PolarityTE Reports Third Quarter 2020 Results

Nov. 9, 2020 12:00 UTC

 

 
 

SALT LAKE CITY--(BUSINESS WIRE)-- PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company developing regenerative tissue products and biomaterials, today reported financial results for the third calendar quarter of 2020. PolarityTE will host a conference call and webcast today, November 9, 2020 at 8:00 a.m. ET.

Highlights

  • Total revenues were $3.34 million in Q3:20 compared to $1.40 million in Q3:19
  • SkinTE revenues were $1.16 million in Q3:20 compared to $0.84 million in Q3:19
  • Contract services revenues were $2.18 million in Q3:20 and includes $1.75 million from COVID-19 testing

Financial Results for the Three Months Ended September 30, 2020

Total revenue for the three months ended September 30, 2020 was $3.34 million, of which $1.16 million was from sales of SkinTE and $2.18 million from PolarityTE’s contract service operations, which includes $1.75 million from COVID-19 testing services that the Company started providing at the end of May 2020.

Research and development expenses for the three months ended September 30, 2020 were approximately $2.70 million versus $2.96 million for the three months ended September 30, 2019. Research and development expenses for the three months ended September 30, 2020 included an expense of $0.39 million from stock-based compensation, which is a non-cash charge.

General and administrative expenses for the three months ended September 30, 2020 were $6.26 million versus $16.04 million for the three months ended September 30, 2019. General and administrative expenses for the three months ended September 30, 2020 included stock-based compensation expense of $1.65 million, which is a $3.17 million reduction in stock compensation expense compared to the three months ended September 30, 2019, due to restricted stock and option forfeitures related to the reductions in force taken during 2020. Other Q3 2020 general and administrative reductions from Q3 2019 include a $2.89 million decrease in severance expense, a $1.68 million reduction in legal, accounting, and consulting fees, and a $2.41 million reduction in compensation-related expenses.

Sales and marketing expenses for the three months ended September 30, 2020 were $1.61 million versus $4.99 million for the three months ended September 30, 2019. Sales and marketing expenses for the three months ended September 30, 2020 included a reduction in compensation and benefits costs of $0.81 million and reduction of marketing and consultant spending of $1.45 million compared to the three months ended September 30, 2019.

Net loss for the three months ended September 30, 2020 was $7.08 million compared with a net loss of $22.98 million for the three months ended September 30, 2019.

Cash and Liquidity as of September 30, 2020

As of September 30, 2020, our cash, cash equivalents and short-term investments balance was approximately $23.19 million, compared to cash and cash equivalents and short-term investments of $29.24 million at December 31, 2019.

Cash used in operating activities for the three-month period ended September 30, 2020 was approximately $6.76 million, or approximately $2.25 million per month on average, 43% lower than the $3.95 million monthly average in the three months ended September 30, 2019 and 42% lower than the $3.85 million monthly average in the three months ended June 30, 2020.

Conference Call and Webcast Details

The conference call can be accessed by calling 1-888-599-8688 (U.S. and Canada) or +44 (0)330 336 9104 (International), with confirmation code 496517 and referencing “PolarityTE Third Quarter 2020 Earnings Call.” A webcast of the conference call can be accessed by using the link below.

Earnings Call Webcast – CLICK HERE

A replay of the earnings conference call will be available for 30 days, beginning approximately one hour after the conclusion of the call and can be found by visiting PolarityTE’s website at https://www.polarityte.com/news-media/events or by clicking on the link above.

About PolarityTE®

PolarityTE is focused on transforming the lives of patients by discovering, designing and developing a range of regenerative tissue products and biomaterials for the fields of medicine, biomedical engineering and material sciences. Rather than manufacturing with synthetic and foreign materials within artificially engineered environments, PolarityTE manufactures products from the patient's own tissue and uses the patient's own body to support the regenerative process. From a small piece of healthy autologous tissue, the company creates an easily deployable, dynamic and self-propagating product designed to regenerate the target tissues. PolarityTE's innovative methods are intended to promote and accelerate growth of the patient's tissues to undergo a form of effective regenerative healing. Learn more at www.PolarityTE.com – Welcome to the Shift®.

Forward Looking Statements

Certain statements contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They are generally identified by words such as "believes," "may," "expects," "anticipates," "intend," "plan," "will," "would," "should" and similar expressions. Readers should not place undue reliance on such forward-looking statements, which are based upon the Company's beliefs and assumptions as of the date of this release. The Company's actual results could differ materially due to the impact of the COVID-19 pandemic and FDA regulatory matters, which cannot be predicted, and the risk factors and other items described in more detail in the "Risk Factors" section of the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the SEC (copies of which may be obtained at www.sec.gov). Subsequent events and developments may cause these forward-looking statements to change. The Company specifically disclaims any obligation or intention to update or revise these forward-looking statements as a result of changed events or circumstances that occur after the date of this release, except as required by applicable law. Our actual results could differ materially due to risk factors and other items described in more detail in the "Risk Factors" section of the Company's Annual Reports and other filings with the SEC (copies of which may be obtained at www.sec.gov).

POLARITYTE, the POLARITYTE logo, SKINTE, WHERE SELF REGENERATES SELF and WELCOME TO THE SHIFT are trademarks or registered trademarks of PolarityTE, Inc.

 

POLARITYTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)

 

 

September 30,

2020

 

 

December 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,186

 

 

$

10,218

 

Short-term investments

 

 

 

 

 

19,022

 

Accounts receivable, net

 

 

3,379

 

 

 

1,731

 

Inventory

 

 

907

 

 

 

252

 

Prepaid expenses and other current assets

 

 

1,596

 

 

 

1,264

 

Total current assets

 

 

29,068

 

 

 

32,487

 

Property and equipment, net

 

 

11,970

 

 

 

14,911

 

Operating lease right-of-use assets

 

 

3,110

 

 

 

4,590

 

Intangible assets, net

 

 

589

 

 

 

731

 

Goodwill

 

 

278

 

 

 

278

 

Other assets

 

 

472

 

 

 

602

 

TOTAL ASSETS

 

$

45,487

 

 

$

53,599

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

4,818

 

 

$

7,095

 

Other current liabilities

 

 

2,311

 

 

 

2,338

 

Current portion of long-term notes payable

 

 

1,887

 

 

 

528

 

Deferred revenue

 

 

25

 

 

 

98

 

Total current liabilities

 

 

9,041

 

 

 

10,059

 

Common stock warrant liability

 

 

7,233

 

 

 

 

Operating lease liabilities

 

 

1,817

 

 

 

2,994

 

Other long-term liabilities

 

 

872

 

 

 

1,630

 

Long-term notes payable

 

 

1,964

 

 

 

 

Total liabilities

 

 

20,927

 

 

 

14,683

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Preferred stock - 25,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock – $.001 par value; 250,000,000 shares authorized; 38,912,005 and 27,374,653 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

39

 

 

 

27

 

Additional paid-in capital

 

 

492,676

 

 

 

474,174

 

Accumulated other comprehensive income

 

 

 

 

 

72

 

Accumulated deficit

 

 

(468,155

)

 

 

(435,357

)

Total stockholders’ equity

 

 

24,560

 

 

 

38,916

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

45,487

 

 

$

53,599

 

POLARITYTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share amounts)

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

1,156

 

 

$

839

 

 

$

2,528

 

 

$

1,640

 

Services

 

 

2,181

 

 

 

556

 

 

 

4,008

 

 

 

2,546

 

Total net revenues

 

 

3,337

 

 

 

1,395

 

 

 

6,536

 

 

 

4,186

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

210

 

 

 

315

 

 

 

825

 

 

 

930

 

Services

 

 

1,142

 

 

 

330

 

 

 

1,925

 

 

 

1,087

 

Total cost of sales

 

 

1,352

 

 

 

645

 

 

 

2,750

 

 

 

2,017

 

Gross profit

 

 

1,985

 

 

 

750

 

 

 

3,786

 

 

 

2,169

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,698

 

 

 

2,956

 

 

 

9,235

 

 

 

13,072

 

General and administrative

 

 

6,264

 

 

 

16,044

 

 

 

22,080

 

 

 

48,299

 

Sales and marketing

 

 

1,606

 

 

 

4,988

 

 

 

7,324

 

 

 

12,922

 

Restructuring and other charges

 

 

 

 

 

 

 

 

2,536

 

 

 

 

Total operating costs and expenses

 

 

10,568

 

 

 

23,988

 

 

 

41,175

 

 

 

74,293

 

Operating loss

 

 

(8,583

)

 

 

(23,238

)

 

 

(37,389

)

 

 

(72,124

)

Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of common stock warrant liability

 

 

1,503

 

 

 

 

 

 

4,444

 

 

 

 

Interest (expense) income, net

 

 

(58

)

 

 

27

 

 

 

(135

)

 

 

126

 

Other income, net

 

 

57

 

 

 

228

 

 

 

282

 

 

 

650

 

Net loss

 

$

(7,081

)

 

$

(22,983

)

 

$

(32,798

)

 

$

(71,348

)

Net loss per share, basic and diluted

 

$

(0.18

)

 

$

(0.87

)

 

$

(0.89

)

 

$

(2.94

)

Weighted average shares outstanding, basic and diluted

 

 

38,761,141

 

 

 

26,405,307

 

 

 

36,743,864

 

 

 

24,273,774

 

POLARITYTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)

 

 

For the Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(32,798

)

 

$

(71,348

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock based compensation expense

 

 

5,963

 

 

 

23,932

 

Depreciation and amortization

 

 

2,337

 

 

 

2,243

 

Amortization of intangible assets

 

 

142

 

 

 

146

 

Amortization of debt discount

 

 

17

 

 

 

40

 

Change in fair value of common stock warrant liability

 

 

(4,444

)

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

(48

)

Loss on abandonment and disposal of property and equipment

 

 

1,566

 

 

 

265

 

Other non-cash adjustments

 

 

(21

)

 

 

3

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,648

)

 

 

(881

)

Inventory

 

 

(655

)

 

 

(10

)

Prepaid expenses and other current assets

 

 

(332

)

 

 

126

 

Operating lease right-of-use assets

 

 

1,348

 

 

 

1,214

 

Other assets

 

 

130

 

 

 

25

 

Accounts payable and accrued expenses

 

 

(2,349

)

 

 

4,095

 

Other current liabilities

 

 

 

 

 

155

 

Deferred revenue

 

 

(73

)

 

 

(36

)

Operating lease liabilities

 

 

(1,353

)

 

 

(1,142

)

Other long-term liabilities

 

 

 

 

 

571

 

Net cash used in operating activities

 

 

(32,170

)

 

 

(40,650

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,225

)

 

 

(2,386

)

Purchase of available-for-sale securities

 

 

(14,144

)

 

 

(29,002

)

Proceeds from maturities of available-for-sale securities

 

 

16,945

 

 

 

14,636

 

Proceeds from sale of available-for-sale securities

 

 

16,171

 

 

 

1,877

 

Net cash provided by (used in) investing activities

 

 

17,747

 

 

 

(14,875

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net proceeds from the sale of common stock and warrants

 

 

24,276

 

 

 

27,948

 

Proceeds from stock options exercised

 

 

31

 

 

 

529

 

Proceeds from ESPP purchase

 

 

40

 

 

 

35

 

Cash paid for tax withholdings related to net share settlement

 

 

(114

)

 

 

(679

)

Payment of contingent consideration liability

 

 

 

 

 

(109

)

Principal payments on financing leases

 

 

(376

)

 

 

(336

)

Proceeds from term note payable and financing arrangements

 

 

4,630

 

 

 

 

Principal payments on term note payable and financing arrangements

 

 

(1,096

)

 

 

(263

)

Net cash provided by financing activities

 

 

27,391

 

 

 

27,125

 

Net increase (decrease) in cash and cash equivalents

 

 

12,968

 

 

 

(28,400

)

Cash and cash equivalents - beginning of period

 

 

10,218

 

 

 

55,673

 

Cash and cash equivalents - end of period

 

$

23,186

 

 

$

27,273

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Unpaid liability for acquisition of property and equipment

 

$

10

 

 

$

249

 

Reclassification of stock-based compensation expense that was previously classified as a liability to paid-in capital

 

$

 

 

$

38

 

Unpaid tax liability related to net share settlement

 

$

5

 

 

$

 

Allocation of proceeds from sale of common stock and warrants to warrant liability

 

$

11,677

 

 

$

 

Property and equipment acquired through finance lease

 

$

 

 

$

2,341

 

Property and equipment acquired through financing arrangement

 

$

 

 

$

58

 

 

Contacts

Investors:
Rich Haerle
VP, Investor Relations
PolarityTE, Inc.
ir@PolarityTE.com
(385) 315-0697

 
 

Source: PolarityTE, Inc.

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