CollPlant Biotechnologies Reports Second Quarter (Q2) 2020 Financial Results

Increasing sales of BioInk for 3D Bioprinting and Medical Aesthetics

REHOVOT, Israel, Aug. 28, 2020 /PRNewswire/ -- CollPlant (NASDAQ: CLGN), a regenerative and aesthetics medicine company, today announced financial results for the second quarter ended June 30, 2020 and provided an update on the Company's business developments. Certain metrics, including those expressed on an adjusted basis, are non-GAAP measures. See "Use of Non-GAAP Measures" below.

CollPlant reported revenues of $823,000 for the second quarter of 2020, a 36% increase from the $606,000 recorded in the second quarter of 2019. The Company ended the second quarter of 2020 with $3.7 million in cash and cash equivalents. Comprehensive loss for the second quarter of 2020 was $2.0 million on a GAAP basis, or adjusted comprehensive loss of $1.4 million, on a non-GAAP basis.

"We continue to make major strides in revolutionizing the fields of regenerative and aesthetic medicine through our first-in-class, recombinant human collagen (rhCollagen) platform technology. First, we are partnering with United Therapeutics Corporation (NASDAQ: UTHR) in efforts to address global organ shortages. We plan to leverage this experience in 3D bioprinting of lung scaffolds to explore other life-saving organs and tissues in the future," stated Yehiel Tal, the Chief Executive Officer of CollPlant. "Second, the combination of hyaluronic acid and rhCollagen in our next-generation, regenerative, photocurable dermal fillers will provide superior skin rejuvenation inclusive of the ability to inject into deep wrinkles, as well as other key attributes. Moreover, we are looking forward to sharing new data on our innovative photocurable dermal fillers and additional updates on our breast implant product pipeline at the exclusive Science of Aging Virtual Symposium 2020, which will be held digitally on September 16, 2020. Third, we continue to abide by Israeli Health Ministry guidelines for optimal protection of our employees. To accommodate heightened social distancing policies amid the ongoing pandemic, we have concentrated efforts on amplifying corporate visibility through a stronger online and social media presence. Finally, we remain committed to bolstering our workforce with brilliant scientists and support staff from prestigious institutions here in Israel. We are opportunistic about establishing relationships with new strategic partners who can support our pipeline development efforts."

Financial Results

Second Quarter 2020 Financial Results on US GAAP basis ("GAAP")

Revenues for the three months ended June 30, 2020 increased by 36% to $823,000, compared to $606,000 in the second quarter of 2019. Revenues were derived mainly from CollPlant's BioInk for the development of 3D bioprinting of human organs, and from sales of rhCollagen for medical aesthetics product development.

Cost of revenue was $748,000 in the three months ended June 30, 2020, an increase of 62% compared to $463,000 in the same period in 2019. The increase is primarily related to differences in the mix of products sold, different profitability and the different capacity of production in the reported periods presented.

The Company's gross profit for the three months ended June 30, 2020 decreased by $68,000 to $75,000 compared to $143,000 in the second quarter of 2019.

Total operating expenses for the three months ended June 30, 2020 were $2.0 million, an increase of 5% compared to $1.9 million in the second quarter of 2019.

Operating loss for the three months ended June 30, 2020 was $1.9 million, an increase of 6% compared to an operating loss of $1.8 million in the second quarter of 2019.

Financial expense, net for the three months ended June 30, 2020 was $58,000 compared to financial income, net of $513,000 in the second quarter of 2019. Financial expense in the three months ended June 30, 2020 derived from non-cash exchange differences of operating lease liabilities under ASC 842, compared to financial income in the three months ended June 30, 2019 which derived from re-evaluation of financial instruments.

Comprehensive loss for the second quarter of 2020 was $2.0 million, or $0.28 per share, compared to a comprehensive loss of $1.2 million, or $0.27 per share, for the second quarter of 2019.

Cash used in operating activities during the six months ended June 30, 2020 was $4.3 million compared to $2.7 million in the six months ended June 30, 2019. As of June 30, 2020, cash and cash equivalents totaled $3.7 million.

Cash used in investing activities during the six months ended June 30, 2020 was $246,000 compared to $1.1 million in the six months ended June 30, 2019. The decrease is mainly attribute to costs incurred in the establishment in 2019 of CollPlant's new HQ and R&D center in Rehovot, Israel.

Cash provided by financing activities during the six months ended June 30, 2020 was $4.5 million compared to cash used in financing activities of $18,000 in the six months ended June 30, 2019. The increase is mainly attribute to proceeds from issuance of shares in a private placement in February 2020.

Second Quarter 2020 Financial Results on Non-US GAAP Basis ("non-GAAP")

On a non-GAAP basis, the operating expenses for the second quarter of 2020 were $1.4 million, compared to $1.5 million for the second quarter of 2019.

Comprehensive loss for the second quarter of 2020 was $1.4 million, or $0.20 per share, compared to $1.5 million, or $0.31 per share, for the second quarter of 2019.

Non-GAAP measures exclude certain non-cash expenses. The table on page 10 includes a reconciliation of the Company's GAAP results to non-GAAP results. The reconciliation reflects non-cash expenses in the amount of $555,000 with respect to (i) change in fair value of financial instruments, (ii) share-based compensation to employees, directors and consultants and (iii) change of operating lease accounts, including related financial expenses.

Use of Non-GAAP Measures

This press release contains certain non-GAAP financial measures for operating costs and expenses, operating loss, comprehensive loss and basic and diluted comprehensive loss per share that exclude the effects of non-cash expense for fair market value attributed to change in fair value of financial instruments, share-based compensation to employees, directors and consultants, and change in operating lease accounts. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance that enhances management's and investors' ability to evaluate the Company's operating costs, comprehensive loss and loss per share, and to compare them to historical Company results.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when operating and evaluating the Company's business internally and therefore decided to make these non-GAAP adjustments available to investors. The non-GAAP financial measures used by the Company in this press release may be different from the measures used by other companies.

For more information on the non-GAAP financial measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" table on page 10 in this press release. This accompanying table on page 10 has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

The Company's consolidated financial results as of, and for the six months ended, June 30, 2020 are presented in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP").

About CollPlant

CollPlant is a regenerative and aesthetic medicine company focused on 3D bioprinting of tissues and organs, and medical aesthetics. Our products are based on our rhCollagen (recombinant human collagen) that is produced with CollPlant's proprietary plant based genetic engineering technology.

Our products address indications for the diverse fields of tissue repair, aesthetics and organ manufacturing, and, we believe, are ushering in a new era in regenerative and aesthetic medicine.

Our flagship rhCollagen BioInk product line is ideal for 3D bioprinting of tissues and organs. Our flagship rhCollagen BioInk product line is ideal for 3D bioprinting of tissues and organs. In October 2018, we entered into a licensing agreement with United Therapeutics, whereby United Therapeutics is using CollPlant's BioInks in the manufacture of 3D bioprinted lungs for transplant in humans.

In January 2020, we also entered into a Joint Development Agreement with 3D Systems Corporation, or 3D Systems, pursuant to which we and 3D Systems jointly develop tissue and scaffold bioprinting processes for third party collaborators. Our industry collaboration also includes the Advanced Regenerative Manufacturing Institute, or ARMI.

For more information about CollPlant, visit http://www.collplant.com

Safe Harbor Statements

This press release may include forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to CollPlant's objectives plans and strategies, as well as statements, other than historical facts, that address activities, events or developments that CollPlant intends, expects, projects, believes or anticipates will or may occur in the future. These statements are often characterized by terminology such as "believes," "hopes," "may," "anticipates," "should," "intends," "plans," "will," "expects," "estimates," "projects," "positioned," "strategy" and similar expressions and are based on assumptions and assessments made in light of management's experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Many factors could cause CollPlant's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the following: the Company's history of significant losses, its ability to continue as a going concern, and its need to raise additional capital and its inability to obtain additional capital on acceptable terms, or at all; the outbreak of coronavirus; the Company's expectations regarding the timing and cost of commencing clinical trials with respect to tissues and organs which are based on its rhCollagen based BioInk and products for medical aesthetics; the Company's ability to obtain favorable pre-clinical and clinical trial results; regulatory action with respect to rhCollagen based BioInk and medical aesthetics products including but not limited to acceptance of an application for marketing authorization review and approval of such application, and, if approved, the scope of the approved indication and labeling; commercial success and market acceptance of the Company's rhCollagen based products in 3D Bioprinting and medical aesthetics; the Company's ability to establish sales and marketing capabilities or enter into agreements with third parties and its reliance on third party distributors and resellers; the Company's ability to establish and maintain strategic partnerships and other corporate collaborations; the Company's reliance on third parties to conduct some or all aspects of its product manufacturing; the scope of protection the Company is able to establish and maintain for intellectual property rights and the Company's ability to operate its business without infringing the intellectual property rights of others; the overall global economic environment; the impact of competition and new technologies; general market, political, and economic conditions in the countries in which the Company operates; projected capital expenditures and liquidity; changes in the Company's strategy; and litigation and regulatory proceedings. More detailed information about the risks and uncertainties affecting CollPlant is contained under the heading "Risk Factors" included in CollPlant's most recent annual report on Form 20-F filed with the SEC, and in other filings that CollPlant has made and may make with the SEC in the future. The forward-looking statements contained in this press release are made as of the date of this press release and reflect CollPlant's current views with respect to future events, and CollPlant does not undertake and specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact at CollPlant:
Eran Rotem
Deputy CEO & CFO
Tel: + 972-73-2325600
Email: Eran@collplant.com

Sophia Ononye-Onyia, PhD MPH MBA Founder &
CEO, The Sophia Consulting Firm
Tel: +1-347-533-4578
E-mail: sophia@sophiaconsultingfirm.com

COLLPLANT BIOTECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(U.S. dollars in thousands, except share and per share data)
(Unaudited)

 
   

Six months ended
June 30

   

Three months ended
June 30

 
   

2020

   

2019

   

2020

   

2019

 
   

U.S. dollars in thousands, except per share data

 

Revenue from product sales

 

$

1,228

   

$

1,048

   

$

713

   

$

606

 

Revenue from service

   

204

     

152

     

110

     

-

 

Total Revenue

   

1,432

     

1,200

     

823

     

606

 

Cost of Revenue

   

1,223

     

883

     

748

     

463

 

Gross Profit

   

209

     

317

     

75

     

143

 
                                 

Operating expenses:

                               

Research and development, net

   

1,812

     

1,856

     

1,002

     

1,084

 

General, administrative and marketing

   

2,017

     

1,749

     

986

     

820

 

Total operating loss

   

3,620

     

3,288

     

1,913

     

1,761

 

Financial income

   

26

     

48

     

9

     

630

 

Financial expenses

   

(6)

     

(6)

     

(2)

     

(6)

 

Exchange differences

   

28

     

(242)

     

(65)

     

(111)

 

Financial income (expenses), net

   

48

     

(200)

     

(58)

     

513

 

Loss for the period

 

$

3,572

   

$

3,488

   

$

1,971

   

$

1,248

 

Basic and diluted loss per ordinary share

 

$

0.52

   

$

0.75

   

$

0.28

   

$

0.27

 

Weighted average ordinary shares outstanding

   

6,809,666

     

4,660,862

     

6,958,109

     

4,661,506

 

COLLPLANT BIOTECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)
(Unaudited)

 
   

June 30,

   

December 31,

 
   

2020

   

2019

 

Assets

           

Current assets:

           

Cash and cash equivalents

 

$

3,672

   

$

3,791

 

Trade receivables

   

321

     

79

 

Other accounts receivable and prepaid expenses

   

750

     

270

 

Restricted deposit

   

12

     

12

 

Inventory

   

730

     

888

 

Total current assets

   

5,485

     

5,040

 

Non-current assets:

               

Restricted deposit

   

167

     

168

 

Operating lease right-of-use assets

   

3,048

     

3,215

 

Property and equipment, net

   

2,248

     

2,329

 

Total non-current assets

   

5,463

     

5,712

 

Total assets

 

$

10,948

   

$

10,752

 

COLLPLANT BIOTECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)
(Unaudited)

 
   

June 30,

   

December 31,

 
   

2020

   

2019

 

Liabilities and shareholders' equity

           

Current liabilities:

           

Loan

 

$

12

   

$

24

 

Accounts payable:

               

Trade payables

   

559

     

833

 

Accrued liabilities and other

   

866

     

1,203

 

Operating lease liabilities

   

442

     

455

 

Deferred revenues

   

297

     

942

 

Total current liabilities

   

2,176

     

3,457

 

Non-current liabilities:

               

Derivatives

   

42

     

68

 

Operating lease liabilities

   

2,953

     

3,139

 

Total non-current liabilities

   

2,995

     

3,207

 

Total liabilities

   

5,171

     

6,664

 
                 

Commitments and contingencies

               
                 

Shareholders' Equity:

               

Ordinary shares, NIS 1.5 par value - authorized: 30,000,000 ordinary shares as of June
30, 2020 and December 31, 2019; issued and outstanding: 6,467,536 and 5,670,829
ordinary shares as June 30, 2020 and December 31, 2019, respectively

   

2,713

     

2,368

 

Additional paid in capital and warrants

   

74,865

     

69,949

 

Currency translation differences

   

(969)

     

(969)

 

Accumulated deficit

   

(70,832)

     

(67,260)

 

Total shareholders' equity

   

5,777

     

4,088

 

Total liabilities and shareholders' equity

 

$

10,948

   

$

10,752

 

COLLPLANT BIOTECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)
(Unaudited)

 
   

Six months ended
June 30,

 
   

2020

   

2019

 

Cash flows from operating activities:

           

Net cash used in operations (see Appendix A)

 

$

(4,343)

   

$

(2,725)

 

Net cash used in operating activities

   

(4,343)

     

(2,725)

 

Cash flows from investing activities:

               

Purchase of property and equipment

   

(246)

     

(1,060)

 

Net cash used in investing activities

   

(246)

     

(1,060)

 

Cash flows from financing activities:

               

Proceeds from issuance of shares, net

   

4,400

     

-

 

Exercise of options into shares

   

67

     

7

 

Loan paid

   

(12)

     

(8)

 

Payments made for equipment on financing terms

   

-

     

(17)

 

Net cash provided by (used in) financing activities

   

4,455

     

(18)

 

Decrease in cash and cash equivalents and restricted deposits

   

(134)

     

(3,803)

 

Cash and cash equivalents and restricted deposits at the beginning of the period

   

3,971

     

5,663

 

Exchange differences on cash and cash equivalents and restricted deposits

   

14

     

54

 

Cash and cash equivalents and restricted deposits at the end of the period

 

$

3,851

   

$

1,914

 

COLLPLANT BIOTECHNOLOGIES LTD.
APPENDICES TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)
(Unaudited)

 
   

Six months ended
June 30,

 
   

2020

   

2019

 

Appendix to the statement of cash flows

           

A. Net cash used in operations:

           

Loss

 

$

(3,572)

   

$

(3,488)

 

Adjustments for:

               

Depreciation

   

327

     

228

 

Share-based compensation to employees and consultants

   

794

     

629

 

Exchange differences on cash and cash equivalents

   

(14)

     

(54)

 

Financial expenses related to financial instruments

   

(26)

     

60

 

Net change of operating lease accounts

   

(32)

     

292

 
     

(2,523)

     

(2,333)

 

Changes in operating asset and liability items:

               

Increase in trade receivables

   

(242)

     

(95)

 

Decrease (increase) in inventory

   

158

     

(144)

 

Decrease (increase) in other receivables (including long-term receivables)

   

(480)

     

11

 

Increase (decrease) in trade payables (including long-term payables)

   

(274)

     

156

 

Increase (decrease) in accrued liabilities and other payables

   

(337)

     

91

 

Decrease in deferred revenues (including long term deferred revenues)

   

(645)

     

(411)

 
     

(1,820)

     

(392)

 

Net cash used in operations

 

$

(4,343)

   

$

(2,725)

 

Supplemental disclosures of non-cash investing and financing activities:

               

Conversion of pre-paid warrants to ordinary shares

   

137

     

-

 

Obtaining right of use assets in exchange for a lease liability

   

23

     

-

 

Classification of warrants from equity to liabilities, net

   

-

     

1,804

 

CollPlant Biotechnologies Ltd.
Reconciliation of GAAP to Non-GAAP Financial Measures

(U.S. dollars in thousands, except per share data)
(Unaudited)

 
   

Six months ended
June 30

   

Three months ended
June 30

 
   

2020

   

2019

   

2020

   

2019

 
   

USD in thousands

 
                         

GAAP gross profit

 

$

209

   

$

317

   

$

75

   

$

143

 
                                 

GAAP operating costs and expenses:

   

3,829

     

3,605

     

1,988

     

1,904

 
                                 

Change of operating lease accounts

   

32

     

(292)

     

(87)

     

(88)

 

Share-based compensation to employees, directors and
consultants

   

(794)

     

(629)

     

(477)

     

(289)

 

Non-GAAP operating costs and expenses:

   

3,067

     

2,684

     

1,424

     

1,527

 
                                 

GAAP operating loss

   

3,620

     

3,288

     

1,913

     

1,761

 
                                 

Non-GAAP operating loss

   

2,858

     

2,367

     

1,349

     

1,384

 
                                 

GAAP Comprehensive loss

   

3,572

     

3,488

     

1,971

     

1,248

 
                                 

Change in fair value of financial instruments

   

26

     

(60)

     

9

     

579

 

Change of operating lease accounts

   

32

     

(292)

     

(87)

     

(88)

 

Share-based compensation to employees, directors and consultants

   

(794)

     

(629)

     

(477)

     

(289)

 

Non-GAAP Comprehensive loss

 

$

2,836

   

$

2,507

   

$

1,416

   

$

1,450

 

GAAP Basic and diluted loss per ordinary share

 

$

0.52

   

$

0.75

   

$

0.28

   

$

0.27

 

Non-GAAP Basic and diluted loss per ordinary share

 

$

0.42

   

$

0.54

   

$

0.20

   

$

0.31

 

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SOURCE CollPlant


Company Codes: NASDAQ-NMS:CLGN, ISIN:IL0004960188, RICS:CLPT.TA, RICS:CQPTY

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