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NeoStem, Inc. Announces 2014 Year-End Financial Results and Provides Corporate Update

NEW YORK, March 2, 2015 (GLOBE NEWSWIRE) -- NeoStem, Inc. (Nasdaq:NBS) ("NeoStem" or the "Company"), a biopharmaceutical company developing novel, cell-based personalized medicine therapies, announced today 2014 year end results and provided an update on its business.

"We are pleased with our company's achievements in 2014 and look forward to reporting on our progress advancing the programs in our diversified and balanced pipeline," said Dr. David J. Mazzo, Chief Executive Officer of NeoStem. "Our near-term focus will be the initiation of and continued enrollment in our Phase 3 Intus Study for stage III recurrent and stage IV metastatic melanoma patients. This is a program supported by Special Protocol Assessment as well as Fast Track and Orphan Designations. We expect the first patient randomization for the study in the second quarter of 2015. We also are planning the release of one-year data from the PreSERVE Phase 2 trial for acute myocardial infarction on March 15, 2015 at the Annual Scientific Sessions of the American College of Cardiology. We expect that these results will further corroborate the results observed at 6 months of a clinically meaningful effect of our NBS10 candidate."

Business Highlights

Over the past year, NeoStem significantly advanced its leadership in the cell therapy industry, with highlights including:

  • The acquisition of California Stem Cell, Inc., (CSC) and execution of the steps necessary to initiate a pivotal Phase 3 trial for its most advanced product candidate, NBS20 (USAN generic name of eltrapuldencel-T, an autologous melanoma-initiating cell immune-based therapy intended to eliminate the tumor cells capable of causing disease recurrence) in recurrent stage III and stage IV metastatic melanoma patients;
  • Announcement of clinically meaningful six-month primary analysis results from the Company's Phase 2 PreSERVE study for patients with left ventricular dysfunction post-ST elevation myocardial infarction (STEMI);
  • Announcement of Phase 1 results for a T regulatory cell immunotherapy for type 1 diabetes, which included preliminary data indicating safety and tolerability in adult patients, complementing recently published 12-month data indicating feasibility and potential efficacy in children with type 1 diabetes;
  • Strengthening of executive management with appointments of David J. Mazzo, PhD as Chief Executive Officer and Robert S. Vaters as President and Chief Financial Officer;
  • Announcement of 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 where small-scale is full scale, while also supporting efficient development of processes at lower cost prior to transitioning to scaled volumes.

2014 Year-End Financial Highlights

Total revenue for the year was $17.9 million compared to $14.7 million in 2013, an increase of 22%. Clinical Services, representing process development and clinical manufacturing services provided at PCT (NeoStem's wholly-owned subsidiary, a contract development and manufacturing organization) to its various clients, were approximately $10.4 million for 2014 compared to $9.1 million for 2013, representing an increase of approximately $1.3 million or 14%.

Research and development expenses were approximately $29.2 million for 2014 compared to $16.9 million for 2013. The increase was primarily comprised of investment in the Company's (i) targeted cancer immunotherapy program, including the initiation of the Intus Phase 3 clinical trial for the Company's lead cancer immunotherapy product candidate NBS20, (ii) ischemic repair program, including expenses associated with the PreSERVE AMI Phase 2 clinical trial for the Company's product candidate NBS10, and (iii) immune modulation program, primarily due to the Company's efforts to develop Tregs.

Selling, general and administrative expenses were approximately $30.8 million for 2014 compared to $21.6 million for 2013. The increase was related to increased corporate development activities, expenses associated with the additional California Stem Cell (CSC) operating activities since its acquisition in May 2014, and increased corporate infrastructure needed to support the Company's expanded clinical activities. In addition, the increase was related to higher equity-based compensation paid in exchange for services and, in particular, equity awards issued as a bonus for the successful completion of the CSC acquisition.

Net loss for 2014 was $55.5 million compared with a $39.5 million loss for 2013. Net loss for 2014 excluding non-cash charges was $45.2 million, compared with $28.7 million for 2013 (see below for reconciliation).

At December 31, 2014 NeoStem's cash, cash equivalents and marketable securities totaled $26.3 million.

2015 Outlook

In 2015, NeoStem's management expects significant additional achievements. The Company's milestones and goals for the year include:

Therapeutic Pipeline

  • Randomization of the first patient for the Intus Phase 3 trial for NBS20 in the second quarter of 2015;
  • Release of one-year data from PreSERVE AMI Phase 2 trial for NBS10 on March 15, 2015 at the Annual Scientific Sessions of the American College of Cardiology;
  • Finalization of decision on next development steps for NBS10 based on PreSERVE primary analysis results in the second half of 2015;
  • Initiation of a Phase 2 study for which NeoStem has received FDA agreement on the protocol to evaluate in adolescents the use of NBS03D, a Treg-based therapeutic being developed to treat type 1 diabetes, in late 2015 or 2016 depending on resource availability;
  • Further exploration of means by which the Company can take advantage of new regulations in Japan that permit conditional approval for regenerative medicine products that show sufficient safety evidence and signals of efficacy.

Commercial Operations

  • Continued growth of the Company's client services business;
  • Advancement of initiatives to lower costs and improve efficiency of manufacturing in anticipation of production for NeoStem's own products and those of its clients.

Use of Non-GAAP Financial Measures

The Company uses Net Loss Excluding Non-Cash Charges as a non-GAAP financial measure in evaluating its performance. This measure represents net loss, less equity-based compensation, depreciation and amortization, and other non-cash adjustments included in net loss. The Company believes that providing this measure to investors provides important supplemental information of 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.

Net Loss Excluding Non-Cash Charges has limitations as an analytical tool, and investors should not consider this measure in isolation, or as a substitute for analysis of the Company's results as reported under generally accepted accounting principles in the United States ("U.S. GAAP"). For example, this measure 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 U.S. 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

Net Loss Excluding Non-Cash Charges Reconciliation
(unaudited)
(in millions) For the twelve
months ended
December 31, 2014
For the twelve
months ended
December 31, 2013
Net loss $(55.5) $(39.5)
Equity-based compensation 11.2 6.8
Depreciation and amortization 2.2 1.6
Changes in fair value of derivative liability (0.0) (0.1)
Changes in acquisition-related contingent consideration (3.1) 1.9
Bad debt recovery (0.0) (0.2)
Deferred income taxes (0.1) 0.8
Accretion on marketable securities 0.1 0.0
Net Loss Excluding Non-Cash Charges $(45.2) $(28.7)

About NeoStem, Inc.

NeoStem is a biopharmaceutical company pursuing the preservation and enhancement of human health globally through the development of novel cell based personalized medicine therapeutics that prevent, treat or cure disease by repairing and replacing damaged or aged tissue, cells and organs and restoring their normal function. The combination of a rich therapeutics pipeline and externally recognized in-house manufacturing expertise has created an organization with unique capabilities for cost effective and accelerated 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 Targeted Immunotherapy 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 contract development and manufacturing business 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.

CONTACT: NeoStem, Inc. Eric Powers Manager of Communications and Marketing Phone: +1-212-584-4173 Email: epowers@neostem.com

Source:NeoStem Inc.