Fourth Quarter Revenues of $3.59 million and
Full Year 2020 Revenues of $10.13 million
PolarityTE to host conference call and webcast
today, March 30, 2021 at 8:00 a.m. ET
PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company
developing regenerative tissue products and biomaterials, today
reported financial results for the fourth quarter and fiscal year
ended December 31, 2020.
David Seaburg, Chief Executive Officer, commented, “2020 was a
transformational year for PolarityTE as we made the decision to
pursue an IND and BLA for SkinTE. If we successfully obtain a BLA
for SkinTE, we believe it will create a more valuable asset with a
greater likelihood of achieving widespread commercial adoption
bolstered by robust clinical data, which should have a positive
effect on stockholder value. As a result of this change in
direction, we reduced our commercial operations in May 2020 and
have realized a substantial reduction in our operating expenses.
This cost savings coupled with our recent capital raises means we
have the resources to pursue the FDA regulatory process and fund
our operations well into 2022. Our team weathered COVID-19’s
headwinds to our SkinTE business and leveraged our internal
resources to build out our testing business, allowing us to defray
expenses and support the public health effort to combat the
pandemic. We have also made great progress towards our planned IND
submission, which we remain on track to file in the second half of
2021. I am proud of what we have accomplished over the past year,
and look forward to what the future holds for PolarityTE and all of
our stakeholders.”
Recent Business
Highlights
- Raised $25.67 million of capital (before offering costs) from a
single healthcare-dedicated institutional investor in December 2020
and January 2021
- Submitted a Type B Pre-IND meeting request to FDA for SkinTE
and received written responses in October 2020
- In February 2021, U.S. Patent No. 10,926,001 issued, and U.S.
Application No. 16/165,169 was allowed. The granted and allowed
claims pertain to methods of making compositions for regenerating
functional skin tissue, and related methods of treatment. The
Company’s total number of allowed and granted utility patents is
currently ten—eight internationally and two in the U.S.
- Final patient enrolled in our multicenter, randomized
controlled trial evaluating SkinTE plus standard of care versus
standard of care alone in treatment of diabetic foot ulcers in
January 2021, with top-line results expected to be announced at the
Symposium on Advanced Wound Care (SAWC) Spring Conference in May
2021
Operating Highlights for the Year Ended
December 31, 2020
- Total revenues were $10.13 million for FY:20 compared to $5.65
million for FY:19, representing a 79% increase year over year
- SkinTE revenues were $3.73 million for FY:20 compared to $2.35
million for FY:19, representing a 59% increase year over year
- Contract services revenues were $6.40 million for FY:20
compared to $3.30 million for FY:19, representing a 94% increase
year over year
- Contract services revenues for FY:20 includes $4.32 million
from COVID-19 test processing that began in late May of 2020
- Operational cash burn for FY:20 was $37.75 million which is a
reduction of $18.89 million from FY:19, representing a 33% decrease
year over year
Operating Highlights for the Quarter
Ended December 31, 2020
- Total revenues were $3.59 million in Q4:20 compared to $3.34
million in Q3:20, representing an 8% increase quarter over
quarter
- SkinTE revenues were $1.20 million in Q4:20 compared to $1.16
million in Q3:20, representing a 4% increase quarter over
quarter
- Contract services revenues were $2.39 million in Q4:20 compared
to $2.18 million in Q3:20, representing a 9% increase quarter over
quarter
- Contract services revenues for Q4:20 includes $1.86 million
from COVID-19 testing processing
- Operational cash burn for Q4:20 was $4.82 million, excluding
$0.76 million of offering and warrant repricing expenses, which
represents a 70% reduction from Q4:19 and 29% reduction from
Q3:20
Financial Results for the Year Ended December 31,
2020
Net revenues increased by 79% to $10.13 million in 2020. The
increase in net revenues for sale of products was the result of a
sales strategy adopted in May 2020 to focus on regions and
facilities where we had repeat users of SkinTE. For 2020 the
average wound size treated with SkinTE was 219 cm2 compared to 120
cm2 in 2019, which corresponds with the difference in revenue
between those years. The increase in net revenues for services was
the result of $4.32 million in new COVID-19 testing services we
began to offer through Arches Research at the end of May 2020. In
2019 services net revenues was derived primarily from pre-clinical
testing services provided through IBEX Preclinical Research, which
were adversely impacted by COVID-19 in 2020.
Total operating costs and expenses decreased to $51.64 million
in 2020 from $96.57 million in 2019, or 47%. This is the most
significant change in our results of operations period over period
and is attributable to the 46% reduction in personnel from the end
of 2019 to the end of 2020. The reduction in personnel
substantially reduced salary and benefit costs across the Company.
Salary and benefits totaled $19.72 million in 2020 compared to
$28.81 million in 2019. In addition, stock-based compensation
decreased by 77% from $31.40 million in 2019 to $7.26 million in
2020. The decrease in salary and benefits in 2020 accounts for 20%
of the decrease in total operating costs and expenses in 2020
compared to 2019. The decrease in stock-based compensation in 2020
accounts for 54% of the decrease in total operating costs and
expenses in 2020 compared to 2019. The reduction in personnel also
allows us to make incremental reductions in the cost of
infrastructure required to support the activities of employees.
Research and development expenses decreased by 30% in 2020 to
$11.53 million, which is attributable to the reduction in salary
and benefits and stock compensation costs from 2019.
General and administrative expenses decreased by 56% in 2020 to
$27.56 million. In addition to reductions in salary and benefits
and stock compensation costs from 2019, travel and related costs
decreased to $0.24 million in 2020 from $1.32 million in 2019.
Expenses for our leased facilities were $2.09 million in 2020.
Sales and marketing expenses decreased by 49% in 2020 to $8.72
million. In addition to reductions in salary and benefits and stock
compensation costs from 2019, promotional consulting and expense
was reduced to $0.83 million in 2020 from $5.27 in 2019, and travel
and related costs decreased to $0.44 million in 2020 from $1.44
million in 2019.
Net loss for the year ended December 31, 2020 was $42.85 million
compared with a net loss of $92.49 million for the year ended
December 31, 2019.
Cash and Liquidity as of December 31, 2020
As of December 31, 2020, we had $25.52 million in cash and cash
equivalents. In January 2021, we raised an additional $17.67
million in gross proceeds before offering expenses in a registered
direct offering and through a warrant exercise agreement. Based on
currently available information as of the date we file this press
release, we believe that our existing cash and cash equivalents
will be sufficient to fund our activities through the end of 2021
and into the third quarter of 2022. However, our projections of
future cash needs may differ from actual results.
Cash used in operating activities for the three-month period
ended December 31, 2020 was approximately $5.58 million, which
included $0.76 million of offering and repricing costs, or $4.82
million excluding offering and repricing costs or approximately
$1.61 million per month on average, 70% lower than the $5.33
million monthly average in the three months ended December 31, 2019
and 29% lower than the $2.25 million monthly average in the three
months ended September 30, 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 363305 and referencing “PolarityTE Fiscal Year
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
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
(in thousands, except share and per share amounts)
December 31, 2020
December 31, 2019
ASSETS
Current assets
Cash and cash equivalents
$
25,522
$
10,218
Short-term investments
–
19,022
Accounts receivable, net
3,819
1,731
Inventory
883
252
Prepaid expenses and other current
assets
992
1,264
Total current assets
31,216
32,487
Property and equipment, net
10,550
14,911
Operating lease right-of-use assets
2,452
4,590
Intangible assets, net
542
731
Goodwill
278
278
Other assets
472
602
TOTAL ASSETS
$
45,510
$
53,599
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued expenses
$
4,148
$
7,095
Other current liabilities
2,106
2,338
Current portion of long-term note
payable
2,059
528
Deferred revenue
168
98
Total current liabilities
8,481
10,059
Common stock warrant liability
5,975
–
Operating lease liabilities
1,476
2,994
Other long-term liabilities
723
1,630
Long-term notes payable
1,517
–
Total liabilities
18,172
14,683
Commitments and Contingencies (Note
17)
STOCKHOLDERS’ EQUITY
Preferred stock – 25,000,000 shares
authorized, 0 shares issued and outstanding at December 31, 2020
and 2019
–
–
Common stock - $.001 par value;
250,000,000 shares authorized; 54,857,099 and 27,374,653 shares
issued and outstanding at December 31, 2020 and 2019,
respectively
55
27
Additional paid-in capital
505,494
474,174
Accumulated other comprehensive income
–
72
Accumulated deficit
(478,211
)
(435,357
)
Total stockholders’ equity
27,338
38,916
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
45,510
$
53,599
POLARITYTE, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except share and per share
amounts)
For the Year Ended December
31,
For the Year Ended December
31,
2020
2019
Net revenues
Products
$
3,730
$
2,353
Services
6,396
3,299
Total net revenues
10,126
5,652
Cost of sales
Products
1,068
1,365
Services
3,356
1,114
Total costs of sales
4,424
2,479
Gross profit
5,702
3,173
Operating costs and expenses
Research and development
11,532
16,397
General and administrative
27,557
63,189
Sales and marketing
8,719
16,980
Restructuring and other charges
3,834
–
Total operating costs and expenses
51,642
96,566
Operating loss
(45,940
)
(93,393
)
Other income (expense), net
Change in fair value of common stock
warrant liability
2,914
–
Interest (expense) income, net
(182
)
151
Other income, net
354
749
Net loss
$
(42,854
)
$
(92,493
)
Net loss per share attributable to
common stockholders
Basic
$
(1.11
)
$
(3.70
)
Diluted
$
(1.16
)
$
(3.70
)
Weighted average shares outstanding
Basic
38,779,316
24,966,355
Diluted
39,367,390
24,966,355
POLARITYTE, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands)
For the Year Ended December
31,
For the Year Ended December
31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(42,854
)
$
(92,493
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
7,258
31,402
Depreciation and amortization
3,074
2,992
Change in allowance for doubtful
accounts
148
26
Change in fair value of common stock
warrant liability
(2,914
)
–
Amortization of intangible assets
189
193
Amortization of debt discount
19
49
Change in fair value of contingent
consideration
–
(36
)
Loss on abandonment of property and
equipment and ROU assets
2,806
914
Other non-cash adjustments
(21
)
20
Changes in operating assets and
liabilities:
Accounts receivable
(2,236
)
(1,045
)
Inventory
(631
)
84
Prepaid expenses and other current
assets
272
193
Operating lease right-of-use assets
1,700
1,651
Other assets/liabilities, net
(200
)
(249
)
Accounts payable and accrued expenses
(2,761
)
1,269
Other current liabilities
35
32
Deferred revenue
70
(72
)
Operating lease liabilities
(1,708
)
(1,578
)
Net cash used in operating activities
(37,754
)
(56,648
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equipment
(1,339
)
(2,773
)
Purchase of available-for-sale
securities
(14,144
)
(40,072
)
Proceeds from maturities of
available-for-sale securities
16,945
23,327
Proceeds from sale of available-for-sale
securities
16,171
3,901
Net cash provided by/(used in) investing
activities
17,633
(15,617
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from term note payable and
financing arrangements
4,629
–
Principal payments on term note payable
and financing arrangements
(1,675
)
(534
)
Payment of contingent consideration
liability
–
(225
)
Principal payments on financing leases
(508
)
(453
)
Net proceeds from the sale of common
stock, warrants and pre-funded warrants
32,020
28,073
Proceeds from warrants exercised
1,008
–
Cash paid for tax withholdings related to
net share settlement
(155
)
(679
)
Proceeds from stock options exercised
31
529
Proceeds from ESPP purchase
75
99
Net cash provided by financing
activities
35,425
26,810
Net increase/(decrease) in cash and cash
equivalents
15,304
(45,455
)
Cash and cash equivalents - beginning of
period
10,218
55,673
Cash and cash equivalents - end of
period
$
25,522
$
10,218
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210330005206/en/
Investors: Rich Haerle VP, Investor Relations PolarityTE,
Inc. ir@PolarityTE.com (385) 315-0697
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