Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
FCSC > SEC Filings for FCSC > Form 10-Q on 15-May-2013All Recent SEC Filings

Show all filings for FIBROCELL SCIENCE, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for FIBROCELL SCIENCE, INC.


15-May-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This report contains certain "forward-looking statements" relating to Fibrocell that is based on management's exercise of business judgment and assumptions made by and information currently available to management. When used in this document, the words "anticipate," "believe," "estimate," "expect," "intend," "the facts suggest" and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect our current view of future events and are subject to certain risks and uncertainties as noted below. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described in such statements. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize. Many factors could cause actual results to differ materially from our forward looking statements. Several of these factors include, without limitation:

• whether our clinical human trials relating to the use of autologous cellular therapy applications, in particular, for burn scars and vocal cord scars, and such other indications as we may identify and pursue can be conducted within the timeframe that we expect, whether such trials will yield positive results, or whether additional applications for the commercialization of autologous cellular therapy can be identified by us and advanced into human clinical trials;

• our ability to meet requisite regulations or receive regulatory approvals in the United States, and our ability to retain any regulatory approvals that we may obtain; and the absence of adverse regulatory developments in the United States;

• our ability to increase our manufacturing capacity and reduce our manufacturing costs through the improvement of our manufacturing process, our ability to validate any such improvements with the relevant regulatory agencies and our ability to accomplish the foregoing on a timely basis, if at all;

• new entrance of competitive products or further penetration of existing products in our markets;

• the effect on us from adverse publicity related to our products or the company itself;

• any adverse claims relating to our intellectual property; and

• our dependence on physicians to correctly follow our established protocols for the safe administration of our product.

These factors are not necessarily all of the important factors that could cause actual results of operations to differ materially from those expressed in these forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results. We cannot assure you that projected results will be achieved.

General

We are a commercial-stage autologous cellular therapeutic company focused on the development of innovative products for aesthetic, medical and scientific applications. We have has a pipeline of therapeutic and aesthetic product development programs based on the first Food and Drug Administration (FDA) approved cell-based product, LAVIV™ (azficel-T), in aesthetics, all of which are based on the autologous fibroblast cell. Our clinical and pre-clinical programs include treatments for restrictive burn scars, vocal cord scars, and acne scars. Through our collaboration with Intrexon Corporation, we are working to discover and develop treatments for rare collagen deficient conditions such as recessive dystrophic epidermolysis bullosa.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make significant judgments and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Management bases these significant judgments and estimates on historical experience and other assumptions it believes to be reasonable based upon information presently available. Actual results could differ from those estimates under different assumptions, judgments or conditions. There were no material changes to our critical accounting policies and use of estimates previously disclosed in our 2012 Annual Report on Form 10-K.


Table of Contents

Results of Operations

Three Months Ended March 31, 2013 compared to the Three Months Ended March 31,
2012

Revenue and Cost of Sales. Revenue and cost of sales for the three months ended
March 31, 2013 and 2012 were comprised of the following:



                                  Three months ended             Increase
                                       March 31,                (Decrease)
                                  2013           2012        $000s        %
                                    (in thousands)
                Total revenue   $      26      $     16      $   10        63 %
                Cost of sales       2,351         1,553         798        51 %

                Gross (loss)    $  (2,325 )    $ (1,537 )    $ (788 )      51 %

Revenue of less than $0.1 million was recognized in the first quarter of 2013 for LAVIV. Revenue is booked based on the shipment of cells to the patients for injection of LAVIV. We booked cost of sales of $2.4 million for the three months ended March 31, 2013. Cost of sales includes the costs related to the processing of cells for LAVIV, including direct and indirect costs. The cost of sales for the three months ended March 31, 2013 comprised $1.1 million of compensation related expenses, $0.9 million of laboratory supplies and other related expenses and $0.4 million of rent, utilities, amortization and depreciation. The cost of sales for the three months ended March 31, 2012 comprised $0.8 million of compensation related expenses, $0.5 million of laboratory supplies and other related expenses and $0.2 million of rent, utilities, amortization and depreciation. The principal reasons for the relatively small level of revenue as compared to the large cost of sales in this quarter are as follows: (1) Charging for biopsies and injections - we are offering complimentary and reduced price biopsies and injections, and (2) Manufacturing complexity and quality control and assurance - manufacturing for cell therapy products is difficult as a result of logistical issues, significant manual processing, raw materials consistency and significant quality control and assurance. We significantly increased the selling price of LAVIV on May 1, 2013 in order to more closely align product pricing with our cost structure and our limited manufacturing capacity in 2013.

Selling, General and Administrative Expense. Selling, general and administrative expense for the three months ended March 31, 2013 and 2012 were comprised of the following:

                                                        Three months ended               Increase
                                                            March 31,                   (Decrease)
                                                        2013           2012         $000s           %
                                                          (in thousands)
Compensation and related expense                     $      973       $ 1,108      $   (135 )       (12 %)
External services - consulting                              213            67           146         218 %
Marketing expense                                           127         1,279        (1,152 )       (90 %)
Travel                                                       75           207          (132 )       (64 %)
License fees                                                166           165             1           0 %
Facilities and related expense and other                    813           897           (84 )        (9 %)

Total selling, general and administrative expense    $    2,367       $ 3,723      $ (1,356 )       (36 %)

Selling, general and administrative expense decreased $1.4 million to $2.4 million for the three months ended March 31, 2013 as compared to $3.7 million for the three months ended March 31, 2012. There was a decrease in compensation of $0.1 million due primarily to the reduction of sales and marketing personnel employed for the three months ended March 31, 2013. Consulting expenses increased by $0.1 million due to additional legal fees incurred in the three months ended March 31, 2013. There was a decrease in marketing expenses of $1.2 million as there was increased spending for the initial launch for the three months ended March 31, 2012 as compared to the three months ended March 31, 2013. License fees remained constant at $0.2 million for the three months ended March 31, 2013 and 2012. Facilities and other expenses decreased $0.1 million.


Table of Contents

Research and Development Expense. Research and development expense for the three months ended March 31, 2013 and 2012 were comprised of the following:

                                              Three months ended             Increase
                                                   March 31,                (Decrease)
                                               2013           2012      $000s          %
                                                (in thousands)
 Compensation and related expense           $        66       $  66     $   -               %
 External services - consulting                     944         390        554          142 %
 Lab costs and related expense                      201          17        184        1,082 %
 Facilities and related expense and other             1           6         (5 )        (83 %)

 Total research and development expense     $     1,212       $ 479     $  733          153 %

Research and development expense increased $0.7 million to $1.2 million for the three months ended March 31, 2013 from $0.5 million for the three months ended March 31, 2012. The increase is due primarily to the increase in consulting fees related to research and development costs incurred in the three months ended March 31, 2013 for restrictive burn scars and recessive dystrophic epidermolysis bullosa, as well as costs to develop manufacturing, cell collection and logistical process improvements.

Change in Revaluation of Warrant Liability. During the three months ended March 31, 2013 and 2012, we recorded non-cash warrant income of less than $0.1 million and non-cash warrant expense of $0.5 million in our statements of operations. In the fourth quarter of 2012, more than 98% of the warrants were reclassified to the equity section due to the modification of the warrants as a result of the October 2012 financing.

Change in Revaluation of Derivative Liability. During the three months ended March 31, 2013, there was no revaluation of the derivative liability as our previously outstanding preferred stock was converted to common stock in the fourth quarter of 2012 and the related derivative liability was reclassified to shareholders' deficit as it no longer required the liability classification. During the three months ended March 31, 2012, we recorded non-cash derivative revaluation expense of less than $0.1 million in our statements of operations.

Interest Expense. Interest expense related to our 12.5% notes decreased $0.2 million to no interest expense for the three months ended March 31, 2013 from $0.2 million for the three months ended March 31, 2012. The 12.5% notes were either paid or converted into common stock with the close of the October 2012 financing.

Deferred tax benefit. During the three months ended March 31, 2012, we recorded a deferred tax benefit of $2.5 million due to the favorable impact to the computation of the valuation allowance recorded against our net deferred tax asset as a result of the reclassification of the intangible assets recognized upon emergence from bankruptcy as a finite-lived intangible asset. The restatement freed-up the related deferred tax liability by allowing it to offset our net deferred tax asset before applying the valuation allowance.

Loss from Discontinued Operations. The net loss from discontinued operations for the three months ended March 31, 2013 remained relatively constant to the net loss for the three months ended March 31, 2012.

Net Loss. Net loss increased approximately $1.9 million to a net loss of $5.9 million for the three months ended March 31, 2013, as compared to a net loss of $4.0 million for the three months ended March 31, 2012 primarily due to the deferred tax benefit realized in the three months ending March 31, 2012, offset by the increase in cost of goods sold and increase in research and development expenses for the three months ending March 31, 2013.

  Add FCSC to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for FCSC - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.