities:
              
Purchases of property and equipment
  
(764,000
)
(519,000
)
    
Expenditures for intellectual property
  
(255,000)
  
—
      
Proceeds from sale of assets
  
76,000
  
5,000,000
      
License agreement  termination fee …………………………………………………..
  
(400,000
)
(800,000)
      
Cash acquired in purchase of joint venture
  
—
  
5,000
      
               
Net cash provided by (used in) investing activities
  
(1,343,000)
  
3,686,000
      
               
Cash flows from financing activities:
              
Principal payments on long-term debt obligations
  
(1,962,000
)
(22,304,000
)
    
Proceeds from long-term obligations
  
—
  
27,000,000
      
Debt issuance costs and loan fees
  
—
  
(1,744,000
)
    
Joint venture purchase payments
  
(2,262,000
)
(221,000
)
    
Proceeds from exercise of employee stock options and warrants and stock purchase plan
  
4,066,000
  
225,000
      
Proceeds from issuance of common stock
  
19,086,000
  
18,000,000
      
Proceeds from issuance of preferred stock
  
13,500,000
  
—
      
Costs from sale of common stock
  
(425,000
)
(184,000
)
    
Costs from sale of preferred stock
  
(1,129,000
)
—
      
               
Net cash provided by financing activities
  
30,874,000
  
20,772,000
      
               
Effect of exchange rate changes on cash and cash equivalents …………….
  
(85,000
)
(106,000
)
    
               
Net decrease in cash and cash equivalents
  
(884,000
)
(10,211,000
)
    
               
Cash and cash equivalents at beginning of year
  
15,506,000
  
25,717,000
      
               
Cash and cash equivalents at end of year
  
$       14,622,000
  
$       15,506,000