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Cytori Therapeutics Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 8, 2011 09:41PM
Cytori Therapeutics Inc (CYTX) filed Quarterly Report for the period ended 2011-09-30. Cytori Therapeutics Inc has a market cap of $156 million; its shares were traded at around $2.9 with and P/S ratio of 18.9.
Highlight of Business Operations:Our overall net losses for the three and nine months ended September 30, 2011 were $8,335,000 and $25,544,000 as compared to the losses for the three and nine months ended September 30, 2010 were $10,417,000 and $18,243,000, respectively. The fluctuation in the losses for the three and nine months ended September 30, 2011 as compared to the losses for the three and nine months ended September 30, 2010 is primarily due to the non-cash fair value estimates of our warrant liability, recognition of non-cash development revenue of $1,231,000 during first quarter of 2011 as compared to recognition of non-cash development revenue of $2,122,000 of during first quarter of 2010, offset by an increase in operating expenses.
Cost of product revenues as a percentage of product revenues was 44.1% and 49.0% for the three and nine months ended September 30, 2011 and 60.6% and 46.5% for the three and nine months ended September 30, 2010, respectively. Fluctuation in this percentage is to be expected due to the product mix as well as mix of distributor and direct sales comprising the revenue for the period.
We will continue to recognize revenue from the Thin Film development work we are performing on behalf of Senko, based on the relative fair value of the milestones completed as compared to the total efforts expected to be necessary to obtain regulatory clearance from the MHLW. We are still awaiting regulatory clearance from the MHLW in order for initial commercialization to occur. Accordingly, we expect to recognize approximately $1,129,000 (consisting of $879,000 in deferred revenues plus a non-refundable payment of $250,000 to be received upon commercialization) in revenues associated with this milestone arrangement if and when regulatory approval is achieved. Moreover, we expect to recognize $500,000 per year associated with deferred Senko license fees over a three-year period following commercialization, if achieved, as the refund rights associated with the license payment expire.
The increase in sales and marketing expense for the three and nine months ended September 30, 2011 as compared to the same period in 2010 was mainly attributed to the increase in salary and related benefits expense (excluding share-based compensation) of $419,000 and $1,882,000, an increase in travel related expenses of $63,000 and $326,000, and an increase in professional services of $203,000 and $479,000, respectively, which are due to our emphasis in seeking strategic alliances and/or co-development partners.
We granted 246,225 performance-based restricted stock awards under the 2004 Equity Incentive Plan in February 2011. The awards provide employees until January 1, 2012 to achieve certain performance goals established by the Compensation Committee. The performance goals are weighted based on the following achievements: obtaining certain FDA clearance or approval (40%), achieving a targeted revenue increase for the fiscal year ended December 31, 2011 (20%), and entering into a major collaboration for development and/or commercialization of the Company s products (40%). To the extent that any of the performance goals are partially achieved, the Compensation Committee maintains the discretion to continue the vesting of all or a portion of the awards following January 1, 2012. Once earned, the awards will remain unvested until January 1, 2013. Termination of employment prior to vesting will result in the forfeiture of any earned (as well as unearned) awards. No compensation expense was recognized related to these awards during the three and nine months ended September 30, 2011 because the Compensation Committee has not determined that the performance criteria has been met, nor has it exercised its discretion in determining if partial awards will be granted. The following table summarizes activity with respect to such awards during the nine months ended September 30, 2011:
Stocks Discussed: CYTX,