ViaCell Announces Third Quarter 2005 Financial Results

CAMBRIDGE, Mass., Nov. 8 /PRNewswire-FirstCall/ -- ViaCell, Inc. today announced its consolidated financial results for the third quarter of 2005. Financial highlights for the third quarter include:

  * Revenue totaled $11.7 million, an increase of 18% over revenue of $9.9
    million in the third quarter of 2004;
  * Processing and storage revenues for ViaCord were $11.6 million, an
    increase of 21% over the third quarter of 2004;
  * Net loss decreased to $3.6 million, or $0.09 per share, as compared to a
    net loss of $9.5 million, or $3.49 per share, in the third quarter of
    2004; and
  * Cash, cash equivalents and short-term investments totaled $61.5 million
    at September 30, 2005.

"We are pleased with the continued revenue growth of ViaCord," stated Marc D. Beer, President and Chief Executive Officer of ViaCell. "We have also demonstrated our ability to control expenses in 2005."

Total revenues for the third quarter of 2005 were $11.7 million, an increase of $1.8 million, or 18%, over total revenues of $9.9 million for the same period in 2004. Processing and storage fees of ViaCord(R), ViaCell's product for the preservation and storage of umbilical cord blood, for the third quarter of 2005 were approximately $11.6 million, an increase of 21% over $9.6 million in the third quarter of 2004. Grant and contract revenues for the third quarter of 2005 were $135,000 versus $386,000 for the same period in 2004. The decrease in grant and contract revenues is due to the closing of ViaCell's German facility in December 2004.

The gross margin for ViaCord was approximately 81.3% in the third quarter of 2005 compared to 80.7% in third quarter of 2004.

Research and development expenses for the third quarter of 2005 were $3.3 million, a decrease of 14% compared to research and development expenses of $3.8 million for the third quarter of 2004. Research and development expenses consist primarily of costs associated with the clinical development of CB001, ViaCell's investigational cord blood stem cell product for hematopoietic stem cell transplantation in patients affected by a variety of cancers. The decrease in research and development expenses in the third quarter of 2005, as compared to the same period in 2004, was due primarily to the Company's restructuring in 2004 which reduced costs and focused the scope of its research and development initiatives.

Sales and marketing expenses for the third quarter of 2005 were $6.3 million, an increase of $1.6 million or 35%, compared to sales and marketing expenses of $4.7 million in the third quarter of 2004. The increase in sales and marketing expenses was primarily due to higher spending within ViaCell's Reproductive Health business, including increased staffing within the sales organization as well as external marketing program spending for ViaCord.

General and administrative expenses were approximately $2.8 million for the third quarter of 2005, slightly lower than general and administrative expenses in the third quarter of 2004 of $3.0 million.

Net loss per common share for the third quarter of 2005 was $0.09 compared to a net loss per common share of $3.49 and pro forma net loss per common share of $0.22 in the corresponding quarter of 2004. Net loss for the third quarter of 2005 of $3.6 million compared to a net loss of $9.5 million and a pro forma net loss of $6.1 million for the corresponding period in 2004. A reconciliation of GAAP basic and diluted net loss per share to pro forma basic and diluted net loss per share is included in the Company's unaudited consolidated statements of operations, which is described below in the financial tables.

As of September 30, 2005, ViaCell had approximately $61.5 million in cash, cash equivalents and short-term investments.

Conference Call and Webcast

ViaCell will host a conference call and live audio webcast with investment analysts beginning today, November 8, 2005 at 10:00 a.m. Eastern Time to discuss its third quarter 2005 financial results and its product pipeline. To participate by telephone, dial (719) 457-2728. A live audio webcast can be accessed on the ViaCell web site at http://www.viacellinc.com/ within the Investor Information section.

A replay of this conference call will be available for two weeks, beginning Tuesday, November 8, 2005 at 1:00 p.m. Eastern Time by dialing (719) 457-0820 and using the access code 5714751. In addition, a replay of the webcast will be archived on the ViaCell website in the Investor Information section.

About ViaCell

ViaCell is a biotechnology company focused on enabling the widespread use of human cells as medicine. The Company is developing a pipeline of proprietary stem cell product candidates intended to address cancer, cardiac disease, and diabetes. CB001, its lead cord blood derived stem cell therapy product candidate, is being developed for hematopoietic stem cell transplantation in patients affected by a variety of cancers. In addition to its therapeutic development programs, ViaCell's reproductive health business unit commercializes ViaCord(R), a product that offers expecting families the option of preserving their baby's umbilical cord blood. The Company is working to leverage its commercial infrastructure and product development capabilities by developing ViaCyte(TM), its investigational product intended to broaden reproductive choices for women through the cryopreservation of human unfertilized eggs. ViaCell is headquartered in Cambridge, Massachusetts with a processing and storage facility in Kentucky and additional research and development operations in Singapore.

This press release contains forward-looking statements regarding the Company's financial outlook including the potential for growth in the ViaCord business. These statements are based on management's current expectations. The Company's financial performance and ability to achieve its expectations for growth and stated financial goals are subject to a number or risks and uncertainties. Factors which could cause actual results to differ materially from the Company's current expectations include, but are not limited to: the impact of competition in the umbilical cord preservation industry, the impact of any potential adverse outcome in pending patent infringement litigation related to the cord blood preservation business, any other unexpected material issues, delays or failures in the collection, processing or storage of umbilical cord blood by the Company, and fluctuations in the level and timing of expenses including as a result of difficulties or delays in the development of the Company's product candidates. The Company's long-term financial performance and growth is also expected to be dependent on the Company's ability to bring new products to the marketplace. Currently, the Company's product candidates are at an early stage of development. There can be no assurance that the Company will be successful in its efforts to develop these or other products. For more information on the risks and uncertainties associated with the Company, its financial performance, its products and programs, and pending litigation, see the factors set forth under the heading "Risk Factors That May Affect Results" in the Company's Report on Form 10-K filed on March 31, 2005 and its Report on Form 10-Q for the quarter ending June 30, 2005, which are on file with the Securities and Exchange Commission and which factors are incorporated herein by reference. ViaCell does not undertake any obligation to update forward-looking statements.

ViaCell(R) and ViaCord(R) are registered trademarks and ViaCyte(TM) is a trademark of ViaCell, Inc.

  -- Financial Tables to Follow --


        Condensed Consolidated Statement of Operations (unaudited)
                    (in thousands, except share data)

                                 Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                 2005        2004        2005        2004
  Revenues
     Processing and storage
      revenues                   $11,555      $9,552     $32,718    $27,397
     Grant and contract
      revenues                       135         386         495      1,236

       Total revenues             11,690       9,938      33,213     28,633

  Operating expenses:
     Cost of revenues
       Direct costs                2,164       1,839       6,136      5,514
       Royalty expense               -           -           -       (3,258)
         Total cost of revenues    2,164       1,839       6,136      2,256

      Research and development     3,278       3,824       9,879     11,699
      Sales and marketing          6,259       4,651      17,784     15,081
      General and administrative   2,847       3,010       8,978     10,400
      Stock-based compensation     1,024         793       1,818      2,662
      Restructuring                   94       1,740         305      1,740
        Total operating expenses  15,666      15,857      44,900     43,838

        Loss from operations      (3,976)     (5,919)    (11,687)   (15,205)

  Interest income (expense):
      Interest income                531         139       1,305        402
      Interest expense              (113)       (360)       (306)    (1,118)
        Total interest income
         (expense), net              418        (221)        999       (716)

  Net loss                        (3,558)     (6,140)    (10,688)   (15,921)

  Accretion on redeemable
   convertible preferred
   stock                             -        (3,315)       (987)    (9,944)

  Net loss attributable to
   common stockholders           $(3,558)    $(9,455)   $(11,675)  $(25,865)

  Net loss per share:
      Net loss per common share,
       basic and diluted          $(0.09)     $(3.49)     $(0.33)    $(9.62)
         Weighted average
          shares used in
          basic and diluted
          net loss per share
          computation         37,771,959   2,707,538  34,877,333  2,689,866

      Pro forma net loss
       per common share,
       basic and diluted          $(0.09)     $(0.22)     $(0.29)    $(0.67)
         Weighted average shares
          used in pro forma
          basic and diluted net
          loss per share
          computation         37,771,959  28,518,470  36,884,850 28,500,798

 The non-GAAP financial measure presented below is utilized by ViaCell,
 Inc. management to gain an understanding of the comparative financial
 performance of the Company.  Management believes that this non-GAAP
 financial measure is useful because it includes all outstanding shares of
 the Company, whether common or preferred, in the calculation of basic and
 diluted earnings per share.  The presentation of this information is not
 meant to be considered in isolation or as a substitute for GAAP financial
 measures.

  Pro forma disclosure assumes all convertible preferred shares were
  considered as outstanding common stock and no related accretion was
  recorded during both periods reported. It also assumes that no royalty
  expense was recorded in any period reported.


                                 Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                  2005        2004        2005        2004
  Net loss attributable to
   common stockholders          $(3,558)    $(9,455)   $(11,675)   $(25,865)
  Reversal of royalty
   expense                          -           -           -        (3,258)
  Accretion on redeemable
   convertible preferred
   stock for the period
   ended September 30, 2005
   and 2004                         -         3,315         987       9,944
  Pro forma net loss
   attributable to common
   stockholders                  (3,558)     (6,140)    (10,688)    (19,179)

  Weighted average shares
   used in basic and diluted
   net loss per share
   computation               37,771,959   2,707,538  34,877,333   2,689,866
  Increase in weighted
   average common shares
   outstanding assuming
   conversion at January 1,
   2005 and 2004                    -    25,810,932   2,007,517  25,810,932
  Weighted average shares
   used in pro forma basic
   and diluted net loss per
   share computation         37,771,959  28,518,470  36,884,850  28,500,798



          Condensed Consolidated Balance Sheet Data (unaudited)
                              (in thousands)

                                             September 30,      December 31,
                                                   2005               2004
  Cash, cash equivalents and
   investments                                    61,488             28,585
  Accounts receivable, net                        15,132             10,808
  Other current assets                             2,680              4,928
  Property & equipment, net                        8,958              6,738
  Intangible assets                                6,495              6,646
  Other assets                                     2,696              3,386

            Total assets                         $97,449            $61,091

  Current liabilities                             16,271             29,384
  Deferred revenue & rent                         13,190              7,764
  Contingent purchase price                        8,155              8,155
  Long-term debt                                     245              1,572
  Convertible preferred stock                        -              175,173
  Stockholders' equity (deficit)                  59,588           (160,957)

    Total Liabilities and Stockholders' equity
     (deficit)                                   $97,449            $61,091

   For Additional Information Contact:
   Justine E. Koenigsberg
   Senior Director, Corporate Communications
   (617) 914-3494