OREANDA-NEWS. International Stem Cell Corporation (OTCQB:ISCO) (“ISCO” or “the Company”), a California-based biotechnology company developing novel stem cell-based therapies and biomedical products, today provided a business update and announced operating results for the three and six months ended June 30, 2016.

“We are pleased with the progress of the Company in the second quarter. We continue to generate revenue to finance our research and development activities on the therapeutics side of our business. We are particularly proud to have moved our Parkinson’s Disease program into a Phase I clinical trial in Australia, an important milestone in the Company’s development. We are looking forward to reporting on our progress to you in that as well as other programs that the Company is working on,” said Andrey Semechkin, Ph.D., CEO and Co-Chairman of ISCO.

Second Quarter 2016 Financial Highlights

  • Consolidated revenue for the second quarter of 2016 was 1.9 million, reflecting an increase of 6% compared to the consolidated revenue of $1.8 million for the second quarter of 2015.
  • Gross profit margin for the Company’s revenue-generating subsidiaries for the second quarter of 2016 was $1.4 million, or 74%, compared to gross profit margin of $1.3 million, or 72%, for the second quarter of 2015. 
  • Consolidated loss from operations for the second quarter of 2016 was $1.2 million, compared to consolidated loss from operations of $937,000 for the second quarter of 2015.

Year-to-Date Financial Highlights

  • Consolidated revenue for the six months ended June 30, 2016 was 3.5 million, reflecting an increase of 3% compared to the consolidated revenue of $3.4 million for the six months ended June 30, 2015.
  • Gross profit margin for the Company’s revenue-generating subsidiaries for the six months ended June 30, 2016 was $2.6 million, or 75%, compared to gross profit margin of $2.5 million, or 73%, for the six months ended June 30, 2015. 
  • Consolidated loss from operations for the six months ended June 30, of 2016 was $2.4 million, compared to consolidated loss from operations of $2.9 million for the six months ended June 30, 2015.

Recent Corporate Highlights

  • The first patient in the Company’s Phase I clinical trial has undergone a successful intracranial transplant of ISC-hpNSC as a treatment under investigation for Parkinson’s Disease (PD). The operation took place at the Royal Melbourne Hospital in Australia.
  • Published the results of a 12-month preclinical non-human primate study. The data demonstrates the safety and efficacy of the Company’s proprietary ISC-hpNSC.

About International Stem Cell Corporation

International Stem Cell Corporation is focused on the therapeutic applications of human parthenogenetic stem cells (hpSCs) and the development and commercialization of cell-based research and cosmetic products.  ISCO's core technology, parthenogenesis, results in the creation of pluripotent human stem cells from unfertilized oocytes (eggs).  hpSCs avoid ethical issues associated with the use or destruction of viable human embryos.  ISCO scientists have created the first parthenogenetic, homozygous stem cell line that can be a source of therapeutic cells for hundreds of millions of individuals of differing genders, ages and racial background with minimal immune rejection after transplantation. hpSCs offer the potential to create the first true stem cell bank, UniStemCell™.

Safe harbor statement

Statements pertaining to anticipated developments, expected clinical studies (including timing and results), progress of research and development, and other opportunities for the company and its subsidiaries, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates,") should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products, regulatory approvals, need and ability to obtain future capital, application of capital resources among competing uses, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the company's business, particularly those mentioned in the cautionary statements found in the company's Securities and Exchange Commission filings. The company disclaims any intent or obligation to update forward-looking statements.

International Stem Cell Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
 
    June 30,     December 31,  
    2016     2015  
Assets   (Unaudited)          
Cash and cash equivalents   $ 768     $ 532  
Accounts receivable, net of allowance for doubtful accounts of $12 and $20 at June 30, 2016 and December 31, 2015, respectively     518       539  
Inventory, net     1,368       1,348  
Prepaid expenses and other current assets     666       572  
Total current assets     3,320       2,991  
Property and equipment, net     431       375  
Intangible assets, net     3,520       3,223  
Non-current inventory     532       489  
Deposits and other assets     58       60  
Total assets   $ 7,861     $ 7,138  
Liabilities and Stockholders' Equity (Deficit)                
Accounts payable   $ 743     $ 1,092  
Accrued liabilities     681       834  
Related party payable     21       3,129  
Advances     250       250  
Fair value of warrant liability     7,148       239  
Total current liabilities     8,843       5,544  
Commitments and contingencies                
Stockholders' Equity (Deficit)                
Series B Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized, 250,000
  issued and outstanding, with liquidation preferences of $374 and $366 at June 30, 2016
  and December 31, 2015, respectively		     —       —  
Series D Convertible Preferred stock, $0.001 par value, 50 shares authorized, 43 issued and
  outstanding, with liquidation preference of $4,320		     —       —  
Series G Convertible Preferred stock, $0.001 par value, 5,000,000 shares authorized,
  issued and outstanding, with liquidation preference of $5,000		     5       5  
Series I-1 Convertible Preferred stock, $0.001 par value, 2,000 and 0 shares authorized at
  June 30, 2016 and December 31, 2015, respectively, 1,820 and 0 issued and outstanding
  at June 30, 2016 and  December 31, 2015, respectively, with liquidation preferences of
  $1,820 and $0 at June 30, 2016 and December 31, 2015, respectively		     —       —  
Series I-2 Convertible Preferred stock, $0.001 par value, 4,310 and 0 shares authorized at
  June 30, 2016 and December 31, 2015, respectively, 4,310 and 0 issued and outstanding
  at June 30, 2016 and  December 31, 2015, respectively, with liquidation preferences of
  $4,310 and $0 at June 30, 2016 and December 31, 2015, respectively		     —       —  
Common stock, $0.001 par value, 120,000,000 and 720,000,000 shares authorized at
  June 30, 2016 and December 31, 2015, respectively, 3,191,236 and 2,808,598
  shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively		     3       3  
Additional paid-in capital     100,048       98,970  
Accumulated deficit     (101,038 )     (97,384 )
Total stockholders' equity (deficit)     (982 )     1,594  
Total liabilities and stockholders' equity (deficit)   $ 7,861     $ 7,138  
                 
                 
International Stem Cell Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
 
  Three Months Ended     Six Months Ended  
  June 30,     June 30,  
  2016     2015     2016     2015  
Revenues                              
Product sales $ 1,916     $ 1,815     $ 3,532     $ 3,437  
Total revenue   1,916       1,815       3,532       3,437  
Expenses                              
Cost of sales   506       516       883       934  
Research and development   852       567       1,431       1,685  
Selling and marketing   651       602       1,299       1,256  
General and administrative   1,156       1,067       2,335       2,465  
Total expenses   3,165       2,752       5,948       6,340  
Loss from operating activities   (1,249 )     (937 )     (2,416 )     (2,903 )
Other income (expense)                              
Change in fair value of warrant liability   12,227       1,702       9,597       2,381  
Fair value of warrant liability in excess of proceeds   —       —       (9,902 )     —  
Financing transaction costs   (59 )     —       (928 )     —  
Interest expense   (1 )     (2 )     (6 )     (3 )
Warrant modification expense   —       (40 )     —       (40 )
Sublease income   —       —       —       1  
Miscellaneous income   1       —       1       —  
Total other income (expense), net   12,168       1,660       (1,238 )     2,339  
Income (loss) before income taxes   10,919       723       (3,654 )     (564 )
Provision for income taxes   —     —       —     —  
Net income (loss) $ 10,919     $ 723     $ (3,654 )   $ (564 )
Net income (loss) applicable to common stockholders $ 10,919     $ 723     $ (3,654 )   $ (564 )
Net income (loss) per common share-basic $ 3.76     $ 0.40     $ (1.28 )   $ (0.33 )
Net income (loss) per common share-diluted $ 0.26     $ (0.52 )   $ (1.28 )   $ (1.61 )
Weighted average shares-basic   2,903       1,800       2,856       1,719  
Weighted average shares-diluted   5,742       1,881       2,856       1,829