Filing and reporting period
The supplied filing is Caladrius Biosciences, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2017, signed May 15, 2017. This conflicts with the request metadata identifying Lisata Therapeutics and 2016 Q1; the summary below follows the filing text. Share and per-share data reflect the company’s one-for-ten reverse stock split in July 2016.
Caladrius developed cell-therapy candidates and operated PCT, a cell-therapy development and manufacturing business. It proposed selling its remaining 80.1% interest in PCT to Hitachi America; after a completed sale, Caladrius expected to focus on its retained therapeutic-development business.
Financial results and liquidity
| Metric | Q1 2017 | Q1 2016 |
|---|---|---|
| Revenue | $7.92 million | $7.49 million |
| Cost of revenue | $8.04 million | $6.23 million |
| Gross profit (loss) and margin | $(0.12) million; approximately (2)% | $1.26 million; approximately 17% |
| Operating loss | $(9.53) million | $(11.07) million |
| Net loss | $(9.79) million | $(12.05) million |
| Net loss attributable to common stockholders | $(9.36) million; $(1.12) per share | $(11.98) million; $(2.09) per share |
| Cash used in operating activities | $(10.09) million | $(8.03) million |
- At March 31, 2017, cash and cash equivalents were $12.0 million, down from $14.7 million at year-end. Current assets of $21.9 million were below current liabilities of $23.2 million, a working-capital deficit of approximately $1.3 million.
- Oxford Finance debt was approximately $4.9 million, including $3.2 million classified as current; other notes payable totaled approximately $1.2 million. The Oxford loan bears 8.5% interest, began amortizing in January 2017, and matures September 1, 2018. The company reported covenant compliance.
- Total liabilities were $31.1 million; redeemable non-controlling interests were $19.4 million; total equity was a deficit of $2.0 million.
Material changes versus the prior period
- Revenue rose 6%, but cost of revenue increased 29%, turning gross profit positive in Q1 2016 into a gross loss in Q1 2017. Management attributed the shortfall to PCT’s unused capacity, partly associated with lower client trial enrollment and the end of a major customer contract.
- R&D expense fell 41% to $3.46 million. Lower ischemic-repair and other program costs—including prior-year trial close-out and restructuring expenses—more than offset higher spending on CLBS03.
- SG&A declined 8% to $5.95 million, while interest expense fell to $0.17 million from $0.93 million, principally reflecting lower Oxford loan interest expense.
- Operating cash use increased to $10.1 million from $8.0 million. Financing included $5.0 million received as an advance against the proposed PCT sale, $3.2 million in common-stock proceeds, and debt repayments.
Outlook, risks, and unusual items
- Proposed PCT sale: The agreement sets a stated purchase price of $75 million in cash, subject to adjustments. Hitachi paid $5 million in March as an advance. At closing, the filing says Caladrius expected to receive $65 million, with $5 million placed in escrow; a further $5 million may be payable if PCT achieves $125 million of cumulative revenue, excluding clinical-service reimbursements, during 2017–2018. Stockholder approval and other closing conditions remained outstanding, and completion was not assured. The stockholder vote was scheduled for May 16, 2017.
- Management said proceeds from a second-quarter closing were expected to fund CLBS03 and other operating expenses for at least 12 months after issuance of the statements and support repayment of the Oxford loan in 2017. If the sale did not close, management said substantial additional capital would be required and the business would face severe financial constraints. The filing states that recurring losses and capital needs raise substantial doubt about the company’s ability to continue as a going concern.
- If the sale terminates in certain circumstances, the company may have to repay the $5 million advance and, in some cases, pay a $5 million termination fee; failure to make specified payments could increase Hitachi’s ownership interest in PCT.
- CLBS03’s Phase 2 T-Rex trial was underway. A therapeutic-effect interim analysis was expected in late 2017 or early 2018 after approximately half of patients reached six-month follow-up. CIRM awarded up to $12.2 million subject to milestones; $5.7 million was received on May 4, 2017, after quarter-end.
- Management expected PCT customer enrollment to improve in Q2 2017 and projected a return to positive gross profit, but this was not assured. Risks include trial enrollment and results, access to financing, sale completion, customer concentration, and PCT revenue and capacity utilization. The three largest customers generated 59% of Q1 revenue.
- The sale approval would trigger accelerated vesting of outstanding unvested equity awards. The filing also describes retention and incentive payments to a PCT executive, contingent on closing.
Important facts for investors to verify
- Confirm the company and reporting period: the source filing is Caladrius Biosciences Q1 2017, not Lisata Therapeutics Q1 2016.
- Verify the status and final terms of the PCT sale, including closing adjustments, escrow, transaction expenses, and any milestone entitlement.
- Assess post-sale cash runway, debt repayment, and funding needs if the sale fails or is delayed; the filing expressly raises substantial doubt about going concern absent sufficient liquidity.
- Track PCT utilization, customer enrollment, revenue concentration, and whether gross margins recover as management anticipated.
- Monitor CLBS03 trial enrollment, interim-analysis timing and results, and CIRM milestone funding conditions.