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(ISCO) Announces Operating Results for the Three-Months Ended March 31, 2016

CARLSBAD, CA–(May 17, 2016) – International Stem Cell Corporation (OTCQB: ISCO) (www.internationalstemcell.com) (“ISCO” or “the Company”), a California-based clinical stage biotechnology company developing novel stem cell-based therapies and biomedical products, today provided a business update and announced operating results for the three months ended March 31, 2016.

“I’m happy to report that while revenues remained flat, profit margin improved. In addition our therapeutic development programs are proceeding according to plan,” said Andrey Semechkin, Ph.D., CEO and Co-Chairman of ISCO.

Q1 2016 Financial Highlights

  • Consolidated revenue for the first quarter of 2016 was $1.6 million, which remained unchanged compared to the consolidated revenue of $1.6 million for the first quarter of 2015.
  • Both of the Company’s wholly-owned revenue-generating subsidiaries remain profitable.
  • Profit margin for the Company’s revenue-generating subsidiaries for the first quarter of 2016 was $1.24 million, or 77%, compared to profit margin of $1.20 million, or 74%, for the first quarter of 2015.
  • Consolidated loss from operations for the first quarter of 2016 was $1.2 million, compared to consolidated loss from operations of $2.0 million for the first quarter of 2015.

Recent Corporate Highlights

  • Started enrolling patients in Phase I trial of ISC-hpNSC®, human parthenogenetic stem cell-derived neural stem cells for the treatment of moderate to severe Parkinson’s disease.
  • Raised funds in a private placement financing to fund Phase I clinical study.

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™. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology (www.lifelinecelltech.com), and stem cell-based skin care products through its subsidiary Lifeline Skin Care (www.lifelineskincare.com). More information is available at www.internationalstemcell.com.

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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)
March 31, December 31,
2016 2015
Assets (Unaudited)
Cash and cash equivalents $ 1,542 $ 532
Accounts receivable, net of allowance for doubtful accounts of $12 and $20 at March 31, 2016 and December 31, 2015, respectively 461 539
Inventory, net 1,434 1,348
Prepaid expenses and other current assets 696 572
Total current assets 4,133 2,991
Property and equipment, net 379 375
Intangible assets, net 3,344 3,223
Non-current inventory 469 489
Deposits and other assets 63 60
Total assets $ 8,388 $ 7,138
Liabilities and Stockholders’ Equity (Deficit)
Accounts payable $ 602 $ 1,092
Accrued liabilities 756 834
Related party payable 16 3,129
Advances 250 250
Fair value of warrant liability 19,616 239
Total current liabilities 21,240 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 $370 and $366 at March 31, 2016 and December 31, 2015, respectively – –
Series D Convertible Preferred stock, $0.001 par value, 50 shares authorized, 43 shares 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 March 31, 2016 and December 31, 2015, respectively, 2,000 and 0 issued and outstanding at March 31, 2016 and December 31, 2015, respectively, with liquidation preferences of $2,000 and $0 at March 31, 2016 and December 31, 2015, respectively – –
Series I-2 Convertible Preferred stock, $0.001 par value, 4,310 and 0 shares authorized at March 31, 2016 and December 31, 2015, respectively, 4,310 and 0 issued and outstanding at March 31, 2016 and December 31, 2015, respectively, with liquidation preferences of $4,310 and $0 at March 31, 2016 and December 31, 2015, respectively – –
Common stock, $0.001 par value, 720,000,000 shares authorized, 2,814,910 and 2,808,598 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively 3 3
Additional paid-in capital 99,097 98,970
Accumulated deficit (111,957 ) (97,384 )
Total stockholders’ equity (deficit) (12,852 ) 1,594
Total liabilities and stockholders’ equity (deficit) $ 8,388 $ 7,138
See accompanying notes to the unaudited condensed consolidated financial statements.
International Stem Cell Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2016 2015
Revenues
Product sales $ 1,616 $ 1,622
Total revenue 1,616 1,622
Expenses
Cost of sales 377 418
Research and development 579 1,118
Selling and marketing 648 654
General and administrative 1,179 1,398
Total expenses 2,783 3,588
Loss from operating activities (1,167 ) (1,966 )
Other income (expense)
Change in fair value of warrant liability (2,630 ) 679
Fair value of warrant liability in excess of proceeds (9,902 ) –
Financing transaction costs (869 ) –
Interest expense (5 ) (1 )
Sublease income – 1
Total other income (expense), net (13,406 ) 679
Loss before income taxes (14,573 ) (1,287 )
Provision for income taxes – –
Net loss $ (14,573 ) $ (1,287 )
Net loss applicable to common stockholders $ (14,573 ) $ (1,287 )
Net loss per common share-basic (1) $ (5.19 ) $ (0.79 )
Net loss per common share-diluted (1) $ (5.19 ) $ (1.07 )
Weighted average shares-basic (1) 2,809 1,637
Weighted average shares-diluted (1) 2,809 1,830
(1)  See Note 1, “Reverse Stock Split”
See accompanying notes to the unaudited condensed consolidated financial statements.

Contacts:

International Stem Cell Corporation
Russell Kern, PhD
Executive Vice President
Phone: 760-940-6383
Email: ir@intlstemcell.com

Media:

Alex Fudukidis
Phone: (646) 942-5632
Email: alex.fudukidis@russopartnersllc.com

Tony Russo, Ph.D.
Phone: (212) 845-4251
Email: tony.russo@russopartnersllc.com

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