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THERMOGENESIS: Cesca Therapeutics Reports First Quarter Fiscal Year 2016 Financial Results

The following excerpt is from the company's SEC filing.

Updates Investors on Financing Initiatives and the Status of Clinical Programs

Management will Hold a Conference Call Today at 2:00pm Pacific (5:00pm Eastern)

Cesca Therapeutics Inc.

(NASDAQ: KOOL), an autologous cell-based regenerative medicine company, today reported financial results for the first quarter of fiscal 2016 and provided an update to investors. The update included a status report on each of the Company’s major clinical programs but focused predominantly on developments relating to financing initiatives aimed at supporting implemen tation of its FDA approved Phase III pivotal clinical trial for critical limb ischemia (“CLI”).

On September 1 2015, the Company reported the signing and initial closing of a definitive agreement to raise $15 million in senior secured convertible debentures and warrants from a single institutional investor. The Company received $5.5 million in gross proceeds at the initial closing with the balance of $9.5 million to be placed into a restricted control account and released to the Company upon the achievement of agreed upon milestones, including approval from the California Institute for Regenerative Medicine (“CIRM”) of the Company’s application for matching funds in the form of a CIRM grant.

The Company anticipated CIRM’s evaluation of its application to be concluded during the second half of the month of November. However, preliminary feedback provided in advance of a formal funding decision has cast significant doubt over the prospects for a positive outcome and, as a result, the Company has withdrawn its current application.

“We feel compelled to revisit those elements of our plan that appear to have given CIRM reviewers cause for concern,”

said Robin Stracey, Cesca’s CEO. “Given that we are in the process of gearing up a significant number of sites to begin enrolling patients in a trial that would cost over $20 million to conduct, we need to quickly digest the feedback and address the questions raised. We expect to spend the next several weeks re-validating and/or amending select elements of our plan, with a particular focus on the anticipated rate of patient enrollment, the overall timetable and the design of the statistical plan. Having said that, we remain very excited by the prospects for our program. We believe the science to be sound and the clinical results so far very compelling. Nevertheless, there may be opportunities to refine our approach. It is imperative that we get it right,” he added.

The Company also announced that in conjunction with Mavericks Capital, a boutique investment bank headquartered on the West Coast, and as part of the Company’s overall approach to the future commercialization of its clinical products and protocols, it would accelerate its efforts to explore strategic partnerships and licensing arrangements.

First Quarter 2016 Financial Results

Net revenues for the quarter ended September 30, 2015 were $2.8 million, compared to $3.7 million for the same period in 2014. The decrease in revenues of $832 thousand was primarily due a decrease in sales of BioArchive

devices. The Company shipped five devices in the three months ended September 30, 2014 but did not ship any in the three months ended September 30, 2015. Revenues from Cesca’s Res-Q™ product line also declined following notification of the Company’s principal distributor in the United States of Cesca’s intent to discontinue sales to the distributor effective March 31, 2016. These decreases were partially offset by an increase in AXP

disposables revenues to distributors in Asia

Gross profit for the quarter ended September 30, 2015 was $367 thousand, compared to $1.2 million for the same period in the prior year. The decrease in gross profit of $819 thousand was primarily due to a higher burden on volume of products sold, the mix of products sold, and increases in inventory reserves associated with the Res-Q and BioArchive

product lines

. These increases were partially offset by a decrease in warranty expense as the Company incurred higher warranty costs associated with AXP disposables in the prior year.

Operating expenses for the quarter ended September 30, 2015 were $4.3 million, compared to $4.5 million for the same period in 2014, resulting in a reduction of $192...