First Quarter 2021 Total Revenues of $4.71
million Compared to $3.59 million in Fourth Quarter of 2020
PolarityTE to host conference call and webcast
today, May 13, 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
first quarter ended March 31, 2021.
Business Update
- Reiterates previous guidance on Investigational New Drug (IND)
submission in 2H:21
- Plans to wind down commercial sales of SkinTE® consistent with
FDA enforcement discretion period ending on May 31, 2021
- Expects substantial spending cuts in connection with the end of
commercial operations and confident in ability to manage cash
effectively
- Reported positive top-line data from full 100 patient dataset
of SkinTE diabetic foot ulcer (DFU) randomized controlled trial
(RCT)
- Announced publication of complete interim analysis data from
DFU RCT in the International Wound Journal
Operating Highlights for the Quarter
Ended March 31, 2021
- Total revenues were $4.71 million in Q1:21 compared to $3.59
million in Q4:20, representing a 31% increase quarter over
quarter
- SkinTE revenues were $1.73 million in Q1:21 compared to
$1.20million in Q4:20, representing a 44% increase quarter over
quarter (these revenues are not expected to recur in future
reporting periods due to wind down of commercial operations)
- Contract services revenues were $2.98 million in Q1:21 compared
to $2.39 million in Q4:20, representing a 25% increase quarter over
quarter
- Contract services revenues for Q1:21 includes $1.69 million
from COVID-19 related testing (these revenues are expected to
decrease in future reporting periods due to the loss of a
significant customer, which has not and may not be replaced)
- Operational cash burn for Q1:21 was $6.61 million representing
a 52% reduction from Q1:20, and includes $0.82 million of offering
costs associated with capital raises in January 2021.
SkinTE Biologic License Application
(BLA) Update
PolarityTE continues to make strong progress with its pursuit of
a BLA for SkinTE and is reiterating its guidance on the submission
of an IND to the FDA in the second half of 2021. In connection with
this transition to the BLA pathway and based on the FDA’s recent
announcement that enforcement discretion related to 361 HCT/P
products will not be extended beyond May 31, 2021, the Company will
cease commercial sales of SkinTE and wind down commercial
operations. The Company is planning to make substantial reductions
in the costs associated with its commercial operations, which will
mitigate the effect on cash flow resulting from the loss of SkinTE
revenues.
David Seaburg, Chief Executive Officer, commented, “The decision
to wind down our commercial effort is based on the end of FDA’s
stated period of enforcement discretion, and given our pending IND
submission, to complete our transition to a clinical stage biotech
company. I am incredibly grateful to the commercial team for what
they have achieved through their dedication to SkinTE, and to the
many providers who have successfully treated patients suffering
from debilitating wounds of various types. With a limited team of
just eight sales representatives, we reported record SkinTE sales
of $1.73 million in the first quarter of 2021. This is not only a
testament to the true potential of SkinTE, but to the amazing
talent of all those involved with the product.” Mr. Seaburg
continued, “Because many HCPs have already witnessed the benefits
SkinTE can offer patients with challenging, hard to heal wounds, we
are committed to exploring opportunities for physicians to continue
to treat patients in need through compassionate use programs, such
as FDA’s Expanded Access IND program.”
Richard Hague, President & COO, commented, “Our team firmly
believes that a successful BLA for SkinTE will create a highly
valuable asset based on the clinical data that will support our
eventual BLA submission, which should drive widespread adoption,
enable favorable payer coverage and clear marketing claims, and
provide regulatory exclusivity if SkinTE is deemed a reference
product. With over 1,200 clinical uses of SkinTE to date and many
positive outcomes, we look forward to submitting an IND and
commencing the clinical trials that will support our BLA, so that
many more patients can benefit from treatment with SkinTE.”
Financial Results for the Quarter Ended March 31,
2021
Net revenues increased by 405% to $4.71 million for the
three-month period ended March 31, 2021, compared to $0.93 million
for the same period 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. During the first quarter of 2021 the average wound size
treated with SkinTE was 637 cm2 compared to 62 cm2 in the first
quarter of 2020, which corresponds with the difference in revenue
between those periods. The increase in net revenues for services
was the result of new COVID-19 testing services we began to offer
through our Arches Research, Inc. subsidiary at the end of May
2020, which we did not offer in the first three months of 2020.
Total operating costs and expenses decreased to $10.75 million
for the three-month period ended March 31, 2021, compared to $18.12
million for the same period in 2020, a decrease of 41%. The
decrease is largely attributable to the substantial reduction in
personnel effectuated in May 2020 that reduced salary and benefit
costs across the Company. Salary and benefits totaled $3.86 million
for the first three months of 2021 compared to $6.67 million for
the same period in 2020, a decrease of 42%. Severance expenses
decreased from $495,000 in the first quarter of 2020 to $4,000 in
the first quarter of 2021. Stock-based compensation decreased 49%
from $3.22 million in the first quarter of 2020 to $1.65 million in
the first quarter of 2021. In addition to the reduction of salary
and benefit costs, the following significant changes also
contributed to the decrease in operating costs and expenses, which
are a consequence of our reduction of personnel and adjustment of
our operating activities that began in May 2020:
- Travel and related costs decreased from $0.525 million in the
first quarter of 2020 to $0.123 million in the first quarter of
2021;
- Issuance costs, which are included in operating expenses,
decreased from $1.156 million in the first quarter of 2020 to
$0.824 million in the first quarter of 2021;
- Consulting costs, including legal, accounting, and audit fees,
decreased from $1.301 million in the first quarter of 2020 to
$0.897 million in the first quarter of 2021;
- Promotional consulting and expense decreased from $0.701
million in the first quarter of 2020 to $0.045 million in the first
quarter of 2021;
- Lease expenses for our corporate office facility was $0.119
million in the first quarter of 2020, which did not recur in the
first quarter of 2021 because the lease expired in 2020.
In connection with discontinuing commercial sales of SkinTE, we
recorded as a restructuring charge a loss on impairment of property
and equipment in the amount of $0.425 million during the first
quarter of 2021, while the $0.452 million of restructuring and
other charges in the first quarter of 2020 were severance costs
arising from a reduction in force in March 2020.
Our operating loss decreased from an operating loss of $17.71
million for the three-month period ended March 31, 2020, to an
operating loss of $8.21 million for the comparable period in 2021.
Net loss, however, increased from $13.04 million for the
three-month period ended March 31, 2020, to $17.41 million for the
comparable period in 2021. The increase in net loss is attributable
to the change in fair value of common stock warrant liability and
warrant inducement loss.
The table below shows adjusted net loss, which is a non-GAAP
measure that shows net loss before fair value adjustments relating
to our common stock warrant liability and warrant inducement loss.
We believe 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 would be 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 March
31,
2021
2020
GAAP Net loss
$
(17,410
)
$
(13,040
)
Change in fair value of common stock
warrant liability
4,027
(4,532
)
Inducement loss on sale of liability
classified warrants
5,197
–
Non-GAAP Adjusted net loss attributable to
common stockholders
$
(8,186
)
$
(17,572
)
GAAP net loss per share attributable to
common stockholders
Basic
$
(0.23
)
$
(0.39
)
Diluted
$
(0.24
)
$
(0.39
)
Non-GAAP adjusted net loss per share
attributable to common stockholders
Basic
$
(0.11
)
$
(0.53
)
Diluted
$
(0.12
)
$
(0.53
)
Cash and Liquidity as of March 31, 2021
As of March 31, 2021, we had $37.2 million in cash and cash
equivalents and working capital of approximately $34.5 million.
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 at least for
the next 12 months.
Cash used in operating activities for the three-month period
ended March 31, 2021 was approximately $6.61 million, which
included $0.82 million of offering costs. 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 costs. The higher quarter over quarter cash burn is
attributable to annual prepaid expenses paid in the first quarter
of the year, such as insurance.
Conference Call and Webcast Details
The conference call can be accessed by calling 1-800-377-1217
(U.S. and Canada) or +44 (0)330 027 2386 (International), with
confirmation code 231666 and referencing “PolarityTE First 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. 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, 2021
December 31, 2020
ASSETS
Current assets
Cash and cash equivalents
$
37,237
$
25,522
Accounts receivable, net
4,320
3,819
Inventory
373
883
Prepaid expenses and other current
assets
2,631
992
Total current assets
44,561
31,216
Property and equipment, net
9,414
10,550
Operating lease right-of-use assets
2,087
2,452
Intangible assets, net
495
542
Goodwill
278
278
Other assets
227
472
TOTAL ASSETS
$
57,062
$
45,510
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable and accrued expenses
$
4,295
$
4,148
Other current liabilities
3,039
2,106
Current portion of long-term notes
payable
2,508
2,059
Deferred revenue
207
168
Total current liabilities
10,049
8,481
Common stock warrant liability
15,866
5,975
Operating lease liabilities
1,142
1,476
Other long-term liabilities
596
723
Long-term notes payable
1,068
1,517
Total liabilities
28,721
18,172
Commitments and Contingencies (Note
13)
STOCKHOLDERS’ EQUITY
Preferred stock - 25,000,000 shares
authorized, 0 shares issued and outstanding at March 31, 2021 and
December 31, 2020
–
–
Common stock – $.001 par value;
250,000,000 shares authorized; 80,316,309 and 54,857,099 shares
issued and outstanding at March 31, 2021 and December 31, 2020,
respectively
80
55
Additional paid-in capital
523,882
505,494
Accumulated deficit
(495,621
)
(478,211
)
Total stockholders’ equity
28,341
27,338
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
57,062
$
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
March 31,
2021
2020
Net revenues
Products
$
1,729
$
428
Services
2,980
505
Total net revenues
4,709
933
Cost of sales
Products
241
340
Services
1,924
176
Total cost of sales
2,165
516
Gross profit
2,544
417
Operating costs and expenses
Research and development
2,431
3,373
General and administrative
6,371
10,605
Sales and marketing
1,526
3,694
Restructuring and other charges
425
452
Total operating costs and expenses
10,753
18,124
Operating loss
(8,209
)
(17,707
)
Other income (expenses)
Change in fair value of common stock
warrant liability
(4,027
)
4,532
Inducement loss on sale of liability
classified warrants
(5,197
)
–
Interest expense, net
(38
)
(12
)
Other income, net
61
147
Net loss
$
(17,410
)
$
(13,040
)
Net loss per share attributable to
common stockholders
Basic
$
(0.23
)
$
(0.39
)
Diluted
$
(0.24
)
$
(0.39
)
Weighted average shares outstanding
Basic
76,158,275
33,019,994
Diluted
76,396,078
33,019,994
POLARITYTE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
thousands)
For the Three Months Ended
March 31,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss
$
(17,410
)
$
(13,040
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
1,651
3,221
Depreciation and amortization
701
752
Amortization of intangible assets
47
48
Amortization of debt discount
–
8
Bad debt expense
97
–
Change in inventory reserve
391
–
Change in fair value of common stock
warrant liability
4,027
(4,532
)
Inducement loss on sale of liability
classified warrants
5,197
–
Loss on restructuring and other
charges
425
–
Loss on sale of property and equipment
7
–
Other non-cash adjustments
–
(16
)
Changes in operating assets and
liabilities:
Accounts receivable
(598
)
545
Inventory
119
19
Prepaid expenses and other current
assets
(1,639
)
(1,543
)
Operating lease right-of-use assets
328
448
Other assets
245
4
Accounts payable and accrued expenses
138
818
Other current liabilities
(15
)
(61
)
Deferred revenue
39
(75
)
Operating lease liabilities
(360
)
(450
)
Net cash used in operating activities
(6,610
)
(13,854
)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equipment
(12
)
(999
)
Proceeds from sale of property and
equipment
10
–
Purchase of available-for-sale
securities
–
(14,144
)
Proceeds from maturities of
available-for-sale securities
–
15,945
Proceeds from sale of available-for-sale
securities
–
16,171
Net cash (used in) provided by investing
activities
(2
)
16,973
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from term note payable and
financing arrangements
1,028
1,053
Principal payments on term note payable
and financing arrangements
(9
)
(55
)
Principal payments on financing leases
(135
)
(123
)
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
(125
)
(2
)
Proceeds from stock options exercised
3
31
Net cash provided by financing
activities
18,327
25,180
Net increase in cash and cash
equivalents
11,715
28,299
Cash and cash equivalents - beginning of
period
25,522
10,218
Cash and cash equivalents - end of
period
$
37,237
$
38,517
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210513005796/en/
Investors: Rich Haerle VP, Investor Relations PolarityTE,
Inc. ir@PolarityTE.com (385) 315-0697
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