PolarityTE Reports First Quarter 2020 Results

May 11, 2020 |

10 min read

PolarityTE, Inc. (Nasdaq: PTE) , a biotechnology company developing regenerative tissue products and biomaterials, today reported financial results for the first calendar quarter of 2020. PolarityTE will host a conference call and webcast today, May 11, 2020 at 8:00 a.m. ET. Highlights SkinTE revenues were $0.428 million in Q1:20 compared to $0.297 million in Q1:19 Total revenues were $0.933 million in

May 11, 2020 11:00 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 first calendar quarter of 2020. PolarityTE will host a conference call and webcast today, May 11, 2020 at 8:00 a.m. ET.

Highlights

SkinTE revenues were $0.428 million in Q1:20 compared to $0.297 million in Q1:19
Total revenues were $0.933 million in Q1:20 compared to $1.465 million in Q1:19
Paid Cases were 81 in Q1:20 compared to 41 in Q1:19
New Users were 24 in Q1:20 compared to 18 in Q1:19
Repeat Users were 28 in Q1:20 compared to 9 in Q1:19

Financial Results for the Three Months Ended March 31, 2020

Total revenue for the three months ended March 31, 2020 was $0.933 million, of which $0.428 million was from sales of SkinTE and $0.505 million was associated with PolarityTE’s contract research operations.

Research and development expenses for the three months ended March 31, 2020 were approximately $3.373 million versus $5.352 million for the three months ended March 31, 2019. Research and development expenses for the three months ended March 31, 2020 included a $0.036 million benefit from stock-based compensation which is a non-cash charge, versus an expense of $1.084 million for the three months ended March 31, 2019.

General and administrative expenses for the three months ended March 31, 2020 were $11.057 million versus $17.195 million for the three months ended March 31, 2019. General and administration expenses for the three months ended March 31, 2020 included $1.16 million of issuance fees related to the February raise. Also included in the period was $3.076 million of stock-based compensation which is a non-cash charge, versus $9.037 million for the three months ended March 31, 2019.

Sales and marketing expenses for the three months ended March 31, 2020 were $3.694 million versus $3.953 million for the three months ended March 31, 2019.

Net loss for the three months ended March 31, 2020 was $13.040 million compared with a net loss of $25.573 million for the three months ended March 31, 2019.

Cash and Liquidity as of March 31, 2020

As of March 31, 2020, our cash, cash equivalents and short-term investments balance was approximately $39.5 million, compared to cash and cash equivalents and short-term investments of $29.2 million at December 31, 2019.

Cash used in operating activities for the three-month period ended March 31, 2020, was approximately $13.854 million, of which $1.156 million was issuance fees related to the February capital raise. Cash used in operating activities, net of issuance fees, was approximately $12.698 million or approximately $4.233 million per month, 21% lower than the $5.333 million per month in the three months ended December 31, 2019 and 20% lower than the $5.323 million per month in the three months ended March 31, 2019.

Based on product development and commercialization plans, the Company believes existing cash, cash equivalents and short-term investments will be adequate to meet capital needs for at least the next 12 months. As noted in our April 21, 2020 press release, we have already taken action to reduce future cash burn by reducing payroll expense, adopting a salary and wage reduction, and reducing discretionary spending across the organization to minimal levels. As discussed in our April 30, 2020 press release updating corporate strategy and regulatory pathway for SkinTE, we are substantially reducing commercial operations and other functions to further significantly decrease cash burn.

Conference Call and Webcast Details

The conference call can be accessed by calling 1-888-394-8218 (U.S. and Canada) or +44 (0)330 336 9105 (International), with confirmation code 9016712 and referencing “PolarityTE First 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 method is 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 Reports 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)

	March 31, 2020			December 31, 2019

ASSETS
Current assets
Cash and cash equivalents	$	38,517		$	10,218
Short-term investments		997			19,022
Accounts receivable, net		1,186			1,731
Inventory		233			252
Prepaid expenses and other current assets		2,807			1,264
Total current assets		43,740			32,487
Property and equipment, net		15,022			14,911
Operating lease right-of-use assets		4,142			4,590
Intangible assets, net		683			731
Goodwill		278			278
Other assets		598			602
TOTAL ASSETS	$	64,463		$	53,599

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	8,026		$	7,095
Other current liabilities		3,223			2,338
Current portion of long-term note payable		536			528
Deferred revenue		23			98
Total current liabilities		11,808			10,059
Common stock warrant liability		7,145			–
Operating lease liabilities		2,614			2,994
Other long-term liabilities		1,243			1,630
Total liabilities		22,810			14,683

Commitments and Contingencies (Note 12)

STOCKHOLDERS’ EQUITY
Preferred stock - 25,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2020 and December 31, 2019		–			–
Common stock – $.001 par value; 250,000,000 shares authorized; 38,393,289 and 27,374,653 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		38			27
Additional paid-in capital		490,009			474,174
Accumulated other comprehensive income		3			72
Accumulated deficit		(448,397	)		(435,357	)
Total stockholders’ equity		41,653			38,916
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	64,463		$	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 March 31,
	2020			2019
Net revenues
Products	$	428		$	297
Services		505			1,168
Total net revenues		933			1,465
Cost of sales
Products		340			273
Services		176			503
Total costs of sales		516			776
Gross profit		417			689
Operating costs and expenses
Research and development		3,373			5,352
General and administrative		11,057			17,195
Sales and marketing		3,694			3,953
Total operating costs and expenses		18,124			26,500
Operating loss		(17,707	)		(25,811	)
Other income (expense)
Change in fair value of common stock warrant liability		4,532			–
Interest (expense) income, net		(12	)		70
Other income, net		147			168
Net loss	$	(13,040	)	$	(25,573	)
Net loss per share, basic and diluted	$	(0.39	)	$	(1.18	)
Weighted average shares outstanding, basic and diluted		33,019,994			21,594,699

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

	For the Three Months ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(13,040	)	$	(25,573	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation expense		3,221			10,289
Depreciation and amortization		752			676
Amortization of intangible assets		48			51
Amortization of debt discount		8			15
Change in fair value of common stock warrant liability		(4,532	)		–
Change in fair value of contingent consideration		–			20
Other non-cash adjustments		(16	)		(7	)
Changes in operating assets and liabilities:
Accounts receivable		545			(76	)
Inventory		19			27
Prepaid expenses and other current assets		(1,543	)		(412	)
Operating lease right-of-use assets		448			355
Other assets		4			–
Accounts payable and accrued expenses		818			(1,331	)
Other current liabilities		(61	)		425
Deferred revenue		(75	)		(80	)
Operating lease liabilities		(450	)		(343	)
Other long-term liabilities		–			(4	)
Net cash used in operating activities		(13,854	)		(15,968	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(999	)		(1,539	)
Purchase of available-for-sale securities		(14,144	)		(5,220	)
Proceeds from maturities of available-for-sale securities		15,945			1,700
Proceeds from sale of available-for-sale securities		16,171			–
Net cash provided by (used in) investing activities		16,973			(5,059	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from the sale of common stock and warrants		24,276			–
Proceeds from stock options exercised		31			529
Cash paid for tax withholdings related to net share settlement		(2	)		–
Payment of contingent consideration liability		–			(109	)
Principal payments on financing leases		(123	)		(118	)
Proceeds from financing arrangements		1,053			–
Principal payments on financing arrangements		(55	)		–
Net cash provided by financing activities		25,180			302
Net increase (decrease) in cash and cash equivalents		28,299			(20,725	)
Cash and cash equivalents - beginning of period		10,218			55,673
Cash and cash equivalents - end of period	$	38,517		$	34,948
Non-cash investing and financing activities:
Unpaid liability for acquisition of property and equipment	$	137		$	170
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	$	3		$	617
Allocation of proceeds from sale of common stock and warrants to warrant liability	$	11,677		$	–