International Stem Cell Corporation (ISCO)

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International Stem Cell (ISCO)

Q3 2012 Earnings Call

November 09, 2012 11:00 am ET

Executives

Mark McPartland

John Simon Craw - Executive Vice President of Business Development and Investor Relations

Linh T. Nguyen - Chief Financial Officer, Principal Accounting Officer and Secretary

Presentation

Operator

Good morning, and welcome to the International Stem Cell Corporation Third Quarter Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Mark McPartland. Please go ahead, sir.

Mark McPartland

Thank you, operator, and good morning, everyone. Joining us today for International Stem Cell's third quarter 2012 financial results conference call are the company's Executive Vice President, Dr. Simon Craw; Chief Financial Officer, Ms. Linh Nguyen. Dr. Craw and Ms. Nguyen will review and comment on the financial and operating results for the third quarter and will be available for questions and answers after the prepared comments.

Now before we begin, I'd like to remind our listeners that on this call, prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties that management may take additional statements in response to your questions. Therefore, the company claims the protection from the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements related to the business of International Stem Cell Corporation and its subsidiaries can be identified by common use of forward-looking terminology, and those statements involve unknown risks and uncertainties, including all business-related risks that are more detailed in the company's filings on Form 10-K, 10-Q and 8-K with the SEC. For those who aren't able to listen to the entire call today, there will be an audio replay available, and the call is also being webcast, so you can log in via the Internet to review at a later time. All details were provided on the conference call announcement and in the press release earlier today. You may also find more information on the company's website located at internationalstemcell.com.

At this time, I'd like to turn the call over to Dr. Simon Craw, who will provide opening remarks. Simon, the floor is yours.

John Simon Craw

Thank you, Mark, and good morning, everyone, and thank you for joining International Stem Cell's third quarter 2012 earnings conference call.

We are pleased with the progress we have made in our therapeutic programs and in our subsidiaries during the last 3 months. I would, firstly, like to discuss the important progress our research and development team have made in the liver and Parkinson's disease programs.

In our liver disease program, we significantly improved our manufacturing methods, allowing us to produce liver cells at lower cost. We have also initiated efficacy studies in rats, designed to demonstrate that our stem cell-derived liver cells can be as efficient as primary human liver cells in treating metabolic disease called Crigler-Najjar syndrome.

In addition, in the third quarter, we were granted a new patent for a method of generating definitive endoderm, the precursor of both liver and pancreas cells. The patent is important, it covers creating such cells from all types of human pluripotent stem cells and offers a new efficient and scalable approach.

In our Parkinson's disease, we commenced a new rodent study to measure the efficacy of parthenogenetic-derived neuronal cells for the treatment of the disease. We plan to announce the results towards the end of the first quarter next year.

I'm also pleased to say that we have started our first non-human primate study in our Parkinson's disease program earlier than anticipated. This study is important as monkeys provide the best non-human model for Parkinson's disease and will help us understand how our stem cell derived neuronal cells perform in the brain.

Now I would like to discuss the performance of our subsidiaries. As we announced this morning, revenues in Lifeline Cell Technology grew 37%, and in Lifeline Skin Care, by 46%. In the third quarter, we adjusted the strategy and corresponding organizational structure of Lifeline Cell Technology to be more sales and market-driven. This has already resulted in improved sales.

In September, we announced that Lifeline Cell Technology began selling its primary human cells and optimized media products through Fischer Scientific's e-catalog as an Encompass Preferred Supplier. This is important as it provides us direct access to a group of potential customers and large pharmaceutical companies who may not have been able to purchase products from us before.

Lifeline Skin Care continues to diversify its source of revenue during the third quarter, by way of example, had a promotional campaign in the USA Today aimed primarily at building greater brand awareness.

The Skin Care team has also signed up a number of new professional SPAR accounts, increasing the number of locations where our products can be purchased.

Last but not least, in the third quarter, Lifeline Skin Care signed a distribution agreement to sell its anti-aging products through the extended clinical network of one of the largest pharmaceutical companies in China, Sinopharm Group.

We believe that these achievement, along with the new products that we have in our pipelines, will continue the positive sales momentum of both subsidiaries.

On the operational side, we continue to make good progress to further improve our efficiencies in cash usage. Our vigilant control over every non-essential cost has resulted in a 26% reduction of our general and administrative expenses compared to the third quarter of 2011.

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