Filing summary
Filing identity and period: The request metadata identifies Lisata Therapeutics, Inc. and 2015 Q2, but the supplied filing is Caladrius Biosciences, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2016. Figures below summarize the filing actually provided. Unless noted, dollar amounts are U.S. dollars.
Business context and reporting period
Caladrius combined a cell-therapy development and manufacturing services business, operated through its majority-owned subsidiary PCT, with a clinical-stage cell-therapy pipeline. PCT provides contract development and manufacturing services. The lead candidate, CLBS03, was in a Phase 2 trial for adolescents with recent-onset type 1 diabetes.
Financial results and liquidity
| Metric | Q2 2016 | Q2 2015 | Six months 2016 | Six months 2015 |
|---|---|---|---|---|
| Revenue | $8.30 million | $5.87 million | $15.79 million | $9.04 million |
| Gross profit (margin) | $1.25 million (15%) | $0.07 million (1%) | $2.51 million (16%) | $(0.13) million (negative 1%) |
| Operating loss | $(7.48) million | $(25.67) million | $(18.56) million | $(43.76) million |
| Net loss | $(7.88) million | $(17.16) million | $(19.93) million | $(36.39) million |
| Net cash used in operations | Not stated for quarter | Not stated for quarter | $(14.58) million | $(21.83) million |
Revenue rose 41% in Q2 and 75% for the six-month period. Growth reflected higher clinical manufacturing activity, clinical-service reimbursements and processing and storage services. Reimbursements generally carry little margin. At June 30, cash and cash equivalents were $17.70 million, working capital was approximately $6.9 million, and total assets were $56.71 million. Current liabilities were $22.36 million.
Oxford Finance debt was approximately $8.7 million at June 30, including $5.0 million payable within 12 months; the loan bears 8.5% interest and matures September 1, 2018. Notes payable totaled approximately $1.3 million. The company reported total equity of $5.64 million, including $19.4 million of redeemable securities classified outside equity.
Changes and notable items versus prior periods
- Q2 operating expenses fell 50% year over year, to $15.79 million; six-month expenses fell 35%, to $34.35 million. Lower R&D and SG&A, including substantially lower share-based compensation, contributed to the reductions.
- Prior-year results included a $9.4 million impairment of CLBS10-related in-process R&D and a $3.7 million tax benefit from reversal of the related deferred tax liability. Prior-year other income also included a reduction in contingent consideration; these items affect comparability.
- In March 2016, Hitachi Chemical acquired a 19.9% interest in PCT for $19.4 million, with Caladrius retaining 80.1%. A related Asia license provides for total fees of $5.6 million and potential royalties. Caladrius used $7.0 million of transaction proceeds toward Oxford debt repayment.
- After quarter-end, the company effected a one-for-ten reverse stock split on July 28, 2016, intended to help restore Nasdaq’s $1.00 minimum bid-price compliance. Historical share and per-share figures in the filing are retroactively adjusted for the split.
Outlook, risks and contingencies
Management said additional capital would be needed to expand PCT, fund CLBS03 and other operations, and service debt. Potential sources included operating revenue, the Aspire Capital stock purchase agreement, further debt or equity financing, collaborations, asset sales and grants; availability on acceptable terms was not assured. The filing states that inability to obtain necessary capital would raise substantial doubt about the company’s ability to continue as a going concern and could require delaying or discontinuing CLBS03 or business expansion.
The CLBS03 Phase 2 trial began enrolling in Q1 2016. The first cohort comprised 18 patients, with three-month follow-up and an initial safety and biomarker analysis expected by year-end 2016; enrollment of the remaining 93 patients was conditional on satisfactory safety review. The company also reported discontinuing CLBS20 development in January 2016 and winding down CLBS10-related activities. These programs, clinical outcomes, enrollment and partnering prospects remain uncertain.
Oxford’s amended loan terms require payment of 20% of certain proceeds received through March 31, 2017, up to $3.0 million; if that amount is not reached, a balancing payment is due by that date. Hitachi also has a put right after the tenth anniversary, subject to the agreement’s terms. Three customers represented 46% of six-month revenue and 46% of receivables at June 30. Management reported disclosure controls were effective and no material change in internal control over financial reporting.
Key facts for investors to verify
- Confirm the intended issuer and reporting period: the supplied filing is Caladrius Biosciences, Inc., Q2 2016, not Lisata Therapeutics, Inc., Q2 2015.
- Assess cash burn, remaining liquidity and the timing and terms of any required financing, including the going-concern warning.
- Verify Hitachi transaction receipts, PCT expansion plans, license-fee recognition and the loan’s proceeds-based repayment requirement.
- Track CLBS03 cohort safety findings, enrollment milestones and the effect of trial timing or outcomes on funding needs.
- Confirm Nasdaq listing compliance following the reverse split and monitor customer concentration and debt repayment capacity.