$2 Million Additional Equity Investment with Anson Group
Conference Call Scheduled for Tuesday, April 1st at 8:00 AM Eastern Time
GAITHERSBURG, Md., March 31, 2014 (GLOBE NEWSWIRE) -- Cytomedix, Inc. (OTCQX:CMXI), a leading developer of biologically active regenerative therapies, today reported financial results for the three and twelve months ended December 31, 2013 and announced that the Company has entered into a convertible credit facility of up to $35 million with certain investment funds managed by Deerfield Management Company, L.P., and a $2 million equity investment with Anson Group.
"We are very pleased to announce these financial transactions with Deerfield Management and Anson Group," commented Martin Rosendale, Chief Executive Officer of Cytomedix. "We are encouraged that the professionals at Deerfield and Anson have recognized the value of AutoloGelTM and the compelling opportunities that exist in chronic wound care, and are working as our financial partners to create a financial platform to execute our commercial business plans. We anticipate that the relationship with Deerfield will also add value in non-financial areas including market intelligence and strategic development."
"2013 and early 2014 have been a period of change in the chronic wound care market and we believe we are well positioned to respond to the needs of patients, caregivers and payers in this dynamic market place," continued Mr. Rosendale. "Government reimbursement determinations have caused industry leaders in advanced wound care to retrench, and have created market access opportunities for others. In addition, the chronic wound care market continues to grow due to the prevalence of diabetes and obesity in the U.S. and throughout the world. In our view, AutoloGel is now well positioned to provide a therapeutic and cost effective alternative for patients suffering with chronic wounds."
FINANCIAL HIGHLIGHTS
Fourth Quarter 2013 Financial Highlights (all comparisons are with the 2012 fourth quarter)
- Product revenues were $3.0 million, up 45% from $2.0 million in the prior year.
- Net loss to common stockholders of $4.9 million, or ($0.05) per share, as compared to a net loss of $3.8 million or ($0.04) per share in the prior year.
- Cash and cash equivalents were approximately $3.3 million at December 31, 2013.
Twelve-Months Ended December 31, 2013 Financial Highlights (all comparisons are with the 2012 fiscal year)
- Product revenues increased 45% to $10.5 million from $7.2 million in the prior year.
- Net loss to common stockholders was $20.2 million, or ($0.20) per share, compared with $19.8 million, or ($0.24) per share in the prior year.
2013 and Recent Corporate Highlights
- In first half 2013, the Centers for Medicare & Medicaid Services (CMS) issued the billing code for the use of the AutoloGel™ System for chronic wounds under the Coverage with Evidence Development (CED) coverage decision, and CMS approved the clinical endpoints in 4 CED protocols.
- In November 2013 CMS issued final Medicare payment regulations for the Hospital Outpatient Prospective Payment System and the Medicare Physician Fee Schedule, which allow for ample payment for use of AutoloGel for the treatment of chronic, non-healing wounds. These rules took effect on January 1, 2014.
- In August 2013, Cytomedix signed a five-year worldwide licensing agreement with Arthrex, Inc., for the commercialization of the Angel® Concentrated Platelet Rich Plasma (cPRP) System. Cytomedix received an upfront payment of $5 million and will receive royalties on future Angel product sales.
- On January 6, 2014, Cytomedix announced that the RECOVER-Stroke trial, a landmark phase 2 study investigating the therapeutic use of a differentiated autologous stem cell population in ischemic stroke, completed enrollment. Top line clinical results are expected to be announced in May 2014.
- Industry veteran Dean Tozer has been appointed Executive Vice President and Chief Commercial Officer. Under Dean's leadership, the commercial organization is being strengthened by the recruitment of other experienced industry executives.
- Cytomedix and Deerfield Management Company, L.P. announced the signing of a $35 million convertible credit facility agreement (see a more detailed discussion below).
- Cytomedix and the Anson Group announced the completion of a $2 million equity investment.
Financing Agreements with Deerfield Management and Anson Group
On March 31, 2014, Cytomedix, entered into a financing agreement with certain investment funds managed by Deerfield Management Company, L.P. Under the terms of this agreement, Deerfield agreed to provide to the Company up to $35 million through a senior secured convertible debt facility. The commitment will be funded in two separate tranches. Deerfield has initially provided $9 million at the closing of the transaction, which took place on March 31, 2014, and will fund an additional $26 million after the Company's shareholders authorize an increase in the Company's capital stock required for the potential conversion of the note, warrants, fees and interest under the agreement. Following such shareholder authorization and the increase in the capital stock, Deerfield has the right, subject to ownership limitations, to convert the principal amount of the facility into shares of common stock at $0.52 per share. At the time of the initial funding, the Company agreed to issue to Deerfield 25,115,384 warrants to purchase shares of common stock at an exercise price of $0.52 per share, subject to adjustments.
Concurrently with the Deerfield financing, the Anson Group agreed to invest $2 million in equity funding. Under the terms of the investment agreement, Anson agreed to purchase 3,846,154 shares of the Company's common stock at $0.52 per common share. Anson will also be issued 5-year warrants to purchase 2,884,615 shares of common stock at an exercise price of $0.52. In addition, Anson agreed to a lockup agreement and sales restrictions under the agreement.
BTIG, LLC, acted as the sole placement agent for the financings.
Payoff and Discharge of MidCap Note and December 2013 Convertible Notes
Also in conjunction with the Deerfield and Anson financings, the Company paid approximately $3.8 million to extinguish the secured debt (including accrued interest and fees) owed to MidCap Financial under the note dated February 19, 2013, thereby fully discharging the obligation. In addition, all holders (except one) of the outstanding $3 million, 10% subordinated convertible notes purchased in the December 2013 private placement converted their notes and accrued interest into 5,981,859 shares of common stock according to the conversion terms.
Net proceeds from these related financing activities of approximately $6 million will be used primarily for expanding the commercialization capabilities of the Company and the launch of AutoloGel. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2013 for the complete disclosures related to these financing transactions.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Cytomedix, Inc. or shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The foregoing description of the financing and related transactions does not purport to be complete and is subject to and qualified in its entirety by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and full texts of the operative agreements and instruments, which are filed as exhibits to such filing and are incorporated herein by reference. The readers of this press release are encouraged to review all such descriptions and agreements.
Financial Results, Three-Month Period Ended December 31, 2013
Total revenues were $3.5 million in the three-months ended December 31, 2013, compared to $2.1 million in 2012. The increase was primarily due to an increase in Angel product sales of $0.9 million. Also during the quarter, the Company recognized $0.3 million of Angel royalties, $0.1 million of Angel license fees, and $0.1 million of related transition services revenue. AutoloGel sales for the quarter were $0.2 million.
Overall gross margins decreased to 14% from 48% for the quarter as compared to the same period last year. The decrease was primarily due to the sale of devices and disposable products to Arthrex under the licensing agreement signed last year. Although the cost of the Company's products has remained constant, the contractual selling price of Angel disposable products to Arthrex is significantly lower than the historical average selling price. This was offset by the gross margin realized from licensing fees, accrued royalty income, and other revenue.
As a result of the manufacturing agreement with Arthrex, gross margins on product sales were 1% compared with 47% in the same period last year. The negative impact on gross margins is primarily the result of the requirement under generally accepted accounting principles to record revenues and cost of goods related to Angel product sales on a pass through basis. The Company expects to realize the economic benefit from the Arthrex license agreement in the form of future royalty revenues. Future reported gross margins are expected to recover as the launch of AutoloGel in the wound care market gathers momentum and these related sales begin to account for a more significant portion of overall revenues.
Total operating expenses in the fourth quarter were $4.3 million, compared to $4.6 million in the same period of 2012.
The Company reported a net loss to common stockholders of $4.9 million, or ($0.05) per share for the three months ended December 31, 2013 as compared to a net loss of $3.8 million, or ($0.04) per share in the prior year period.
Financial Results, Twelve-Month Period Ended December 31, 2013
Total revenues for the twelve-months ended December 31, 2013 were $11.6 million, compared with $10.6 million in the same period last year. The increase was primarily due to $2.0 million in higher Angel product sales, the recognition of one-time, non-recurring revenue related to the sale of $1.3 million in existing, placed Angel devices to Arthrex pursuant to the terms and provisions of the Arthrex agreement, and a $0.5 million increase in royalty revenue. This was offset by a decrease in 2012 license fee revenue of $3.0 million. AutoloGel sales for the full year were $0.6 million.
Gross profit for the twelve months ended December 31, 2013 was $3.1 million, compared with $6.6 million in the same period last year. Overall gross margin decreased to 27% from 63% in the same period last year. The decrease in gross profit and margin were primarily due to approximately $3.2 million in license fee revenue recognized in 2012 (which had no associated cost) and the sale of existing, placed Angel fixed assets to Arthrex at book value and disposable products to Arthrex under the Arthrex agreement at a contractual selling price significantly lower than the historical average selling price.
Total operating expenses in 2013 were $21.2 million compared with $19.5 million in 2012.
The Company recorded a net loss to common stockholders of $20.2 million, or ($0.20) per share in 2013, compared to a net loss of $19.8 million, or ($0.24) per share in 2012.
| Conference Call & Webcast | ||
| Tuesday, April 1, 2014 @ 8:00am Eastern/5:00am Pacific | ||
| Domestic: | 866-543-6403 | |
| International: | 617-213-8896 | |
| Passcode: | 31724570 | |
| Webcast: | www.cytomedix.com | |
| Replays – Available through April 8, 2014 | ||
| Domestic: | 888-286-8010 | |
| International: | 617-801-6888 | |
| Passcode: | 52880667 | |
About AutoloGel
The AutoloGel System utilizes a proprietary unique technology that enables the rapid isolation and activation of PRP from a patient's own blood. The PRP is subsequently processed to produce a bioactive gel for application to the wound bed, re-establishing a balance needed for natural healing to occur. In normal healing, platelets migrate from the blood into the wound site where they serve as the primary source of growth factors for effective wound healing. In chronic wounds, blood supply may be impaired and the delivery of platelets is impeded, disallowing adequate concentrations of growth factors. The AutoloGel System is used at the point-of-care and is the only PRP system cleared by the U.S. Food and Drug Administration for use on exuding wounds, such as leg ulcers, pressure ulcers and diabetic ulcers, and for the management of mechanically or surgically-debrided wounds. Cytomedix's clinical studies have shown that AutoloGel rapidly and more effectively improved healing compared with control-treated wounds. This has been demonstrated in a variety of clinical studies including a systematic review of 21 comparison studies and a number of other observational and case series publications as well.
About Cytomedix
Cytomedix, Inc. is an autologous regenerative therapies company commercializing innovative platelet technologies for wound care. The Company markets the AutoloGel™ System, a device for the production of autologous platelet rich plasma ("PRP") gel for use on a variety of exuding wounds. For additional information please visit cytomedix.com.
Safe Harbor Statement – Statements contained in this press release not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule for such statements under the Private Securities Litigation Reform Act of 1995. The information contained in the forward-looking statements is inherently uncertain, and Cytomedix' actual results may differ materially due to a number of factors, many of which are beyond Cytomedix' ability to predict or control, including among many others, risks and uncertainties related to the Company's ability to successfully execute its Angel and AutoloGel sales strategies, to achieve AutoloGel expected reimbursement rates in 2014, and thereafter, the Company's ability to comply with the debt covenants and restrictions under the existing loan facilities, the Company's ability to collect the data necessary for the grant of the unconditional coverage, the Company's ability to continue in its efforts to expand in the wound care market, its ability to successfully negotiate with physician offices as anticipated and to realize the anticipated sales growth from such treatments, the likelihood of a favorable CMS determination relating to the reimbursement rates for AutoloGel™, to meet its stroke trial enrollment rates, to successfully realize sales of the Angel Technology resulting in the royalty stream to the Company, the Company's ability to successfully integrate the Aldagen acquisition, the Company's ability to expand patient populations as contemplated, its ability to provide Medicare patients with access as expected, the Company's expectations of favorable future dialogue with potential strategic partners, and its ability to successfully manage contemplated clinical trials, to manage and address the capital needs, human resource, management, compliance and other challenges of a larger, more complex and integrated business enterprise, viability and effectiveness of the Company's sales approach and overall marketing strategies, commercial success or acceptance by the medical community, competitive responses, the Company's ability to raise additional capital and to continue as a going concern, and Cytomedix's ability to execute on its strategy to market the AutoloGel™ System as contemplated. To the extent that any statements made here are not historical, these statements are essentially forward-looking. The Company uses words and phrases such as "believes", "forecasted," "projects," "is expected," "remain confident," "will" and/or similar expressions to identify forward-looking statements in this press release. Undue reliance should not be placed on forward-looking information. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the reports filed with the Securities and Exchange Commission by Cytomedix, Inc. Cytomedix operates in a highly competitive and rapidly changing business and regulatory environment, thus new or unforeseen risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. Except as is expressly required by the federal securities laws, Cytomedix undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. Additional risks that could affect our future operating results are more fully described in our U.S. Securities and Exchange Commission filings, including our Annual Report for the year ended December 31, 2012, as amended to date, and other subsequent filings. These filings are available at www.sec.gov.
| CYTOMEDIX, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2013 | 2012 | 2013 | 2012 | |
| (UNAUDITED) | (UNAUDITED) | |||
| Revenues | ||||
| Product sales (includes excise tax of $185,767 in 2013) | $ 2,956,852 | $ 2,037,717 | $ 10,498,726 | $ 7,241,392 |
| License fees | 100,594 | -- | 167,657 | 3,154,722 |
| Royalties | 334,098 | 65,085 | 703,744 | 168,106 |
| Other revenue | 72,476 | -- | 201,311 | -- |
| Total revenues | 3,464,020 | 2,102,802 | 11,571,438 | 10,564,220 |
| Cost of revenues | ||||
| Cost of sales | 2,924,501 | 1,082,539 | 8,363,902 | 3,898,162 |
| Cost of royalties | 47,712 | 5,606 | 89,290 | 16,380 |
| Total cost of revenues | 2,972,213 | 1,088,145 | 8,453,192 | 3,914,542 |
| Gross profit | 491,807 | 1,014,657 | 3,118,246 | 6,649,678 |
| Operating expenses | ||||
| Salaries and wages | 1,308,070 | 1,520,163 | 7,319,407 | 7,106,906 |
| Consulting expenses | 552,407 | 491,504 | 2,148,983 | 2,275,905 |
| Professional fees | 329,670 | 186,787 | 1,156,868 | 1,189,734 |
| Research, development, trials and studies | 748,360 | 931,824 | 3,798,398 | 3,386,439 |
| General and administrative expenses | 1,373,892 | 1,503,019 | 6,789,660 | 5,585,419 |
| Total operating expenses | 4,312,399 | 4,633,297 | 21,213,316 | 19,544,403 |
| Loss from operations | (3,820,592) | (3,618,640) | (18,095,070) | (12,894,725) |
| Other income (expense) | ||||
| Interest, net | (356,123) | (244,393) | (1,680,023) | (1,041,533) |
| Change in fair value of derivative liabilities | (720,401) | 49,568 | (470,052) | 492,311 |
| Change in fair value of contingent consideration | -- | -- | -- | (4,334,932) |
| Inducement expense | -- | -- | -- | (1,513,371) |
| Settlement of contingency | -- | -- | -- | (471,250) |
| Other | 3,043 | (16,029) | 15,374 | (16,558) |
| Total other income (expenses) | (1,073,481) | (210,854) | (2,134,701) | (6,885,333) |
| Loss before provision for income taxes | (4,894,073) | (3,829,494) | (20,229,771) | (19,780,058) |
| Income tax provision | 3,919 | 4,173 | 18,589 | 18,000 |
| Net loss | (4,897,992) | (3,833,667) | (20,248,360) | (19,798,058) |
| Preferred dividends: | ||||
| Series D preferred stock | -- | -- | -- | 13,562 |
| Net loss to common stockholders | $ (4,897,992) | $ (3,833,667) | $ (20,248,360) | $ (19,811,620) |
| Loss per common share -- | ||||
| Basic and diluted | $ (0.05) | $ (0.04) | $ (0.20) | $ (0.24) |
| Weighted average shares outstanding -- | ||||
| Basic and diluted | 105,780,493 | 92,133,522 | 103,620,046 | 81,859,343 |
| CYTOMEDIX, INC. | ||
| BALANCE SHEET | ||
| December 31, | December 31, | |
| 2013 | 2012 | |
| ASSETS | ||
| Current assets | ||
| Cash | $ 3,286,713 | $ 2,615,805 |
| Short-term investments, restricted | 53,257 | 53,248 |
| Accounts and other receivable, net | 3,926,681 | 1,733,742 |
| Inventory | 1,111,507 | 1,170,097 |
| Prepaid expenses and other current assets | 1,258,282 | 737,445 |
| Deferred costs, current portion | 316,551 | 136,436 |
| Total current assets | 9,952,991 | 6,446,773 |
| Property and equipment, net | 919,469 | 2,440,081 |
| Deferred costs | 482,349 | 180,783 |
| Intangible assets, net | 33,768,954 | 34,135,287 |
| Goodwill | 1,128,517 | 1,128,517 |
| Other long-term assets | -- | -- |
| Total assets | $ 46,252,280 | $ 44,331,441 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Accounts payable and accrued expenses | $ 8,018,672 | $ 2,812,371 |
| Deferred revenues, current portion | 740,990 | -- |
| Note payable, current portion | 1,800,000 | -- |
| Total current liabilities | 10,559,662 | 2,812,371 |
| Notes payable | 3,620,593 | 2,100,000 |
| Convertible debt | 202,658 | 462,815 |
| Deferred revenues | 1,441,852 | -- |
| Derivative and other liabilities | 3,615,521 | 952,344 |
| Total liabilities | 19,440,286 | 6,327,530 |
| Commitments and contingencies | ||
| Conditionally redeemable common stock (909,091 issued and outstanding) | 500,000 | -- |
| Stockholders' equity | ||
| Common stock; $.0001 par value, authorized 200,000,000 shares; | ||
| 2013 issued and outstanding - 107,164,855 shares; | ||
| 2012 issued and outstanding - 93,808,386 shares | 10,626 | 9,381 |
| Common stock issuable | 432,100 | 489,100 |
| Subscriptions receivable | -- | -- |
| Additional paid-in capital | 117,097,844 | 108,485,646 |
| Accumulated deficit | (91,228,576) | (70,980,216) |
| Total stockholders' equity | 26,311,994 | 38,003,911 |
| Total liabilities and stockholders' equity | $ 46,252,280 | $ 44,331,441 |