PolarityTE to host conference call and webcast
today, August 12, 2021, at 4:30 p.m. ET
PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company
developing regenerative tissue products and biomaterials, today
provided a business update and reported financial results for the
second quarter ended June 30, 2021.
Recent Business Updates
- Submitted an Investigational New Drug application (IND) for
SkinTE® on July 23, 2021, for the proposed indication of treatment
of chronic cutaneous ulcers
- Reported SkinTE met primary and secondary endpoints in final
analysis from Diabetic Foot Ulcer (DFU) trial
- Received notice of allowance for additional patent, bringing
the Company’s total number of allowed and granted utility patents
worldwide to 12 – 10 abroad and 2 in the United States
In response to the IND submission the Company recently received
requests from the FDA’s Clinical and CMC reviewers for additional
information and the Company provided initial responses to those
requests. The Company appreciates the FDA’s feedback and believes
it is generally in line with what the Company anticipated following
its pre-IND interactions with the FDA.
Financial Updates for the Quarter Ended
June 30, 2021
- Total revenues were $2.54 million in Q2:21 compared to $4.71
million in Q1:21
- SkinTE revenues were $1.20 million in Q2:21 (April 1, 2021
through cessation of SkinTE sales on May 31, 2021) compared to
$1.73 million in Q1:21
- Contract services revenues were $1.34 million in Q2:21 compared
to $2.98 million in Q1:21
- Cash used in operations for Q2:21 was $4.1 million, or an
average of $1.4 million per month, representing a 38% reduction
from Q1:21
Transition to a Clinical Stage Biotech
Company
As part of the transition to a clinically focused biotech
company and consistent with the conclusion of FDA’s enforcement
discretion for certain human cells, tissues, and cellular and
tissue-based products under Section 361 of the Public Health
Service Act (361 HCT/Ps), the Company ceased commercial sales of
SkinTE on May 31, 2021, and has made substantial reductions in
costs associated with its commercial operations. The Company
previously provided guidance for an IND submission in the second
half of 2021 and on July 23, 2021 the Company submitted to the FDA
an IND for SkinTE for the treatment of chronic cutaneous
ulcers.
David Seaburg, Chief Executive Officer, commented, “We have made
great strides to position the Company for the future, most recently
with the submission of an IND, and I could not be more impressed by
the organization’s commitment to this achievement. We are also
incredibly encouraged by the recent outreach and support from
physicians and patients after ceasing sales of SkinTE, and we will
work expeditiously in the pursuit of a Biologic License Application
(BLA).” Mr. Seaburg continued, “The second quarter includes the
final two months of SkinTE sales prior to the end of FDA’s
enforcement discretion and further solidifies our view that there
is sizable market opportunity for SkinTE.”
Financial Results for the Quarter Ended June 30, 2021
There have been significant changes in items affecting the
Company’s results of operations for the six-month period ended June
30, 2021, compared to the six-month period ended June 30, 2020, due
to:
- The decision in April 2020 to file an IND with the FDA for
SkinTE and, as a result, transition from a commercial stage company
to a clinical stage company;
- The COVID-19 testing business that began in the last week of
May 2020 that generated significant services revenues through March
2021, but has since substantially diminished; and
- The COVID-19 pandemic, which had a negative impact on revenues
from the sale of SkinTE and IBEX services in the six-month period
ended June 30, 2020, but not in the six-month period ended June 30,
2021.
As a result of the foregoing developments, the Company made a
number of changes to its operations that impacted results of
operations. These included reductions in the Company’s work force
in March and May 2020 and on June 1, 2021, and reducing the
services and infrastructure needed to support a larger work force
and commercial sales effort.
Net revenues increased $4.0 million, or 127%, for the six months
ended June 30, 2021, compared to the six months ended June 30,
2020, and $0.3 million, or 12%, for the three months ended June 30,
2021, compared to the same period in 2020. The Company effectuated
a substantial reduction in force for commercial operations in May
2020, which together with the effect of COVID-19 on selling product
to healthcare institutions caused the Company to adopt a sales
strategy in May 2020 that focused on regions and facilities where
there were repeat users of SkinTE. As a result of this strategy,
product net revenues increased by 27% for the three-months ended
June 30, 2021, compared to the same period in 2020, even though the
Company ceased product sales at the end of May 2021. Net revenues
from services remained essentially unchanged for the three months
ended June 30, 2021, compared to the same period in 2020, but the
mix of business activity generating those revenues changed from a
majority of service revenues generated by COVID-19 testing in the
second quarter of 2020 to a majority of service revenues generated
by pre-clinical research services in 2021.
Cost of sales increased $1.7 million, or 121%, for the six
months ended June 30, 2021, compared to the six months ended June
30, 2020, and $0.04 million, or 5%, for the three months ended June
30, 2021, compared to the same period in 2020. Cost of sales for
products revenues decreased 27% period over period for the six
months ended June 30, 2021, compared to the six months ended June
30, 2020, and decreased 25% period over period for the three months
ended June 30, 2021, compared to the three months ended June 30,
2020, even though revenues were higher in 2021 for both the six and
three-month periods, which is attributable to the economies of
scale the Company achieved by selling product for larger wound
sizes in 2021 compared to 2020. Cost of sales for services revenues
increased 237% period over period for the six months ended June 30,
2021, compared to the six months ended June 30, 2020, and increased
18% period over period for the three months ended June 30, 2021,
compared to the three months ended June 30, 2020, which is
primarily attributable to the cost of sales pertaining to the
COVID-19 testing service that only began in the last week of May
2020, including a write-off of inventory for the COVID-19 testing
business in the first quarter of 2021 due to the substantial
decrease in that business during the quarter.
Operating costs and expenses decreased $9.6 million, or 31%, for
the six months ended June 30, 2021, compared to the six months
ended June 30, 2020, and $2.2 million, or 18%, for the three months
ended June 30, 2021, compared to the same period in 2020.
Operating loss decreased $12.0 million, or 42%, for the six
months ended June 30, 2021, compared to the six months ended June
30, 2020, and $2.5 million, or 22%, for the three months ended June
30, 2021, compared to the same period in 2020. Net loss decreased
$5.1 million, or 20%, for the six months ended June 30, 2021,
compared to the six months ended June 30, 2020, and $9.5 million,
or 75%, for the three months ended June 30, 2021, compared to the
same period in 2020. When the Company’s PPP Loan was forgiven in
June 2021, it recognized a gain on extinguishment of debt in the
amount of $3.6 million. For the six months ended June 30, 2021,
this gain was offset by a day one loss on warrants issued in
January 2021 of $5.2 million plus a loss on the change in fair
value of common stock warrant liability of $2.2 million, which are
primarily responsible for other expense of $3.8 million for the six
months ended June 30, 2021, and the $3.8 million difference between
the Company’s operating loss and net loss for the six months ended
June 30, 2021.
The table below details adjusted net loss, which is a non-GAAP
measure that shows net loss before fair value adjustments relating
to the Company’s common stock warrant liability and warrant
inducement loss. The Company believes this measure is useful to
investors because it eliminates the effect of non-operating items
that can significantly fluctuate from period to period due to fair
value remeasurements. For purposes of calculating non-GAAP per
share metrics, the same denominator is used as that which was used
in calculating net loss per share under GAAP.
Adjusted Net Loss Attributable
to Common Stockholders
(in thousands - unaudited
non-GAAP measure)
For the Three Months
Ended
June 30,
For the Six Months
Ended
June 30,
2021
2020
2021
2020
GAAP Net Loss
$
(3,188
)
$
(12,677
)
$
(20,598
)
$
(25,717
)
Change in fair value of common stock
warrant liability
(1,807
)
1,591
2,220
(2,941
)
Inducement loss on sale of liability
classified warrants
–
–
5,197
–
Non-GAAP adjusted net loss attributable to
common stockholders - basic
$
(4,995
)
$
(11,086
)
$
(13,181
)
$
(28,658
)
Gain from change in fair value of warrant
liabilities
(107
)
–
–
–
Non-GAAP adjusted net loss attributable to
common stockholders - diluted
$
(5,102
)
$
(11,086
)
$
(13,181
)
$
(28,658
)
GAAP net loss per share attributable to
common stockholders
Basic
$
(0.04
)
$
(0.33
)
$
(0.26
)
$
(0.72
)
Diluted
$
(0.04
)
$
(0.33
)
$
(0.26
)
$
(0.72
)
Non-GAAP adjusted net loss per share
attributable to common stockholders
Basic
$
(0.06
)
$
(0.29
)
$
(0.17
)
$
(0.80
)
Diluted
$
(0.06
)
$
(0.29
)
$
(0.17
)
$
(0.80
)
Cash and Liquidity as of June 30, 2021
As of June 30, 2021, the Company had $32.6 million in cash and
cash equivalents and working capital of approximately $30.5
million. The Company believes the cash and cash equivalents on the
Company’s balance sheet will fund its business activities through
the end of 2021 and into, but not beyond, the third quarter of
2022. In the second quarter of 2021 cash used in operating
activities was $4.1 million, or an average of $1.4 million per
month, compared to $6.6 million cash used in operating activities,
or an average of $2.2 million per month, in the first quarter of
2021 and compared to $11.6 million cash used in operating
activities, or an average of $3.9 million per month, in the second
quarter of 2020.
Conference Call and Webcast Details
The conference call can be accessed by calling 1-800-581-5838
(U.S. and Canada) or +44 (0)330 336 9104 (International), with
confirmation code 210912 and referencing “PolarityTE Second Quarter
2021 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. PolarityTE’s
products, including SkinTE, are in the development stage, and are
not approved or available for clinical use. 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, future clinical studies, 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.
POLARITYTE, the POLARITYTE logo, SKINTE, WHERE SELF REGENERATES
SELF and WELCOME TO THE SHIFT are registered trademarks of
PolarityTE, Inc.
POLARITYTE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in thousands,
except share and per share amounts)
June 30, 2021
December 31, 2020
ASSETS
Current assets
Cash and cash equivalents
$
32,614
$
25,522
Accounts receivable, net
2,042
3,819
Inventory
76
883
Prepaid expenses and other current
assets
2,286
992
Total current assets
37,018
31,216
Property and equipment, net
8,684
10,550
Operating lease right-of-use assets
1,756
2,452
Intangible assets, net
447
542
Goodwill
278
278
Other assets
227
472
TOTAL ASSETS
$
48,410
$
45,510
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued expenses
$
3,924
$
4,148
Other current liabilities
2,509
2,106
Current portion of long-term notes
payable
–
2,059
Deferred revenue
86
168
Total current liabilities
6,519
8,481
Common stock warrant liability
14,059
5,975
Operating lease liabilities
550
1,476
Other long-term liabilities
514
723
Long-term notes payable
–
1,517
Total liabilities
21,642
18,172
Commitments and Contingencies (Note
14)
STOCKHOLDERS’ EQUITY
Preferred stock - 25,000,000 shares
authorized, 0 shares issued and outstanding at June 30, 2021 and
December 31, 2020
–
–
Common stock – $.001 par value;
250,000,000 shares authorized; 80,742,443 and 54,857,099 shares
issued and outstanding at June 30, 2021 and December 31, 2020,
respectively
81
55
Additional paid-in capital
525,496
505,494
Accumulated deficit
(498,809
)
(478,211
)
Total stockholders’ equity
26,768
27,338
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
48,410
$
45,510
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 Six Months
Ended
June 30,
June 30,
2021
2020
2021
2020
Net revenues
Products
$
1,195
$
944
$
2,924
$
1,372
Services
1,342
1,322
4,322
1,827
Total net revenues
2,537
2,266
7,246
3,199
Cost of sales
Products
207
275
448
615
Services
717
607
2,641
783
Total cost of sales
924
882
3,089
1,398
Gross profit
1,613
1,384
4,157
1,801
Operating costs and expenses
Research and development
4,190
3,164
6,621
6,537
General and administrative
4,941
5,211
11,312
15,816
Sales and marketing
1,099
2,024
2,625
5,718
Restructuring and other charges
11
2,084
436
2,536
Total operating costs and expenses
10,241
12,483
20,994
30,607
Operating loss
(8,628
)
(11,099
)
(16,837
)
(28,806
)
Other income (expenses)
Gain on extinguishment of debt
3,612
–
3,612
–
Change in fair value of common stock
warrant liability
1,807
(1,591
)
(2,220
)
2,941
Inducement loss on sale of liability
classified warrants
–
–
(5,197
)
–
Interest expense, net
(39
)
(65
)
(77
)
(77
)
Other income, net
60
78
121
225
Net loss
$
(3,188
)
$
(12,677
)
$
(20,598
)
$
(25,717
)
Net loss per share attributable to
common stockholders
Basic
$
(0.04
)
$
(0.33
)
$
(0.26
)
$
(0.72
)
Diluted
$
(0.04
)
$
(0.33
)
$
(0.26
)
$
(0.72
)
Weighted average shares outstanding
Basic
80,602,931
38,428,289
78,392,881
35,724,141
Diluted
81,162,256
38,428,289
78,392,881
35,724,141
POLARITYTE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
thousands)
For the Six Months Ended June
30,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(20,598
)
$
(25,717
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
3,124
3,784
Depreciation and amortization
1,437
1,549
Amortization of intangible assets
95
95
Amortization of debt discount
–
13
Bad debt expense
134
–
Inventory write-off
697
–
Gain on extinguishment of debt – PPP
loan
(3,612
)
–
Change in fair value of common stock
warrant liability
2,220
(2,941
)
Inducement loss on sale of liability
classified warrants
5,197
–
Loss on restructuring and other
charges
269
–
Loss on abandonment of property and
equipment
–
1,529
Loss on sale of property and equipment
7
–
Other non-cash adjustments
–
(21
)
Changes in operating assets and
liabilities:
Accounts receivable
1,643
(384
)
Inventory
110
(29
)
Prepaid expenses and other current
assets
(1,294
)
(1,189
)
Operating lease right-of-use assets
666
899
Other assets
245
3
Accounts payable and accrued expenses
(221
)
(2,109
)
Other current liabilities
(14
)
9
Deferred revenue
(82
)
(1
)
Operating lease liabilities
(728
)
(903
)
Net cash used in operating activities
(10,705
)
(25,413
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equipment
(18
)
(1,170
)
Proceeds from sale of property and
equipment
10
–
Purchase of available-for-sale
securities
–
(14,144
)
Proceeds from maturities of
available-for-sale securities
–
16,945
Proceeds from sale of available-for-sale
securities
–
16,171
Net cash (used in) provided by investing
activities
(8
)
17,802
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from term note payable and
financing arrangements
1,028
4,629
Principal payments on term note payable
and financing arrangements
(359
)
(830
)
Principal payments on financing leases
(272
)
(243
)
Net proceeds from the sale of common stock
and warrants
–
24,276
Net proceeds from the sale of common
stock, warrants and pre-funded warrants
9,884
–
Proceeds from the sale of new warrants
1,002
–
Proceeds from warrants exercised
6,671
–
Proceeds from pre-funded warrants
exercised
8
–
Cash paid for tax withholdings related to
net share settlement
(188
)
(6
)
Proceeds from stock options exercised
3
31
Proceeds from ESPP purchase
28
40
Net cash provided by financing
activities
17,805
27,897
Net increase in cash and cash
equivalents
7,092
20,286
Cash and cash equivalents - beginning of
period
25,522
10,218
Cash and cash equivalents - end of
period
$
32,614
$
30,504
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210812005725/en/
Investors: Rich Haerle VP, Investor Relations PolarityTE,
Inc. ir@PolarityTE.com (385) 315-0697
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