Taxus Cardium Reports First Quarter 2014 Financial Results And Recent Developments

SAN DIEGO, May 15, 2014 /PRNewswire/ -- Taxus Cardium Pharmaceuticals Group Inc. (Trading Symbol: CRXM) today presented highlights of financial results for the quarter ended March 31, 2014.

As recently announced, our Cardium Therapeutics operating unit is focused on the clinical and commercial development of advanced regenerative therapeutics that includes the Generx^® [Ad5FGF-4] product candidate, and Excellagen^® an FDA-cleared advanced wound care skin substitute product. To learn more about Generx and Excellagen, visit Cardium's new website www.cardiumthx.com.

Cardium's non-core investment holdings include (1) an equity interest in Healthy Brands Collective, a business unit of Cell-nique Corporation, resulting from the Company's sale of its To Go Brands^® operating business; and (2) LifeAgain^® advanced medical data analytics business and ADAPT^® technology platform, which has completed its first strategic partnering for a term life insurance product for men with active localized prostate cancer. Cardium seeks to monetize its non-core investments through a potential going public transaction of the Healthy Brands Collective business and independent external funding sources for its LifeAgain business.

Recent Developments

Cardium's Excellagen^® flowable dermal matrix in combination with Orbsen Therapeutics' mesenchymal stromal stem cell therapy Cyndacel-M™ has been selected for clinical evaluation in a Phase 1b safety study for the potential treatment of chronic diabetic wounds to be funded by the European Union under EU Framework 7. The project, known by the acronym "REDDSTAR" (Repair of Diabetic Damage by Stromal Cell Administration), is being coordinated by Professor Timothy O'Brien, Dean of Medicine and Director of Ireland's Regenerative Medicine Institute at National University of Ireland Galway.  Excellagen, which has been cleared by the FDA for the treatment of chronic non-healing dermal wounds, has previously been shown to be capable of stimulating the rapid regeneration of granulation tissue, and to provide a matrix capable of supporting the viability of cells and other biologics. The REDDSTAR preclinical studies therefore evaluated the use of Excellagen and an alternative collagen-based product to promote the maintenance of stem cell viability and their effects on wound closure and neo-vascularization in a diabetic dermal wound healing model. Based on those results, Excellagen was selected to be used with the stromal stem cells in the human clinical study.

Cardium's Generx^®  product candidate, which is designed to be a disease-modifying angiogenic growth factor therapeutic for patients with advanced coronary artery disease, exhibited encouraging initial positive findings in the ASPIRE international clinical study, which is consistent with results obtained in the AGENT Phase 2 clinical study which showed that Generx appeared to be safe and well tolerated and that observed effects for patients with advanced coronary artery disease receiving Generx were similar in magnitude to those reported in the medical literature for patients undergoing surgical revascularization procedures such as cardiac by-pass surgery, or angioplasty and stenting, as measured by improvements of reversible perfusion defects of comparable size following such procedures. We expect to be in a position to provide findings from an interim data analysis in mid-2014, to support the advancement and completion of the Generx international clinical study in Russia, which could then support advancement of other studies and product development efforts in the U.S. and elsewhere.

On February 28, 2014, the Company entered into a strategic collaboration and funding arrangement with Shanxi Taxus Pharmaceuticals Co. Ltd., which is based in the Peoples Republic of China (PRC) and is affiliated with Shenzhen Forntsea Taxus Industry Capital Management, to support the worldwide clinical and commercial development of Cardium's advanced regenerative medicine therapeutics products, including the Generx product candidate and Excellagen. In connection with the agreement, Shanxi Taxus acquired an initial tranche of $0.5 million in unregistered common stock by purchasing 714,286 shares of common stock at $0.70 per share.

The second tranche of funding was delayed while Chinese currency clearance procedures were completed. On May 12, 2014, Shanxi Taxus acquired the second tranche of $1.5 million by purchasing 2,330,278 shares of common stock at $0.6437 per share.

After completion of the second tranche, Shanxi Taxus held approximately 25% of the outstanding common stock of the Company without giving effect to the shares of common stock obtainable upon conversion of preferred shares held by Sabby Healthcare – or approximately 22% of the common stock giving effect to the shares of common stock obtainable by Sabby Healthcare.

While Shanxi Taxus had the right to complete a third tranche of $1.0 million of common stock at a 10% premium above the trailing market price by April 30, 2014, with funding delayed for currency clearance, they closed on the second tranche for $1.5 million (which amount has been received), and committed to promptly provide a minimum of $0.3 million toward the third tranche (which is expected to be cleared shortly), each at a 10% premium above the trailing market price.

Although Shanxi Taxus originally had a right to purchase fourth and fifth tranches of $1.0 million each, with the third tranche not timely closed for the full amount, they will no longer have a contractual right to purchase additional shares pursuant to the terms of the February stock purchase agreement. While we and Shanxi Taxus could mutually agree to effect additional share purchases pursuant to the February agreement or otherwise, they would be at the Company's discretion with terms to be determined.

Cardium and Shanxi Taxus are moving forward with plans to explore the commercialization of Cardium's advanced regenerative medicine therapeutic products for the emerging and rapidly growing advanced healthcare market in the People's Republic China, and Taxus oncology-focused product opportunities for the U.S. market; and for Mr. Jiayue Zhang, who is the Chairman of Taxus, and an additional individual with U.S. corporate and financial experience, to join Cardium's Board of Directors.

First Quarter 2014 Financial Results

Based on recent transactions involving its non-core holdings, during the first quarter 2014, Cardium continued to reduce its overall operating cost structure as it primarily focuses on the clinical and commercial development of its innovative gene therapy and regenerative medicine product and technology platform. As a result, the Company reduced cash-based operating expenses by 58% from $2.2 million to $932,000, as reported on the reconciliation of Non-GAAP measures in the schedule provided below.

On a GAAP reporting basis, the Company's research and development costs for the three months ended March 31, 2014 totaled $244,000, and selling, general and administrative expenses were $1,195,000, compared to $725,000 and $1,268,000, respectively, for the three months ended March 31, 2013. The 66% decrease in research and development costs related to our Generx Aspire study which has now completed the initial pilot study phase to assess the safety and continued efficacy response based on Cardium's new delivery techniques introduced in the international study, reductions in production and commercial assays and testing costs for Excellagen, as well as reductions in personnel costs.  General and administration expenses reflected a cash savings of approximately $493,000 or 39%, primarily due to cost reductions implemented in the second half of 2013, which included an overall reduction in headcount and salary reductions as well as savings in facility costs associated with the relocation of our corporate headquarters; however, these cash savings were offset by a non-cash accounting expense of $455,000 representing the accrual of a Black-Scholes valuation for warrants issued during the quarter in partial consideration for voluntary employee salary and director fee reductions undertaken in connection with the Company's cost reduction plan.

For the three months ended March 31, 2014, the Company reported a net loss of $1,438,000, or $(0.16) per share, compared to a net loss of $2,262,000 or $(0.35) per share for the same period in 2013, reflecting a reduced loss of $824,000 or 36% arising from lowered research and development costs and general and administrative expenses. Net loss for the quarter would have been substantially less, at approximately $932,000 total (representing a reduction of more than 58% compared to the same period in 2013), if not for a non-cash accounting charge of approximately $506,000 associated with accruing for a Black-Scholes valuation of warrants issued during the quarter ($455,000 of which was charged to general and administrative expenses and $51,000 of which was charged to research and development costs). As of March 31, 2014, 9.7 million shares of Cardium's common stock were issued and outstanding.

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 expectations. For example, there can be no assurance that results or trends observed in one clinical study or procedure will be reproduced in subsequent studies or in actual use; that new clinical studies will be successful or will lead to approvals or clearances from health regulatory authorities, or that approvals in one jurisdiction will help to support studies or approvals elsewhere; that the company can attract suitable commercialization partners for our products or that we or partners can successfully commercialize them; that our product 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 or blocked by third party proprietary rights or other means; that the products and product candidates referred to in this report or in our other reports will be successfully commercialized and their use reimbursed, or will enhance our market value; that our non-core businesses can be effectively partnered or monetized or that valuation for them can be effectively obtained; that new product opportunities or commercialization efforts will be successfully established; that third parties on whom we depend will perform as anticipated; that we can raise sufficient capital from partnering, monetization or other fundraising transactions to adequately fund ongoing operations; or that we will not be adversely affected by these or other risks and uncertainties that could impact our operations, business or other matters, as described in more detail in our filings 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.

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Cardium Therapeutics®, Generx®, Cardionovo®, Tissue Repair™, Excellagen®, Excellarate™, Genedexa™, LifeAgain® and ADAPT® are trademarks of Taxus Cardium Pharmaceuticals Group Inc. (formerly Cardium Therapeutics, Inc.), Tissue Repair Company or LifeAgain Insurance Solutions Inc.
Other trademarks belong to their respective owners.

Non-GAAP Financial Measure

To supplement our condensed consolidated financial statements, which statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (GAAP), we use a non-GAAP financial measure called non-GAAP earnings or loss per share. We define non-GAAP earnings or loss per share as net income or loss not including the impact of non-cash items: stock-based compensation.

It should be noted that basic and diluted weighted average shares are determined on a GAAP basis and the resulting share count is used for computing both GAAP and non-GAAP basic and diluted earnings per share.

We believe that non-GAAP earnings or loss per share provides meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of the core business operating results and may help in comparing current-period results with those of prior periods as well as with our peers. We present this information to investors as an additional tool for evaluating our financial results in a manner that reflects ongoing operations and facilitates comparisons with operating results from prior periods and is not meant to be considered in isolation or as a substitute for financial information presented in accordance with GAAP. 

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SOURCE Taxus Cardium Pharmaceuticals Group