NEW YORK, May 5, 2015 (GLOBE NEWSWIRE) -- NeoStem, Inc. (Nasdaq: NBS ) ("NeoStem" or the "Company"), a biopharmaceutical company developing novel, cell-based individualized medicine therapies, announced today 2015 first quarter results and provided an update on its business.
"NeoStem has completed our transformation into a Phase 3 immuno-oncology company with the recent randomization of the first patient in the pivotal Phase 3 Intus trial for NBS20. This is a trial that has been granted a Special Protocol Assessment (SPA) by the FDA. In addition, the NBS20 program has been granted Orphan Drug and Fast Track designations by FDA, all based on compelling published Phase 2 results. We look forward to advancing this therapy towards addressing the significant unmet need of metastatic melanoma treatment," said Dr. David J. Mazzo, Chief Executive Officer of NeoStem.
Operational Highlights
In the year to date, NeoStem's operational highlights included:
- Strengthened leadership with appointments of David J. Mazzo, PhD as Chief Executive Officer, Robert S. Vaters as President and Chief Financial Officer, and Peter G. Traber, MD to the Board of Directors;
- Randomized the first patient in the Phase 3 Intus Study for stage III recurrent and stage IV metastatic melanoma, an event which defers the first principal payment for the Company's debt facility until April 2016;
- Entered into a new Common Stock Purchase Agreement with Aspire Capital Fund, LLC (Aspire), whereby Aspire is committed to purchase up to an aggregate of $30 million of shares of NeoStem stock over a 24-month term, supplementing NeoStem's cash, cash equivalents and marketable securities of $19.1 million as of end of the first quarter;
- Received Advanced Therapeutic Medicinal Product classification for the Company's most advanced product candidate, NBS20, from the European Medicines Agency;
- Expanded office space at Irvine, CA facility to support the clinical trial operations and manufacturing of NBS20 for the Intus Study, and also added office space in Basking Ridge, NJ to accommodate continued growth;
- Received grant subaward from University of California, Irvine (CIRM), providing non-dilutive financing for discovery research;
- Completed expansion in Allendale, NJ facility, adding laboratory, clean room suites and support facilities, and in Mountain View, CA facility, adding manufacturing capacity with additional clean rooms, laboratory space and support facilities;
- Announced an expanded cell therapy manufacturing relationship with Kite Pharma that will serve as a model for future collaborations with clients;
- Announced an agreement with Invetech Pty Ltd. to develop a closed-processing system for cell therapy manufacturing, to provide a flexible small-scale process suitable for GMP manufacturing of autologous and other patient-specific products;
- Announced one-year follow-up results from the Company's Phase 2 PreSERVE study for patients with left ventricular dysfunction post-ST elevation myocardial infarction (STEMI) supporting previous observation of dose-dependent signals across multiple endpoints.
2015 First Quarter Financial Highlights
Total revenue for the quarter was approximately $3.2 million compared to $4.1 million for Q1 2014, a decrease of 22%, which was primarily due to lower reported Clinical Services revenues. The decline, however, was impacted by the net incremental deferral of $1.2 million of additional revenue during the three months ended March 31, 2015, based on our revenue recognition policy. Accordingly, total non-GAAP Adjusted Revenue, which excludes the impact of deferred revenue adjustments, was approximately $4.3 million for both Q1 2015 and Q1 2014, respectively (see below for reconciliation), reflecting adjustments for numerous process development contracts still in process that were not recognized under the Company's revenue recognition policy.
Research and development expenses were approximately $6.8 million for the quarter compared to $4.8 million for Q1 2014. The increase was primarily related to an increase in expenses for the Company's immuno-oncology program, including the initiation of activities to support the commencement of the Intus Phase 3 clinical trial for NBS20, as well as a minor increase in expenses for the immune modulation program efforts to develop T Regulatory cells (Tregs). In addition, there was a minor overall increase in expenses for the ischemic repair program, whereby lower expenses associated with the PreSERVE AMI Phase 2 clinical trial for the Company's product candidate NBS10 were offset by higher expenses associated with activities to support a potential critical limb ischemia development program in Japan.
Selling, general and administrative expenses were approximately $11.1 million for the quarter compared to $9.0 million for Q1 2014, and included $3.2 million and $3.3 million, respectively, of equity-based compensation. The increase was primarily related to expenses associated with executive management changes in the first quarter of 2015, including one-time new hire compensation-related costs as well as separation-related costs. In addition, the increase reflects additional operating activities in connection with the acquisition in May 2014 of California Stem Cell, Inc. These increases were partially offset by lower strategic and corporate development activities in the first quarter of 2015 compared to Q1 2014.
Net loss for Q1 2015 was approximately $19.2 million compared to net loss of $13.8 million for Q1 2014. Net loss for Q1 2015 excluding non-cash charges was $14.3 million, compared with $9.3 million for Q1 2014 (see below for reconciliation).
At March 31, 2015, NeoStem's cash, cash equivalents and marketable securities totaled $19.1 million.
2015 Outlook
In 2015, NeoStem's management expects significant additional achievements, principal among them are the following:
- Continued enrollment in the Intus Phase 3 trial for NBS20;
- Change of corporate name and brand identity in the coming weeks to emphasize the Company's therapeutic development focus on immune therapy and its integrated approach to cell therapy;
- Filing an IND in Japan for one or more programs under Japan's new regenerative medicine law which enables an expedited path to conditional approval for regenerative medicine products based on the demonstration of sufficient safety evidence and signals of efficacy;
- Finalization of decision on next development steps for NBS10 based on available PreSERVE results;
- Receipt of additional non-dilutive (i.e., grant) funding to support development programs;
- Continued growth in the Company's client services (PCT) business.
Use of Non-GAAP Financial Measures
The Company uses "Adjusted Revenues" and "Net Loss Excluding Non-Cash Charges" as non-GAAP financial measures in evaluating its performance.
- Adjusted Revenues represents GAAP revenues less the impact of the change in unearned revenues. The Company believes that providing this measure to investors provides important supplemental information relating to its performance and permits investors and management to evaluate the impact of the Company's revenue-generating activities on its cash position. Additionally, the Company believes this information is frequently used by securities analysts, investors and other interested parties in the evaluation of performance. Management uses, and believes that investors benefit from, this non-GAAP financial measure in assessing the Company's revenue-generating activities, as well as in planning, forecasting and analyzing future periods.
- Net Loss Excluding Non-Cash Charges represents net loss, less equity-based compensation, depreciation and amortization, and other non-cash adjustments included in calculating net loss. The Company believes that providing this measure to investors provides important supplemental information relating to its performance and permits investors and management to evaluate the core operating performance and cash utilization of the Company by excluding the use of these non-cash adjustments. Additionally, the Company believes this information is frequently used by securities analysts, investors and other interested parties in the evaluation of performance. Management uses, and believes that investors benefit from, this non-GAAP financial measure in assessing the Company's operating results, as well as in planning, forecasting and analyzing future periods.
These non-GAAP measures have limitations as an analytical tool, and investors should not consider these measures in isolation, or as a substitute for analysis of the Company's results as reported under generally accepted accounting principles in the United States ("GAAP"). For example, Net Loss Excluding Non-Cash Charges does not reflect the Company's cash expenditures, future requirements for capital expenditures, contractual commitments or cash requirements for working capital needs. Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced in the future, and Net Loss Excluding Non-Cash Charges does not reflect any cash requirements for such replacements. Given these limitations, the Company relies primarily on its GAAP results and uses the Net Loss Excluding Non-Cash Charges measure only as a supplemental measure of its financial performance and cash utilization.
| GAAP to Non-GAAP Reconciliation | ||
| Adjusted Revenues Reconciliation (unaudited) | ||
| (in millions) | For the three months ended March 31, 2015 | For the three months ended March 31, 2014 |
| Revenues | $3.17 | $4.06 |
| Change in Unearned Revenue | 1.17 | 0.21 |
| Adjusted Revenues | $4.34 | $4.27 |
| Net Loss Excluding Non-Cash Charges Reconciliation (unaudited) | ||
| (in millions) | For the three months ended March 31, 2015 | For the three months ended March 31, 2014 |
| Net loss | $ (19.2) | $ (13.8) |
| Equity-based compensation | 3.7 | 3.9 |
| Depreciation and amortization | 0.6 | 0.4 |
| Changes in acquisition-related contingent consideration | 0.6 | 0.2 |
| Other | 0.0 | 0.0 |
| Net Loss Excluding Non-Cash Charges | $ (14.3) | $ (9.3) |
About NeoStem, Inc.
NeoStem is a biopharmaceutical company pursuing the preservation and enhancement of human health globally through the development of novel cell based individualized medicine therapeutics that prevent, treat or cure disease. The Company is developing therapies based on three platform technologies (immuno-oncology, ischemic repair and immunomodulation) with a focus on its lead, Phase 3 clinical program for NBS20 in immuno-oncology. The combination of a rich therapeutics pipeline and an externally recognized in-house center for cell therapy process development and manufacturing has created an organization with unique capabilities for accelerated and efficient product development. www.neostem.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectations, as of the date of this press release, and involve certain risks and uncertainties. Forward-looking statements include statements herein with respect to the successful execution of the Company's business strategy, the Company's ability to develop and grow its business, the successful development of cellular therapies with respect to the Company's research and development and clinical evaluation efforts in connection with the Company's Immuno-Oncology Program, Ischemic Repair Program, Immune Modulation Program and other cell therapies, the future of the regenerative medicine industry and the role of stem cells and cellular therapy in that industry, and the performance and planned expansion of the Company's wholly-owned subsidiary and its center of excellence for cell therapy process development, engineering and manufacturing, PCT, as well as its efforts to expand its capabilities into the cell therapy tools market. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the "Risk Factors" described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 2, 2015, and in the Company's other periodic filings with the SEC. The Company's further development is highly dependent on future medical and research developments and market acceptance, which is outside of its control.
NeoStem, Inc. Eric Powers Manager of Communications and Marketing Phone: +1-212-584-4173 Email:
