Business Context and Reporting Period
Company: Aastrom Biosciences, Inc. (Note: Metadata referenced Vericel Corp, but filing content is for Aastrom Biosciences, Inc.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: March 31, 2010
Business Stage: Clinical development stage company focused on autologous cellular therapies (Tissue Repair Cells or TRCs) for cardiovascular diseases, specifically Dilated Cardiomyopathy (DCM) and Critical Limb Ischemia (CLI). The company has never been profitable and relies on equity financing and grants.
Key Financial Metrics
| Metric (in thousands) | Quarter Ended Mar 31, 2010 | Nine Months Ended Mar 31, 2010 | Balance Sheet (Mar 31, 2010) |
|---|---|---|---|
| Total Revenues | $0 | $89 | N/A |
| Net Loss | $(4,238) | $(12,614) | N/A |
| Net Loss Per Share (Basic/Diluted) | $(0.16) | $(0.55) | N/A |
| Cash and Cash Equivalents | N/A | N/A | $17,844 |
| Short-term Investments | N/A | N/A | $5,000 |
| Total Current Assets | N/A | N/A | $23,435 |
| Total Current Liabilities | N/A | N/A | $1,810 |
| Total Debt (Current + Long-term) | N/A | N/A | $428 |
| Accumulated Deficit | N/A | N/A | $(208,437) |
Operating Cash Flow: Net cash used for operating activities was $11.4 million for the nine months ended March 31, 2010.
Financing Cash Flow: Net cash provided by financing activities was $17.4 million for the nine months ended March 31, 2010, primarily from equity issuances.
Material Changes vs. Prior Period
- Revenue: Product sales and rentals dropped to $0 for the quarter ended March 31, 2010, compared to $58,000 in the prior year quarter. Nine-month revenue decreased to $89,000 from $113,000.
- Expenses: Total costs and expenses increased to $4.26 million for the quarter (from $4.07 million) and $12.75 million for the nine months (from $12.30 million). This increase is driven by expanded clinical development activities, specifically patient recruitment and treatment for the IMPACT-DCM trial.
- Net Loss: Net loss increased to $4.24 million for the quarter (from $3.97 million) and $12.61 million for the nine months (from $11.99 million). However, loss per share improved due to a reverse stock split and share issuance dilution effects.
- Liquidity: Cash and cash equivalents increased to $17.8 million (from $17.0 million at June 30, 2009), and short-term investments increased to $5.0 million (from $0), bolstered by a $12.4 million net proceeds public offering in January 2010 and $5.1 million from a private placement agreement.
Guidance, Outlook, and Risks
- Clinical Progress:
- IMPACT-DCM (Cardiac): The 40-patient surgical trial is fully enrolled; the last patient was treated in March 2010. Interim data is expected in Q3 2010, with results reported in Q4 2010.
- RESTORE-CLI (Vascular): Enrollment concluded in March 2010 (86 patients). An interim analysis in February 2010 showed TRCs were more effective than placebo (p<0.05) on a composite endpoint of time to treatment failure. The company is planning discussions with the FDA for pivotal trials.
- New Trial: A catheter-based cardiac trial began enrolling its first patient in April 2010.
- Liquidity Outlook: Management believes current cash, cash equivalents, and short-term investments ($22.8 million total) are sufficient to finance operations through March 31, 2011. Monthly cash utilization is estimated at approximately $1.4 million for the remainder of fiscal 2010.
- Capital Needs: The company will need to raise substantial additional funds to complete product development, clinical trials, and commercialization. Future funding may come from equity/debt financing, grants, or strategic alliances.
- Risks and Contingencies:
- Supplier Bankruptcy: On April 27, 2010, Moll Industries, a supplier of cell culture cassettes, filed for bankruptcy. While the company believes it has adequate supplies, there is a risk of supply disruption or increased costs.
- Regulatory Uncertainty: Success depends on obtaining FDA approvals and favorable clinical trial results.
- Financing Constraints: The company is restricted from issuing securities under its Fusion Capital agreement for 180 days following the January 2010 public offering without consent, and cannot put shares to Fusion Capital if the stock price is below $2.88.
Investor Verification Checklist
- Supplier Risk: Verify the status of the Moll Industries bankruptcy and Aastrom's ability to secure alternative sources for cell culture cassettes without significant cost increases or delays.
- Clinical Trial Data: Monitor the release of interim data for the IMPACT-DCM trial (expected Q4 2010) and the final analysis of the RESTORE-CLI trial to confirm efficacy claims.
- Cash Runway: Track monthly cash burn rates against the $22.8 million liquidity position to ensure the March 2011 runway remains valid, especially given the $1.4 million monthly utilization estimate.
- Capital Markets: Assess the company's ability to raise additional capital given the 180-day lock-up on the Fusion Capital agreement and current market conditions for biotech equities.
- Stock Split Impact: Confirm the retroactive adjustments for the 1-for-8 reverse stock split authorized in February 2010 when comparing historical share counts and per-share data.