Cyberkinetics Announces Third Quarter Results.FOXBOROUGH, Mass. -- Cyberkinetics Neurotechnology Systems, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CYKN) (Cyberkinetics) today announced financial results for the third quarter ended September 30, 2005, and provided an update on its key development programs. Total revenues for the three months ended September 30, 2005, were $189,000 as compared to $379,000 for the three months ended September 30, 2004. Product sales for the three months ended September 30, 2005, were $119,000 as compared to $164,000 for the three months ended September 30, 2004. Product sales in the three months ended September 30, 2005, included the first sale of a custom NeuroPort System unit. Grant income for the three months ended September 30, 2005 was $69,000 as compared to $215,000 for the three months ended September 30, 2004. The decrease in grant income was anticipated and resulted from the company's strategy to transition from Small Business Innovation Research (SBIR SBIR Small Business Innovation Research (program/grant) SBIR Space Based Infra-Red SBIR Speaker-Boundary Interference SBIR Site Backsurface-referenced Ideal Plane/Range (silicon wafers) ) grant contracts to larger contracts, such as the recently announced NIH "Not invented here." See digispeak. NIH - The United States National Institutes of Health. contract, that may be available from various federal granting agencies. The net loss applicable to common stockholders for the three months ended September 30, 2005, was $2,380,000, or $0.15 per share, based on 16,229,000 weighted-average common shares outstanding, as compared to $1,945,000, or $0.46 per share, for the three months ended September 30, 2004, based on 4,218,000 weighted-average common shares outstanding. Weighted-average common shares outstanding increased primarily as a result of the conversion of 9,419,000 shares of Series A Redeemable Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". in connection with the October 2004 reverse merger, as well as the issuance of 2,000,000 and 9,836,000 shares of common stock in connection with private placements in November 2004 and September 2005, respectively. On September 26, 2005, the Company raised net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $10.7 million in a private placement of common stock and warrants to institutional and accredited investors. At September 30, 2005, the Company had cash and cash equivalents of $13,841,000. "On the heels of FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. 510K-approval in the second quarter, we completed the first sale and delivery of a custom NeuroPort(TM) System for brain monitoring during the quarter. We are optimistic about the early response to the NeuroPort System with leaders in the neurology and neurosurgery neurosurgery /neu·ro·sur·gery/ (noor´o-sur?jer-e) surgery of the nervous system. neu·ro·sur·ger·y n. Surgery on any part of the nervous system. communities and look forward to building the base for broader adoption in the coming months", said Timothy R. Surgenor, Cyberkinetics' President and Chief Executive Officer. "We also raised net proceeds of $10.7 million from our private financing in September and announced in October that the Company was awarded a $2.3 million subcontract from an NIH grant that will be used to fund our key development programs." Surgenor continued, "Our first participant in the pilot trial of our breakthrough BrainGate(TM) System completed his one-year trial period in the second quarter and recently had his implant removed. The participant has fully recovered from the procedure. From medical and scientific perspectives, we are also pleased with the results of the procedure, the condition of the brain tissue where the implant was placed and with the overall condition of the implant itself. We thank him for his pioneering contribution to the development of Cyberkinetics' BrainGate System. As we head into 2006, we are focused on enrolling additional participants in two ongoing pilot trials of the BrainGate System and extending proof of principle in this ground breaking study." Third Quarter and Recent Operational Highlights NeuroPort(TM) System - Neural Monitoring System for Acute Applications --In September 2005, Cyberkinetics sold and delivered a customized version of its NeuroPort(TM) System to a leading neurosurgical researcher at a prestigious California university California University can refer to:
--In October 2005, Cyberkinetics completed upgrades to its Salt Lake City manufacturing facility and quality systems. Completion of these upgrades will allow us to maintain our schedule of a commercial launch of the NeuroPort(TM) System in 2006. BrainGate(TM) System - Direct Brain-Computer Interface A brain-computer interface (BCI), sometimes called a direct neural interface or a brain-machine interface, is a direct communication pathway between a human or animal brain (or brain cell culture) and an external device. for Communication and Control of Other Devices --In August 2005, Cyberkinetics announced that it would expand the pilot trial in those with spinal cord injury Spinal Cord Injury Definition Spinal cord injury is damage to the spinal cord that causes loss of sensation and motor control. Description Approximately 10,000 new spinal cord injuries (SCIs) occur each year in the United States. , stroke and muscular dystrophy muscular dystrophy (dĭs`trōfē), any of several inherited diseases characterized by progressive wasting of the skeletal muscles. There are five main forms of the disease. at all three participating clinical sites to include non-speaking, or "locked-in," participants, as well as individuals with less severe paralysis in the upper body. "Locked-in" syndrome is characterized by complete paralysis of voluntary muscles in all parts of the body except for those that control eye movement. Individuals with locked-in syndrome locked-in syndrome Neurology Flaccid tetraplegia with facial paresis and complete incapacity of expression–ie, anarthric and aphonic; LIS is due to damage or dysfunction of descending motor pathways or peripheral nerves, 2º to bilateral destruction are conscious, can think and reason, though they are unable to speak or move. --In August 2005, the Company announced the commencement of a second pilot clinical trial of the BrainGate System for those with ALS Als (äls), Ger. Alsen, island, 121 sq mi (313 sq km), Sønderjylland co., S Denmark, in the Lille Bælt, separated from the mainland by the narrow Alensund. (amyotrophic lateral sclerosis amyotrophic lateral sclerosis (ALS) (ā'mīətrōf`ik, sklĭrō`sĭs) or motor neuron disease, or Lou Gehrig's disease Lou Geh·rig's disease n. See amyotrophic lateral sclerosis. ) and other motor neuron diseases motor neuron disease: see amyotrophic lateral sclerosis. . According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. protocol, the trial focuses on those with "locked-in" syndrome. The trial is currently underway at the Massachusetts General Hospital Massachusetts General Hospital Health care The major teaching hospital for Harvard Medical School, widely regarded as one of the best health care centers in the world in Boston, Massachusetts “Boston” redirects here. For other uses, see Boston (disambiguation). Boston is the capital and most populous city of Massachusetts.[3] The largest city in New England, Boston is considered the unofficial economic and cultural center of the entire New . --To date, two participants have been implanted with the BrainGate(TM) System implant in a trial for those with spinal cord injury, muscular dystrophy or stroke. There have been no reported adverse events from either participant to date. --The first participant successfully completed the one-year testing period according to trial protocol and had his implant removed successfully in October 2005. The Company expects to utilize the valuable data collected from the retrieved implant to improve engineering of future products used in the Company's clinical trials of the BrainGate(TM) System. --In October 2005, Cyberkinetics announced that it would receive $2.3 million over five years to jointly develop a neuroprosthetic system with Case Western Reserve University and the Cleveland FES (Functional Electrical Stimulation Functional electrical stimulation (commonly abbreviated as FES) is a technique that uses electrical currents to activate nerves innervating extremities affected by paralysis resulting from spinal cord injury (SCI), head injury, stroke or other neurological disorders, ) to restore partial arm and hand function to those with extensive paralysis due to spinal cord injury. The five-year contract will be funded through a $4.4 million grant from the National Center for Medical Rehabilitation Research (NCMRR NCMRR National Center for Medical Rehabilitation Research ), a component of the National Institute of Child Health and Human Development (NICHD NICHD National Institute of Child Health and Human Development. ). About Cyberkinetics Neurotechnology Systems, Inc. Cyberkinetics Neurotechnology Systems, a leader in brain interface technology, is developing products to treat nervous system diseases and disorders by bringing together advances in neuroscience, computer science and engineering. Cyberkinetics' products are based on over ten years of technology development and cutting-edge neuroscience research at leading academic institutions such as Brown University, the Massachusetts Institute of Technology Massachusetts Institute of Technology, at Cambridge; coeducational; chartered 1861, opened 1865 in Boston, moved 1916. It has long been recognized as an outstanding technological institute and its Sloan School of Management has notable programs in business, , Emory University Emory University (ĕm`ərē), near Atlanta, Ga.; coeducational; United Methodist; chartered as Emory College 1836, opened 1837 at Oxford. It became Emory Univ. in 1915 and in 1919 moved to Atlanta. , and the University of Utah The University of Utah (also The U or the U of U or the UU), located in Salt Lake City, is the flagship public research university in the state of Utah, and one of 10 institutions that make up the Utah System of Higher Education. . Cyberkinetics has received FDA clearance to market the NeuroPort(TM) System, a neural monitor designed for acute inpatient applications and labeled for temporary (less than 30 days) recording and monitoring of brain electrical activity. The NeuroPort(TM) System can contribute to the diagnosis and treatment of neurological conditions Neurological conditions A condition that has its origin in some part of the patient's nervous system. Mentioned in: Pervasive Developmental Disorders in patients who have undergone craniotomy Craniotomy Definition Surgical removal of part of the skull to expose the brain. Purpose A craniotomy is the most commonly performed surgery for brain tumor removal. by providing neurologists and neurosurgeons a new resource to detect, transmit and analyze neural activity. Cyberkinetics' BrainGate(TM) System is being designed to give severely paralyzed par·a·lyze tr.v. par·a·lyzed, par·a·lyz·ing, par·a·lyz·es 1. To affect with paralysis; cause to be paralytic. 2. To make unable to move or act: paralyzed by fear. individuals, as well as individuals with motor impairment from a variety of causes, a long-term, direct brain-computer interface for the purpose of communication and control of a computer, assistive devices, and, ultimately, limb movement. Patients are currently being enrolled into a pilot clinical trial to test the BrainGate(TM) System's safety and feasibility. The Company expects to report data from the ongoing trial from time to time in peer-reviewed scientific forums. Visit Cyberkinetics' website for additional information at www.cyberkineticsinc.com. Forward-Looking Statements This announcement contains forward-looking statements, including statements about Cyberkinetics' product development plans and progress. These statements are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, and can be identified by the use of forward-looking terminology such as "may," "will," "believe," "expect," "anticipate" or other comparable terminology. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements and reported results shall not be considered an indication of our future performance. Factors that might cause or contribute to such differences include our limited operating history; our lack of profits from operations; our ability to successfully develop and commercialize our proposed products; a lengthy approval process and the uncertainty of FDA and other governmental regulatory requirements; clinical trials may fail to demonstrate the safety and effectiveness of our products; the degree and nature of our competition; our ability to employ and retain qualified employees; compliance with recent legislation regarding corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. , including the Sarbanes-Oxley Act See SOX. of 2002; as well as those risks more fully discussed in our public filings with the Securities and Exchange Commission, all of which are difficult to predict and some of which are beyond our control. Financial results for the quarter ended September 30, 2005 are summarized in the table below.
Cyberkinetics Neurotechnology Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenues:
Product sales $ 119,281 $ 164,008 $ 495,948 $ 425,400
Grant income 69,294 214,910 280,217 659,507
----------- ----------- ----------- -----------
Total revenues 188,575 378,918 776,165 1,084,907
Operating
expenses:
Cost of product
sales 20,173 68,175 96,842 201,300
Research and
development 1,445,984 785,434 4,283,589 2,158,225
Sales and
marketing 77,675 81,121 245,858 224,889
General and
administrative 918,109 1,170,907 2,994,879 2,864,136
----------- ----------- ----------- -----------
Total operating
expenses 2,461,941 2,105,637 7,621,168 5,448,550
----------- ----------- ----------- -----------
Operating loss (2,273,366) (1,726,719) (6,845,003) (4,363,643)
Other income
(expense):
Interest income 28,222 5,566 61,503 27,551
Interest expense (134,751) (15,851) (257,821) (35,238)
----------- ----------- ----------- -----------
Other expense, net (106,529) (10,285) (196,318) (7,687)
----------- ----------- ----------- -----------
Net loss $(2,379,895) $(1,737,004) $(7,041,321) $(4,371,330)
Dividends and
accretion to
redemption value
of redeemable
convertible
preferred stock - (208,383) - (625,149)
----------- ----------- ----------- -----------
Net loss
attributable to
common
stockholders $(2,379,895) $(1,945,387) $(7,041,321) $(4,996,479)
=========== =========== =========== ===========
Basic and diluted
net loss
attributable to
common
stockholders per
common share $ (0.15) $ (0.46) $ (0.44) $ (1.21)
=========== =========== =========== ===========
Shares used in
computing basic
and diluted net
loss attributable
to common
stockholders per
common share 16,228,603 4,217,836 15,887,463 4,141,525
=========== =========== =========== ===========
Cyberkinetics Neurotechnology Systems, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
As of
September 30, December 31,
2005 2004
-------------- -------------
Assets
Current Assets
Cash and cash equivalents $ 13,841,182 $ 5,232,641
Other current assets 481,861 726,664
Net property and equipment 677,948 549,927
Other assets 243,733 246,871
-------------- -------------
Total assets $ 15,244,724 $ 6,756,103
============== =============
Liabilities and stockholders' equity
Current liabilities 4,635,880 1,308,245
Long-term liabilities 403,273 365,528
Stockholders' equity:
Common stock, $0.001 par value 26,986 16,939
Additional paid-in-capital 30,811,197 17,835,622
Common stock held in escrow (13,000) (13,000)
Deferred stock-based compensation (906,505) (85,445)
Accumulated deficit (19,713,107) (12,671,786)
-------------- -------------
Total stockholders' equity 10,205,571 5,082,330
-------------- -------------
Total liabilities and stockholders'
equity $ 15,244,724 $ 6,756,103
============== =============
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