On August 9, 2016 Caladrius Biosciences, Inc. (NASDAQ: CLBS) ("Caladrius" or the "Company"), a cell therapy company combining an industry-leading development and manufacturing services provider through its subsidiary PCT, LLC a Caladrius Company ("PCT") with a select therapeutic development pipeline, reported financial results for the three and six months ended June 30, 2016 (Press release, Caladrius Biosciences, AUG 9, 2016, View Source [SID:1234514498]).

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Business highlights for the second quarter and recent weeks include:

•Achieved total revenues of $8.3 million for the second quarter of 2016, up 41% compared with $5.9 million in the second quarter of 2015;
•Achieved total operating costs and expenses reduction of 50% in the second quarter of 2016 when compared with the second quarter of 2015;
•Granted Fast Track designation from the U.S. Food and Drug Administration ("FDA") for CLBS03 for the treatment of recent onset type 1 diabetes mellitus ("T1D"), making it the first known therapeutic candidate to receive Fast Track designation for treatment of T1D;
•Granted Orphan Drug designation from the FDA for CLBS03 for the treatment of T1D with residual beta cell function;
•Expanded PCT’s relationship with Kiadis Pharma with an agreement for the manufacturing of their lead product, ATIR101, for the U.S. and Canadian Phase 3 trial in blood cancers;
•Announced the appointment of Robert A. Preti, Ph.D., the Company’s Chief Technology Officer, Senior Vice President, Manufacturing and Technical Operations, and President of PCT, as Chairman of the Alliance for Regenerative Medicine ("ARM"), the international advocacy organization representing the gene and cell therapies and broader regenerative medicine sector; and
•Licensed exclusive global rights to the Company’s tumor cell/dendritic cell technology for the treatment of ovarian cancer to AiVita Biomedical, Inc. In return, Caladrius will receive certain development milestone payments as well as royalties on sales.

Management Commentary

"We remain very pleased with our year-to-date performance as we continue to deliver on our strategic goals to grow and expand the PCT business, to reduce expenses, to advance our Phase 2 T-Rex clinical trial as a treatment for T1D and to monetize non-core assets," stated David J. Mazzo, Ph.D., Chief Executive Officer of Caladrius. "We are delighted to add Fast Track and Orphan Drug designations to CLBS03 for the treatment of T1D as they underscore the significant unmet medical need in this degenerative disease, and provide regulatory provisions that can accelerate the review process and expand our market exclusivity. We look forward to completing enrollment and treatment of the first cohort of approximately 18 patients toward the end of summer. Following the three-month post-treatment visit, an interim safety analysis will be conducted, and we expect to have these results by year-end 2016."

"We entered the second half of 2016 in a solid position to continue advancing our strategic goals and achieving our financial guidance for the year. We are delighted that a growing number of cell therapy developers are partnering with PCT to take advantage of our expertise and our quality, scalable, innovative, reliable and cost-efficient manufacturing platforms and services to advance their cellular therapies."

"Our leadership in regenerative and cell therapy was further solidified with the appointment of Dr. Robert Preti as Chairman of ARM. As a pioneer in cell therapy manufacturing and development, Dr. Preti remains at the forefront of the industry, influencing regulatory trends and policy making. ARM’s dedication to advancing regenerative medicine and cell therapies and to bringing its stakeholders together is unprecedented, and aligns with PCT’s vision of contributing to a world in which transformative cell-based therapeutics are accessible to all patients in need," concluded Dr. Mazzo.

Second Quarter Financial Highlights

Total revenues for the second quarter of 2016 increased 41% to $8.3 million compared with $5.9 million for the second quarter of 2015. Gross margin on revenues was 15% in the second quarter of 2016 compared with 1% in the second quarter of 2015.

Research and development (R&D) expenses for the second quarter of 2016 decreased 47% to $4.0 million compared with $7.6 million for the second quarter of 2015. The decrease was primarily related to lower costs subsequent to the discontinuation of the Intus Phase 3 clinical trial for metastatic melanoma as well as lower program expenses associated with the Company’s ischemic repair platform, compared with the prior-year period. These decreases were partially offset by an increase in expenses related to The Sanford Project: T-Rex Phase 2 Study in T1D.

Selling, general and administrative (SG&A) expenses decreased 46% to $4.7 million for the second quarter of 2016 compared with $8.7 million for the same period in 2015. The decrease is due to both lower equity-based compensation costs and operational and compensation-related cost reductions compared to the prior year period.

The operating loss for the second quarter of 2016 was $7.5 million compared with an operating loss of $25.7 million for the second quarter of 2015, reflecting higher revenues and gross margin, and lower R&D and SG&A expenses, as well as an impairment of intangible assets in the second quarter of 2015.

The Company reported a net loss for the second quarter of 2016 of $7.9 million, or $1.33 per share, compared with a net loss for the second quarter of 2015 of $17.2 million, or $3.84 per share.

First Half Financial Highlights

Total revenues for the six months ended June 30, 2016 increased 75% to $15.8 million compared with $9.0 million for the first six months of 2015. Gross margin for the first half of 2016 was 16% compared with a negative 1% for the first half of 2015.

R&D expenses for the first half of 2016 decreased to $9.9 million compared with $14.4 million for the first half of 2015. SG&A expenses decreased to $11.2 million for the first half of 2016 compared with $19.8 million for the same period in 2015. The first half of 2015 included expenses associated with executive management changes including one-time new hire compensation-related costs. The first half of 2016 included separation-related costs incurred during the first quarter of 2016, while equity-based compensation expenses were significantly lower in the first half of 2016 compared to the prior year period.

The operating loss for the first half of 2016 was $18.6 million compared with an operating loss of $43.8 million for the first half of 2015.

The net loss for the six months ended June 30, 2016 was $19.9 million, or $3.39 per share, compared with a net loss for the six months ended June 30, 2015 of $36.4 million, or $8.83 per share.

Balance Sheet and Cash Flow Highlights

As of June 30, 2016, Caladrius had cash and cash equivalents of $17.7 million. Net cash used in operating activities for the six months ended June 30, 2016 was $14.6 million, compared with $21.8 million for the six months ended June 30, 2015.

2016 Financial Guidance

The Company reaffirms its previous guidance as follows:

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Consolidated Revenues: to exceed $30 million or a greater than 30% increase compared with 2015
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Capital Improvements at PCT’s Allendale, NJ facility: ~$6 million, to be completed by end of first half of 2017
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CLBS03 Phase 2 Study Costs in 2016: $6 million to $7 million
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Consolidated Annual Operating Cash Burn: $25 million to $28 million in 2016, with lower operating cash burn in the second half of 2016 than in the first half of the year