Filing identity and reporting period
The supplied filing is Caladrius Biosciences, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2015, filed August 6, 2015. This does not match the request metadata identifying Lisata Therapeutics and 2014 Q2; the summary below reflects the filing text provided.
Business context
Caladrius combined its PCT cell-therapy manufacturing and services business with a clinical pipeline. Its lead program, CLBS20, is in a Phase 3 melanoma trial. The company also described immune-modulation research and potential chronic heart failure and critical limb ischemia programs. Management said those latter ischemic indications were early-stage and would require outside funding or partnerships.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | 2015: $5.87 million; 2014: $4.49 million | 2015: $9.04 million; 2014: $8.54 million |
| Operating loss | 2015: $25.67 million; 2014: $12.43 million | 2015: $43.76 million; 2014: $25.93 million |
| Net loss | 2015: $17.16 million; 2014: $12.77 million | 2015: $36.39 million; 2014: $26.60 million |
| Net loss per share | 2015: $0.38; 2014: $0.40 | 2015: $0.88; 2014: $0.88 |
- Second-quarter revenue rose 31%; first-half revenue rose 6%. Clinical services drove much of the quarterly increase, while process-development revenue can fluctuate with contract completion timing.
- Gross profit was approximately $68,000, or 1% of revenue, in Q2 2015, versus $812,000, or 18%, a year earlier. First-half gross loss was approximately $128,000, compared with gross profit of approximately $1.04 million in first-half 2014.
- Research and development expense was $7.60 million for Q2 and $14.40 million for the first half, up 31% and 36%, respectively. The first half included a $9.4 million impairment charge for acquired in-process R&D.
- Cash used in operating activities was $21.83 million in the first half, versus $22.51 million in 2014. Financing activities provided $36.63 million, chiefly from equity issuance; cash and cash equivalents increased to $36.21 million from $19.17 million at year-end.
- At June 30, cash and cash equivalents were $36.21 million, marketable securities were $3.01 million, working capital was approximately $31.1 million, and stockholders’ equity was $66.4 million. The filing also states in its market-risk discussion that there were no investments or marketable securities at quarter-end; this conflicts with the balance sheet and should be checked.
- Long-term debt was $15.00 million, with $1.36 million current; notes payable totaled approximately $2.14 million, including $0.88 million current. Oxford debt bears 8.5% interest and matures in 2018. The company reported compliance with loan covenants.
- Total contractual obligations were approximately $26.9 million, including $16.2 million of long-term debt, $7.9 million of operating leases and $2.1 million of notes payable.
Material changes, outlook and risks
- Management decided not to develop CLBS10 further after the ongoing Phase 2 PreSERVE-AMI study. It recorded a full $9.4 million impairment of related IPR&D, reversed a $3.7 million deferred tax liability and reduced related contingent consideration from $5.6 million to zero. Management said these changes together increased net loss by approximately $20,000.
- Other income included the contingent-consideration revaluation; it was $5.35 million in Q2 2015 and $4.81 million for the first half, compared with other expense in the 2014 periods. Interest expense increased, primarily due to the Oxford loan.
- The company raised $28.8 million gross in a June underwritten offering of 14.4 million shares, with $26.5 million net proceeds, and received approximately $9.4 million gross from Aspire Capital share sales in the first half. These financings increased share count and diluted existing holders.
- CIRM awarded $17.7 million toward the Intus Phase 3 study, including a $3.0 million initiation payment received in June and $14.7 million in future milestone payments. The award requires dollar-for-dollar company matching; California may receive future product-related payments of up to nine times the award, subject to the agreement.
- The Intus study plans to randomize 250 patients; the first patient was randomized in April 2015. An interim analysis after 99 trial events was expected in Q4 2017. The company estimated the study would cost approximately $45 million.
- Management believed existing cash, revenue and access to Aspire purchase agreements would fund operations for the next 12 months, but said additional capital would be needed for longer-term development and PCT expansion. Financing may be unavailable or dilutive; without it, programs or expansion could be delayed, discontinued or curtailed.
- Other risks include clinical and regulatory uncertainty, patient enrollment and trial timing, dependence on grants and partnerships, and the ability to meet obligations under licensing and strategic arrangements. The company disclosed federal tax audits for 2012 and 2013; it did not believe pending legal claims would materially affect results.
Important facts for investors to verify
- Confirm the filing identity and period: the supplied document is Caladrius Biosciences’ 2015 Q2 10-Q, not a Lisata Therapeutics 2014 Q2 filing.
- Reconcile the market-risk statement claiming no quarter-end marketable securities with the balance sheet’s $3.01 million balance.
- Track actual Intus enrollment, spending, matching-fund requirements and CIRM milestone receipts against management’s funding assumptions.
- Assess cash burn, remaining Aspire availability, future financing needs and dilution alongside debt service and contractual obligations.
- Monitor the consequences of discontinuing CLBS10, including the future viability and funding of other CD34 programs and the valuation of acquisition-related contingent consideration.