On August 14, 2015 Cellular Biomedicine Group Inc. (NASDAQ: CBMG) ("CBMG" or the "Company"), a biomedicine firm engaged in the development of effective stem cell therapies for degenerative diseases and immunotherapies for cancer, reported financial results and business highlights for the quarter and six months ended June 30, 2015 (Press release, Cellular Biomedicine Group, AUG 14, 2015, View Source [SID:1234507268]).
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"I am pleased with our second quarter progress in reaching certain planned milestones and in strengthening both our business and technological advantages," said Dr. William (Wei) Cao, Chief Executive Officer of Cellular Biomedicine Group. "In addition to our international-standard Shanghai GMP facility passing its 4th consecutive China Food and Drug Administration (CFDA) inspection, we are expanding our GMP coverage with another 15,000 square feet site in Beijing, our third GMP facility. We are also delighted to have industry veterans Richard Wang Ph.D. join us as Chief Operating Officer, and Yihong Yao, Ph.D., join us as Chief Scientific Officer. I’m proud of our team achieving several accolades comprised of publication on the use of human adipose-derived progenitor cells (haMPCs) demonstrating efficacy in a rabbit OA model for treating knee osteoarthritis (KOA) in a peer-reviewed scientific journal, and dissemination of positive Phase I clinical data on the Chimeric Antigen Receptor T-cell (CAR-T) immuno-oncology clinical development programs:
• CD19 for Acute Lymphocytic Leukemia (B-cell ALL); and
• CD20 for Advanced Diffuse Large B Cell Lymphoma (DLBCL), and;
• CD30 for Hodgkin’s lymphoma.
We have confirmed that the trials are safe and remain optimistic about their potential disease efficacy. Furthermore, we added the CD40LGVAX cancer vaccine targeting Non Small Cell Lung Cancer (NSCLC) to our portfolio. We believe the Company is well positioned as a leader in degenerative and cancerous therapies to serve the large patient population," concluded Dr. William (Wei) Cao, Chief Executive Officer of Cellular Biomedicine Group.
"In addition to CBMG’s NASDAQ upgrade to the higher tiered Global Markets, I am pleased that we are now part of the broad-market Russell 3000 Index which will increase visibility with institutional investors across key financial markets," commented Tony (Bizuo) Liu, Chief Financial Officer of the Company. "We believe that health care is a universally defensive sector and CBMG is now equipped to deliver on our clinical milestones and to build a world-class biotechnology firm focused on providing solutions that address large unmet global medical needs."
Second Quarter and First Half 2015 Financial Performance
1. Cash Position: Cash and cash equivalents as of June 30, 2015 were $23.7 million compared to $14.8 million as of December 31, 2014. Our cash position increased as we had an increase in cash generated from financing activities due to a private placement financing in March 2015 for aggregate gross proceeds of approximately $19,600,000 through the sale of 515,786 shares of Common Stock, partially offset by an increase in cash used in operating activities.
2. Net Cash Used in Operating Activities: Net cash used in operating activities for the quarter and six months ended June 30, 2015 was $3.3 million and $5.7 million, respectively, compared to $2.3 million and $4.7 million for the same periods in 2014.
3. Revenue: Revenues for the quarter and six months ended June 30, 2015 were $0.7 million and $1.3 million, respectively, compared to $0.1 million and $0.2 million for the same periods in 2014.
In late 2014, with the acquisition of AG, we started generating revenue from technology services. All the revenue was derived from technology services for the three months ended June 30, 2015, while revenue was solely from sales of A-StromalTM kits during the same period in 2014.
4. G&A Expenses: General and administrative expenses for the quarter and six months ended June 30, 2015 were $3.8 million and $6.4 million, respectively, compared to $1.6 million and $3 million for the same periods in 2014. Increased expenses in the three months ended June 30, 2015 was associated with increased corporate activities related to the management and the development of our biomedicine business and was primarily attributed to the below facts:
• An increase in stock-based compensation expense of $1,172,000, which primarily resulted from the new grants and higher fair value of unvested options after the Company listed on Nasdaq in June 2014 compared with those unvested options as of June 30, 2014;
• An increase in depreciation and amortization of $180,000, which was mainly attributed to the technology and patents obtained from the acquisition of AG in third quarter 2014;
• An increase in rental expenses of $144,000, which was mainly attributed to the new lease agreement concluded for the construction of the Beijing GMP; and
• An increase in legal, accounting and other professional services of $465,000
5. R&D Expenses: Research and development expenses for the quarter and six months ended June 30, 2015 were $1.3 million and $2.8 million respectively, compared to $0.7 million and $1.3 million for the same periods in 2014. Research and development costs increased by approximately $603,000 in the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 due primarily to an increase of our immunotherapy research and development team, which resulted in an increase in payroll expenses of $217,000; an increase in stock-based compensation expenses of $284,000 and an increase in rental of $34,000.
6. Net Loss: Net loss allocable to common stock holders for the quarter and six months ended June 30, 2015 was $5 million and $9.3 million respectively, compared to $6.7 million and $7.1 million for the same periods in 2014. Changes in net loss are primarily attributable to changes in operations of our biomedicine segment and the discontinued consulting segment.
During and since the second quarter of 2015, Cellular Biomedicine Group strengthened its position as a leading pure-play biotechnology company by achieving the following milestones and significant events:
Business Highlights
• Appointment of Richard L. Wang, Ph.D., MBA, PMP as Chief Operating Officer
• Appointment of Yihong Yao, Ph.D., B.S. as Chief Scientific Officer
• Appointment of Alan List, M.D. as Chair of the Scientific Advisory Board
• Acquisition of Blackbird Bio Finance and University of South Florida’s next generation GVAX vaccine’s (CD40LGVAX) related technologies and technical knowledge
• Selected to be included in the broad-market Russell 3000 Index
• Publication of the use of human adipose-derived progenitor cells (haMPCs) demonstrating efficacy in a rabbit OA model for treating knee osteoarthritis (KOA) in peer-reviewed scientific journal "International Journal of Molecular Sciences"
Technology Achievements
• Received two new certifications from the China Food and Drug Administration (CFDA) for each of its proprietary cell and tissue preservation media kits
• Announced positive Phase I Results From CAR-T CD30 Immuno-Oncology Clinical Development Program, demonstrating the trial to be safe, feasible and efficacious
Upcoming Events
In the next twelve months the Company aims to accomplish the following significant milestones:
• Complete the preclinical GLP safety evaluation studies of haMPC for Asthma and Chronic Obstructive Pulmonary Disease
• Evaluate the feasibility of sponsoring a Phase I/II clinical study to support the New Drug Application (NDA) for the U.S.
CD40LGVAX trial
• Publish Phase I clinical trial results for CAR-T EGFR-HER1-positive for advanced lung cancer
• Publish ReJoinTM KOA Phase IIb twelve-month data
• Obtain approval for pending Patent Cooperation Treaty ("PCT") patents
• Develop a strategy to prioritize and launch cancer immune cell therapy clinical trials
• Launch Phase II trials to explore the efficacy and safety of CD19 or CD20 CAR-T mono or combination therapies in chemo refractory/relapsing patients with hematological malignancies
• Prepare preclinical package to apply for clinical trial of allogeneic haMPC therapy for COPD/Asthma