Filing summary
Filing and period: The supplied filing is Caladrius Biosciences, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2016, filed May 5, 2016. This conflicts with the request metadata, which names LISATA THERAPEUTICS, INC. and 2015 Q1; the filing itself does not report on Lisata or 2015 Q1.
Business context
Caladrius combined PCT’s cell-therapy development and manufacturing services business with its clinical-stage cell-therapy programs. Its lead candidate, CLBS03, is in a Phase 2 trial for adolescents with recent-onset type 1 diabetes. Enrollment began in the first quarter; the initial 18-patient cohort is expected to reach three-month follow-up in early 2017, with further enrollment contingent on safety review.
Key financial results
| Metric | Three months ended March 31, 2016 | Prior-year comparable period |
|---|---|---|
| Revenue | $7.49 million | $3.17 million |
| Cost of revenue | $6.23 million | $3.37 million |
| Gross profit (loss) and margin | $1.26 million; 17% | $(0.20) million; (6)% |
| Research and development | $5.88 million | $6.80 million |
| Selling, general and administrative | $6.46 million | $11.09 million |
| Operating loss | $(11.07) million | $(18.09) million |
| Net loss | $(12.05) million | $(19.23) million |
| Net loss per share | $(0.21) | $(0.51) |
| Cash used in operating activities | $(8.03) million | $(14.24) million |
Revenue growth was driven mainly by clinical services, including higher clinical manufacturing activity, and increased reimbursable costs. Processing and storage revenue declined. The company recorded $1.2 million of one-time restructuring costs, including severance and asset impairments. Lower share-based compensation and reduced prior-year executive transition costs contributed to lower SG&A.
Financial position, funding and material changes
- At March 31, cash and cash equivalents were $25.43 million, versus $20.32 million at year-end 2015; working capital was approximately $17.2 million. Total assets were $63.18 million.
- Total liabilities were $30.60 million. Oxford Finance debt was approximately $8.7 million, down from $15.0 million at December 31, 2015; notes payable were approximately $1.8 million. The Oxford loan bears an 8.5% rate, matures September 2018, and its interest-only period was extended to January 1, 2017. The company paid approximately $7.0 million toward the loan in connection with the Hitachi transaction.
- Financing cash flow included $19.4 million from Hitachi’s purchase of a 19.9% interest in PCT; $15.0 million was distributed to Caladrius and $4.4 million retained by PCT. The related license agreement provides for $5.6 million in payments during 2016 and royalties on qualifying Asian contract revenue. The filing says $22.5 million of the broader $25.0 million transaction proceeds had been received in March, with the balance expected by year-end.
- The Hitachi proceeds supported debt reduction and PCT expansion. The transaction also created redeemable noncontrolling interest of $19.4 million, classified outside permanent equity. Total equity at quarter-end was $13.18 million.
- Caladrius raised $1.0 million in a March private placement of shares and two-year warrants. Common shares outstanding were 59.12 million at quarter-end and 59.03 million as of May 5, 2016.
Outlook, risks and unusual items
- Management stated that cash, Hitachi proceeds, operating revenue and access to the Aspire Capital purchase agreement were expected to fund operations for the next 12 months. The company nevertheless anticipates needing additional capital for PCT growth, CLBS03 development, operating costs and debt service; additional financing is not assured and could be dilutive or unavailable on acceptable terms.
- Under the amended Oxford loan agreement, 20% of certain proceeds received through March 31, 2017 must be applied to repayment, up to $3.0 million; if that amount is not reached, a shortfall payment is due by that date.
- Caladrius discontinued CLBS20 clinical development in January 2016 and was completing trial close-out activities. It also reduced CLBS10 activity and is pursuing the critical-limb-ischemia program in Japan with a partner. CLBS03 trial timing and further enrollment depend on safety evaluation and regulatory review.
- NASDAQ notified the company that its share price had failed the $1.00 minimum bid requirement. The compliance period ran through August 23, 2016; failure to regain compliance could put continued listing at risk.
- Revenue is concentrated: three customers accounted for 50% of quarterly revenue, and three customers represented 54% of receivables at quarter-end. The company also disclosed ongoing federal tax audits for 2012 and 2013, but said pending legal claims were not expected to materially affect results.
- Management reported effective disclosure controls and no material change in internal control over financial reporting. No formal earnings or revenue guidance was provided.
Important facts for investors to verify
- Confirm the intended issuer and reporting period: the supplied filing is Caladrius Biosciences’ 2016 Q1 10-Q, not a Lisata Therapeutics 2015 Q1 filing.
- Track cash burn, the timing and amount of remaining Hitachi payments, and whether additional capital is needed beyond management’s stated 12-month runway.
- Review Oxford repayment requirements, including the proceeds sweep and potential $3.0 million minimum payment by March 31, 2017.
- Monitor PCT revenue growth, customer concentration and gross-margin performance, alongside execution of the Hitachi collaboration and license payments.
- Follow CLBS03 enrollment and safety review milestones, and the company’s progress toward satisfying NASDAQ’s minimum bid-price requirement.