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Cytori Therapeutics Announces First Quarter Financial Results: Outlines Significant Development Progress Year to Date

Posted on: Monday, 15 May 2006, 18:03 CDT

Cytori Therapeutics, Inc. (NASDAQ:CYTX) (Frankfurt:XMPA) (Xetra:XMPA) today announced financial results for the quarter ended March 31, 2006.

"Cytori has made an important transition into a clinical stage company with the start of the first clinical study using our proprietary Celution(TM) stem cell processing system," said Christopher J. Calhoun, Chief Executive Officer of Cytori Therapeutics. "In addition, this year we have continued to report strong preclinical data related to our investigational cardiac cell therapy; entered negotiations for a strategic distribution partnership; and achieved regulatory clearance in Europe for the Celution(TM) System. We look forward to continued growth and performance for the remainder of the year as we make progress in our regulatory strategy, provide the Celution(TM) System to clinical researchers conducting investigator-initiated studies, and initiate a cardiac cell therapy trial."

Select highlights year to date include the following:

-- An investigator-initiated clinical study was initiated to

evaluate adipose stem and regenerative cells, isolated with

the Celution(TM) System, for use in breast reconstruction

following partial mastectomy

-- Achieved European regulatory (CE Mark) clearance on the

Celution(TM) System, which positions the Company to use the

system in clinical studies to drive market adoption and

reimbursement

-- Received an $11,000,000 milestone payment from the

Olympus-Cytori Joint Venture as a result of achieving the CE

Mark on the Celution(TM) System

-- Granted Olympus Corporation an exclusive option to negotiate

the rights to distribute the Celution(TM) System for a

specific therapeutic application outside of cardiovascular

disease, in exchange for a $1,500,000 payment from Olympus

-- Formed a cardiovascular clinical advisory board composed of

cardiologists and cardiac imaging specialists to help guide

the Company's design and execution of its planned cardiac

clinical studies

-- Reported preclinical data demonstrating that adipose stem and

regenerative cells used in a heart attack model beneficially

increased capillary density, thereby improving blood flow to

the heart; increased wall thickness; and may reduce the

incidence of arrhythmias following a heart attack

-- Initiated production of the Celution(TM) System and

established the infrastructure to manufacture these systems at

a rate that will allow the company to supply clinical trial

centers in 2006 and 2007

Financials

Total product and development revenues for the first quarter of 2006 were $1.3 million, compared to $1.8 million for the first quarter of 2005. Research and development expenses for the first quarter of 2006 were $5.2 million compared to $3.1 million for the first quarter of 2005. General and administrative expenses for the first quarter of 2006 were $3.2 million compared to $2.1 million for the first quarter of 2005.

Net loss for the first quarter of 2006 was $7.5 million, or $ 0.48 per common share, compared to a net loss of $4.5 million, or $0.32 per common share, for the same period in 2005. Cash, cash equivalents and short term investments were $17.2 million as of March 31, 2006 as compared to $8.2 million as of March 31, 2005 and $15.8 million as of December 31, 2005.

"Since 2002, we have raised over $65 million through strategic collaborations and the sale of non core assets," said Mark Saad, Chief Financial Officer of Cytori Therapeutics. "We continue to pursue additional opportunities in these areas to further strengthen our capital position." Subsequent to the end of the quarter, Cytori received an additional payment of $1.5 million from Olympus related to the potential distribution collaboration.

Conference Call Information

The management of Cytori Therapeutics will host a conference call today at 4:30 p.m. Eastern Daylight Time (EDT) or 10:30 p.m. Central European Summer Time (CEST). The conference call will be webcast live and may be accessed under "Events & Webcasts" in the Investor Relations section of the Company's website at http://www.cytoritx.com. The archived version of the webcast will be available two hours after the call on the company's website and accessible for 14 days. A telephone replay will be available for one week. To access the replay, please call +1 (303) 590-3000 (PIN: 11059258#) or +49 69 58 99 90 568 (PIN: 133878#).

About Cytori Therapeutics

Cytori Therapeutics, Inc. (NASDAQ:CYTX) (Frankfurt:XMPA) (Xetra:XMPA) is discovering and developing proprietary cell-based therapeutics utilizing adult stem and regenerative cells derived from adipose tissue, also known as fat. The Company's investigational therapies target cardiovascular disease, spine and orthopedic conditions, gastrointestinal disorders and new approaches for aesthetic and reconstructive surgery. To facilitate processing and delivery of adipose stem and regenerative cells, Cytori has developed its proprietary Celution(TM) System to isolate and concentrate a patient's own stem and regenerative cells in about an hour. This system will dramatically improve the speed in which personalized cell-based therapies can be delivered to patients.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding events, trends and prospects of our business which may affect our future operating results and financial position. Such statements are subject to risks and uncertainties that could cause our actual results and financial position to differ materially. Some of these risks and uncertainties include our history of operating losses and expected continuing losses, the need for further financing, our ability to develop and commercialize regenerative cell-based therapies, our dependence on third parties, our ability to obtain, defend and enforce our intellectual property, and other risks and uncertainties described (under the heading "Risk Factors") in Cytori Therapeutics' Form 10-K annual report for the year ended December 31, 2005 and subsequent SEC filings, which will be available through our web site. We assume no responsibility to update or revise any forward-looking statements to reflect events, trends or circumstances after the date they are made. CONSOLIDATED CONDENSED BALANCE SHEETS As of As of March 31, December 31, 2006 2005 ----------- ----------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 6,986,000 $ 8,007,000 Short-term investments, available-for-sale 10,253,000 7,838,000 Accounts receivable, net of allowance for doubtful accounts of $9,000 in 2006 and 2005 468,000 816,000 Inventories, net 223,000 258,000 Receivable, related party 1,515,000 -- Other current assets 812,000 621,000 ----------- ----------- Total current assets 20,257,000 17,540,000 Property and equipment, net 5,910,000 4,260,000 Investment in joint venture 101,000 -- Other assets 474,000 458,000 Intangibles, net 1,466,000 1,521,000 Goodwill 4,387,000 4,387,000 ----------- ----------- Total assets $32,595,000 $28,166,000 =========== =========== Liabilities and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 5,523,000 $ 6,129,000 Current portion of long-term obligations 960,000 952,000 ----------- ----------- Total current liabilities 6,483,000 7,081,000 Deferred revenues, related party 29,128,000 17,311,000 Option liabilities 4,856,000 5,331,000 Deferred revenues 2,399,000 2,541,000 Long-term deferred rent 781,000 573,000 Long-term obligations, less current portion 1,337,000 1,558,000 ----------- ----------- Total liabilities 44,984,000 34,395,000 ----------- ----------- Commitments and contingencies Stockholders' deficit: Preferred stock, $0.001 par value; 5,000,000 shares authorized; -0- shares issued and outstanding in 2006 and 2005 -- -- Common stock, $0.001 par value; 95,000,000 shares authorized; 18,436,872 and 18,194,283 shares issued and 15,564,038 and 15,321,449 shares outstanding in 2006 and 2005, respectively 18,000 18,000 Additional paid-in capital 83,547,000 82,196,000 Accumulated deficit (85,469,000) (78,013,000) Treasury stock, at cost (10,414,000) (10,414,000) Accumulated other comprehensive loss (30,000) (16,000) Amount due from exercises of stock options (41,000) -- ----------- ----------- Total stockholders' deficit (12,389,000) (6,229,000) ----------- ----------- Total liabilities and stockholders' deficit $32,595,000 $28,166,000 =========== =========== CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) For the Three Months Ended March 31, ----------------------- 2006 2005 ----------- ---------- Product revenues, related party $ 502,000 $1,755,000 Cost of product revenues 454,000 745,000 ----------- ---------- Gross profit 48,000 1,010,000 ----------- ---------- Development revenues: Development 825,000 9,000 Research grant and other 5,000 25,000 ----------- ---------- 830,000 34,000 ----------- ---------- Operating expenses: Research and development 5,176,000 3,116,000 Sales and marketing 501,000 391,000 General and administrative 3,216,000 2,066,000 Change in fair value of option liabilities (475,000) -- ----------- ---------- Total operating expenses 8,418,000 5,573,000 ----------- ---------- Operating loss (7,540,000) (4,529,000) ----------- ---------- Other income (expense): Interest income 197,000 55,000 Interest expense (58,000) (40,000) Other expense, net (6,000) (13,000) Equity loss from investment in joint venture (49,000) -- ----------- ---------- Total other income 84,000 2,000 ----------- ---------- Net loss (7,456,000) (4,527,000) ----------- ---------- Other comprehensive loss - unrealized holding loss (14,000) -- ----------- ---------- Comprehensive loss (7,470,000) (4,527,000) =========== ========== Basic and diluted net loss per common share $(0.48) $(0.32) =========== ========== Basic and diluted weighted average common shares 15,427,971 13,954,347 =========== ========== CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, ------------------------- 2006 2005 ----------- ------------ Cash flows from operating activities: Net loss $(7,456,000) $ (4,527,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 508,000 426,000 Increase in allowance for doubtful accounts -- 9,000 Change in fair value of option liabilities (475,000) -- Stock based compensation expense 804,000 -- Equity loss from investment in joint venture 49,000 -- Increases (decreases) in cash caused by changes in operating assets and liabilities: Accounts receivable 348,000 (806,000) Inventories 35,000 (154,000) Other current assets (206,000) 250,000 Other assets (16,000) (64,000) Accounts payable and accrued expenses (1,110,000) 50,000 Deferred revenues, related party 10,317,000 -- Deferred revenues (142,000) (9,000) Long-term deferred rent 208,000 -- ----------- ------------ Net cash provided by (used in) operating activities 2,864,000 (4,825,000) ----------- ------------ Cash flows from investing activities: Proceeds from sale and maturity of short- term investments 22,218,000 7,564,000 Purchases of short-term investments (24,647,000) (4,286,000) Purchases of property and equipment (1,599,000) (196,000) Investment in joint venture (150,000) -- ----------- ------------ Net cash (used in) provided by investing activities (4,178,000) 3,082,000 ----------- ------------ Cash flows from financing activities: Principal payments on long-term obligations (213,000) (234,000) Proceeds from exercise of employee stock options 506,000 1,000 ----------- ------------ Net cash provided by (used in) financing activities 293,000 (233,000) ----------- ------------ Net decrease in cash and cash equivalents (1,021,000) (1,976,000) Cash and cash equivalents at beginning of period 8,007,000 2,840,000 ----------- ------------ Cash and cash equivalents at end of period $ 6,986,000 $ 864,000 =========== =============

Source: Business Wire

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