SAN DIEGO, May 11 /PRNewswire-FirstCall/ -- Cardium Therapeutics (NYSE Amex: CXM) today reported its financial results for its first quarter ended March 31, 2009, and on recent developments and future outlook.
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Cardium made significant progress in the first quarter 2009 as the Company continued to focus its efforts on the InnerCool Therapies and Tissue Repair Company subsidiaries, both of which we believe are advancing toward important asset value and monetization inflection points within Cardium's biomedical opportunities portfolio. The Tissue Repair Company made important progress on finalizing the completion of patient recruitment for its Phase 2b MATRIX clinical trial of Excellarate(TM) for the potential treatment of diabetic ulcers. At the same time, InnerCool continued forward with the successful development of the UroCool(TM) pelvic cooling catheter system, which included the submission for FDA 510(k) clearance to further enhance InnerCool's portfolio of best-in-class temperature modulation therapy medical devices.
As initially reported in November 2008, Cardium instituted several important strategic actions intended to focus and enhance its overall operating structure and generate cost efficiencies. Based on these actions, cost savings have begun to be reflected in the Company's operating results. In particular, for the first quarter of 2009, Cardium's Loss from Operations was reduced by almost 50% compared to the same period a year ago.
The first quarter 2009 financial results also include substantial non-cash charges to adjust for the fair market value of certain common stock warrants required beginning this quarter as a result of the adoption of Emerging Issues Task Force EITF 07-05 entitled "Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock" by the Financial Accounting Standards Board. In accordance with this new rule, stock warrants with certain terms that were previously accounted for as equity are now required to be recorded as a derivative liability with quarterly adjustments of their fair value recorded on the income statement. These rule changes resulted in a $9.7 million "Change in Fair Value of Derivative Liabilities" reflecting the substantially higher values associated with outstanding warrants to purchase the Company's stock, since the price of Cardium's common stock increased by about 125% during the first quarter.
Tissue Repair Company
On May 6, 2009, Cardium announced the completion of recruitment for the Phase 2b MATRIX clinical trial to evaluate the safety and efficacy of Excellarate for the treatment of non-healing diabetic foot ulcers. The MATRIX Data and Safety Monitoring Board has reviewed safety data collected from study participants as of April 21, 2009 and reported that Excellarate appears to be both safe and well tolerated, with no serious adverse events attributable to the study product. Approximately 70% of the patients recruited in the MATRIX study have already completed their initial evaluation period with respect to key efficacy criteria, particularly the percentage of patients achieving complete wound closure, the rate of wound closure and the reduction of wound size at various time points. With confirmation of one or more medically meaningful responses, Cardium and TRC would expect to meet with the U.S. Food and Drug Administration (FDA) to review the complete safety and efficacy database from this Phase 2b clinical study and their plans for initiating a larger-scale Phase 3 pivotal study.
Cardium announced on May 7, 2009, that in parallel with the Phase 2b study and in anticipation of a Phase 3 clinical study and future commercialization, the Company's continuing process development activities have led to an important breakthrough in product formulation that not only significantly simplifies the use of Excellarate, but opens the door to additional potential applications of the Excellarate technology in a number of other wound healing market opportunities. The product formulation that was used in the Phase 2b study required storage in a -70 degrees Celsius freezer and a two syringe mixing process prior to treatment. The new product formulation is designed to be maintained in a physician's office using a standard refrigerator (at a temperature of about 4 degrees Celsius) and to have a shelf life of 12-18 months. It will also be formulated as an easy-to-use single syringe that is pre-mixed and ready to be applied to patients' wounds.
The Company believes that with the completion of the Phase 2b MATRIX study, the Tissue Repair Company will have reached a key valuation inflection point within Cardium's investment portfolio and in concert with this, plans to consider potential development and commercialization partnerships for Excellarate with large pharmaceutical companies and companies focused on wound healing. With continued clinical advancement, Excellarate offers the potential to be commercially available in late 2011 or early 2012.
InnerCool Therapies
Cardium continues to build and enhance its InnerCool Therapies operating unit with a specific focus on the development of a new class of targeted organ-specific cooling applications, including its UroCool(TM) pelvic cooling catheter system, which is designed to induce localized cooling during surgery for prostate cancer. An application for FDA 510(k) clearance of the UroCool(TM) system was submitted in the first quarter of 2009. Cardium believes that InnerCool has reached a significant valuation inflection point within Cardium's investment portfolio, and with the appropriate strategic positioning, best-in-class products and a pipeline of innovative product opportunities, Cardium intends to advance InnerCool's therapeutic cooling and warming products into corresponding markets through the strategic sale of the business to a large and diversified medical device company or through various vertical partnering opportunities with established companies having existing sales and marketing organizations but with a continuing need for innovative, high-value content products. The Company believes this strategy is more cost-effective than building InnerCool into a fully integrated manufacturing, sales and marketing organization.
Financial Report
For the first quarter ended March 31, 2009, the Company reported a loss from operations of $3.5 million, representing a 47% reduction from year ago levels, as a result of various strategic actions initiated in the fourth quarter 2008. The first quarter 2009 financial results also include substantial non-cash charges to adjust for the fair market value of certain common stock warrants required beginning this quarter as a result of the adoption of Emerging Issues Task Force EITF 07-05, as noted above. Since the price of Cardium's common stock increased by about 125% during the first quarter, this resulted in a $9.7 million "Change in Fair Value of Derivative Liabilities," and resulted in a reported net loss for the current period of $14.7 million, or $0.31 per share, compared to a net loss of $6.7 million, or $0.16 per share for first quarter 2008. Product revenue for the first quarter 2009 was $350,000, compared to $534,000 in the same period in 2008 as InnerCool's direct sales force was reduced consistent with the Company's new business strategy which is focused on the marketing and sale of InnerCool products through corporate accounts and web-based initiatives, and ultimately vertical partnering with larger organizations having already established marketing and sales organizations. Grant revenue for the first quarter 2009 was $18,000 compared to $112,000 for the same quarter last year. Research and development costs for the three months ended March 31, 2009 totaled $1.4 million and selling, general and administrative expenses were $2.0 million, compared to $3.4 million and $3.4 million respectively for the same period last year. Cash and cash equivalents as of March 31, 2009 were $1.4 million, compared to cash and cash equivalents of $6.3 million as of March 31, 2008. Interest expense for the three months ended March 31, 2009 was $1.6 million and includes $1.3 million representing the amortization of debt costs and warrant value issued with the debt. During the first quarter 2009, the Company completed a secured debt financing resulting in gross proceeds of approximately $3.5 million, before placement agent fees and offering expenses and excluding any future proceeds from the exercise of the warrants issued in the financing.
The Company continues to provide information in accordance with GAAP. However, with the adoption of EITF 07-05 and its very substantial impact on our overall reported net losses, varying substantially based on changes in the underlying market value of Cardium's common stock, the Company believes it is also helpful for investors to receive additional information relating more specifically to the Company's operating results. Accordingly, the Company additionally provides a pro forma income statement and pro forma balance sheet which excludes the non-cash effects of EITF 07-05 on its financial results. The Company presents this information to investors as an additional tool for evaluating the Company's financial results in a manner that reflects ongoing operations and facilitates comparisons with operating results from prior periods. The presentation of this additional non-GAAP information is intended to provide investors with additional incremental tools for their review of the Company's results and is not meant to be considered in isolation or as a substitute for net income information prepared and provided in accordance with GAAP.
In late December 2008, Cardium received notification from the staff of its current listing exchange indicating that the Company was considered to be noncompliant with certain listing requirements of the NYSE Amex. On January 23, 2009, the Company submitted a proposed plan outlining how it could establish compliance with the requirements of section 1003(a)(iv) by March 23, 2009, and establish compliance with all sections, including section 1003(a)(i), by June 23, 2010. Cardium received notification in late February that its plan had been accepted by the exchange, but remains subject to continuing review by the exchange with respect to the carrying out of its plan and the achievement and maintenance of overall compliance. On April 9, 2009, the exchange notified Cardium that it had extended the time for compliance with the requirements of section 1003(a)(iv) from March 23, 2009 to June 27, 2009; and that the Company would also need to regain compliance with section 1003(a)(ii) of the exchange's company guide regarding maintenance of stockholder's equity of at least $4 million, which it would need to do by June 23, 2010.
About Cardium
Cardium Therapeutics, Inc. and its subsidiaries, InnerCool Therapies, Inc. and the Tissue Repair Company, are medical technology companies primarily focused on the development, manufacture and sale of innovative therapeutic products and devices for cardiovascular, ischemic and related indications.
Cardium's InnerCool Therapies subsidiary is a San Diego-based medical technology company in the emerging field of temperature modulation therapy to rapidly and controllably cool the body in order to reduce cell death and damage following acute ischemic events such as cardiac arrest or stroke, and to potentially lessen or prevent associated injuries such as adverse neurological outcomes. For more information about Cardium's InnerCool subsidiary and patient temperature modulation, including InnerCool's new RapidBlue(TM) System, which just received FDA clearance, and its CoolBlue(TM) System, please visit http://www.innercool.com/.
Cardium also has two biologic candidates in clinical development. Cardium's Tissue Repair Company subsidiary (TRC) is focused on the development of growth factor therapeutics for the treatment of severe chronic diabetic wounds. TRC's lead product candidate, Excellarate(TM), is a DNA-activated collagen gel for topical treatment formulated with an adenovector delivery carrier encoding human platelet-derived growth factor-BB (PDGF-BB). Excellarate(TM) is initially being developed to be administered once or twice for the potential treatment of non-healing diabetic foot ulcers. Other potential applications for TRC's Gene Activated Matrix(TM) (GAM) technology include therapeutic angiogenesis (cardiovascular ischemia, peripheral arterial disease) and orthopedic products, including hard tissue (bone) and soft tissue (ligament, tendon, cartilage) repair. For more information about Cardium's Tissue Repair Company subsidiary, please visit http://www.t-r-co.com/.
Cardium's Generx product candidate (alferminogene tadenovec, Ad5FGF-4) is a DNA-based growth factor therapeutic designed for use by interventional cardiologists as a potential one-time treatment to promote and stimulate the growth of collateral circulation in the hearts of patients with ischemic conditions such as recurrent angina. For more information about Cardium Therapeutics and its businesses, products and therapeutic candidates, please visit http://www.cardiumthx.com/ or view its most recent annual report on Form 10-K and other reports as filed with the Securities and Exchange Commission and available on the company's website.
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this press release are forward looking and reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond our control and may cause actual results to differ materially from stated expectations. For example, there can be no assurance that results or trends observed in pre-clinical studies will be reproduced in subsequent studies, that human clinical trials can be conducted and completed in an efficient and successful manner, that partnering, asset monetization or other strategic development opportunities can be successfully achieved and that such opportunities will effectively and efficiently advance commercialization of our products, that we can raise sufficient capital from partnering, monetization or other fundraising transactions to maintain our stock exchange listing or adequately fund ongoing operations, that product modifications or launches will be successful or that the resulting products will be favorably received in the marketplace, that results or trends observed in one clinical study will be reproduced in subsequent studies, that our products or product candidates will prove to be sufficiently safe and effective, that necessary regulatory approvals will be obtained, or that our products or product candidates will not be unfavorably compared to competitive products that may be regarded as safer, more effective, easier to use or less expensive. Actual results may also differ substantially from those described in or contemplated by this press release due to risks and uncertainties that exist in our operations and business environment, including, without limitation, risks and uncertainties that are inherent in the development of complex biologics and therapeutic hypothermia devices and in the conduct of human clinical trials, including the timing, costs and outcomes of such trials, our ability to obtain necessary funding, regulatory approvals and expected qualifications, our dependence upon proprietary technology, our history of operating losses and accumulated deficits, our reliance on collaborative relationships and critical personnel, and current and future competition, as well as other risks described from time to time in filings we make with the Securities and Exchange Commission. We undertake no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date hereof.
Copyright 2009 Cardium Therapeutics, Inc. All rights reserved. For Terms of Use Privacy Policy, please visit http://www.cardiumthx.com/. Cardium Therapeutics(TM) and Generx(R) are trademarks of Cardium Therapeutics, Inc. Tissue Repair(TM), Gene Activated Matrix(TM), GAM(TM), and Excellarate(TM) are trademarks of Tissue Repair Company.
InnerCool Therapies(R), InnerCool(R), RapidBlue(TM) and CoolBlue(TM) are trademarks of InnerCool Therapies, Inc.
- Continued - Cardium Therapeutics, Inc. Selected Condensed Consolidated Results of Operations Three Months Ended March 31, (Unaudited) EITF 07-05 2009 Actual Effect* Pro forma 2009* 2008 Revenues $368,413 - $368,413 $646,002 Cost of goods sold (206,594) - (206,594) (370,696) Gross profit 161,819 - 161,819 275,306 Research and development 1,426,728 - 1,426,728 3,372,480 Selling, general and administrative 2,025,035 - 2,025,035 3,385,566 Amortization - Intangibles 197,414 - 197,414 197,414 Loss from operations (3,487,358) - (3,487,358) (6,680,154) Interest income (expense), net (1,592,890) - (1,592,890) (53,974) Change in fair value of derivative liabilities (9,656,629) 9,656,629 - - Net loss $(14,736,877) 9,656,629 $(5,080,248) $(6,734,128) Net loss per common share - basic and diluted $(0.31) $(0.11) $(0.16) Weighted average common shares outstanding - basic and diluted 46,930,439 46,930,439 40,709,247 Selected Condensed Consolidated Balance Sheet Data March 31, Pro forma December 31, 2009 EITF 07-05 March 31, 2008 (Unaudited) Effect* 2009* (Audited) Cash and cash equivalents $1,426,967 - $1,426,967 $1,102,894 Accounts receivable, net 278,879 - 278,879 296,116 Inventories, net 1,917,769 - 1,917,769 2,000,385 Prepaid expenses and other current assets 744,464 - 744,464 642,246 Property and equipment, net 1,525,297 - 1,525,297 1,706,065 Patented technology and intangibles, net 3,779,260 - 3,779,260 3,976,674 Other long-term assets 620,041 - 620,041 572,541 Total assets $10,292,677 - $10,292,677 $10,296,921 Accounts payable and accrued liabilities $6,574,030 - $6,574,030 $6,819,586 Short-term debt 7,187,038 - 7,187,038 4,036,776 Derivative liabilities 14,860,984 (14,860,984) - - Long-term liabilities 197,789 - 197,789 195,315 Stockholder's deficiency (18,527,164) 14,860,984 (3,666,180) (754,756) Total liabilities and stockholder's deficiency $10,292,677 - $10,292,677 $10,296,921 * Note: additional pro forma information is included to reflect the effects of non-cash charges associated with the treatment of the value of certain derivative securities under newly-adopted EITF 07-05, which effects can vary substantially each quarter along with changes to the price of the underlying common stock during the quarter. The Company presents this information to investors as an additional tool for evaluating the Company's financial results in a manner that reflects ongoing operations and facilitates comparisons with operating results from prior periods. The presentation of this additional non-GAAP information is intended to provide investors with additional incremental tools for their review of the Company's results and is not meant to be considered in isolation or as a substitute for the actual net income information prepared and provided in accordance with GAAP.
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Cardium Therapeutics
CONTACT: Bonnie Ortega, Director, Investor/Public Relations of Cardium
Therapeutics, Inc., +1-858-436-1018, InvestorRelations@cardiumthx.com
Web Site: http://www.cardiumthx.com/
