Company to Hold Conference Call and Webcast
Today, Thursday, December 12, 2019 at 4:30 PM ET
Applied DNA Sciences, Inc. (NASDAQ: APDN) (“Applied DNA” or the
"Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA
manufacturing for product authenticity, traceability solutions and
nucleic acid-based biotherapeutic development today announced
consolidated financial results for the full fiscal year and quarter
ended September 30, 2019.
“In fiscal 2019 total revenues increased 38%, and total
operating expenses decreased by 5% as we sharpened our focus on our
ability to produce linear DNA at scale for our tagging, diagnostics
and preclinical biotherapeutic businesses,” said Dr. James A.
Hayward, chairman, president and CEO of Applied DNA.
Added Dr. Hayward, “Over the past year we focused on elevating
the Company’s profile for preclinical biotherapeutics and
diagnostic applications. With the Company’s unique ability –
approximately 130 patents and patents pending – to produce large
quantities of ultra-pure linear DNA, the Company’s linear DNA
manufacturing platform is a potential industry disrupter that
offers therapeutic developers a replacement to plasmid DNA that we
believe is cheaper, faster and easily scalable. Over the past 15
months, we developed a robust pipeline of more than 15 contract
research opportunities with top cancer, gene therapy, vaccine and
RNA partners, which is already generating initial revenue.”
“The recent acquisition of the assets and IP of Vitatex, Inc.
gives us a second compelling branch to the linear DNA story that we
believe lends itself to the diagnostics, prognostics and
therapeutics of invasive circulating tumor cells (iCTC). Within
just three months of acquisition, we signed an agreement with Tyme
Technologies, Inc. for the supply of our Vita-AssayTM iCTC capture
assay and associated services for iCTC detection in their pivotal
stage pancreatic cancer clinical trial. In addition, our protocols
for obtaining and studying iCTCs in colorectal cancer have recently
been approved by an Institutional Review Board.”
Continued Dr. Hayward, “Within our product authenticity and
traceability solutions segment, our textile business, led by an
experienced sales team, broadened awareness and adoption of our
CertainT platform. Expanding beyond our relationship with
Himatsingka for cotton home textiles, we established a technology
partnership that gives us entrée into the cotton apparel market. We
continued the global implementation of our tagging platform by
completing commercial scale pilots at approximately 20 textile
manufacturing sites using varied materials throughout China,
Southeast Asia and India. In synthetic textiles, brands and
retailers are increasingly relying on materials that offer high
performance, sustainability and transparency and the promise of
circular manufacturing. Our efforts have yielded strategic
alliances that position us alongside key participants along
multiple points in the global textile value chain to more broadly
drive adoption of our authentication technology platform. We have
begun to integrate our CertainT platform to provide end-to-end
material traceability to multiple related categories, including
leather, wool, down and feather, specialty coatings and additives,
recycled PET, viscose, and other synthetics. We believe we are well
positioned for uptake by brands and retailers.”
Concluded Dr. Hayward, “Looking ahead, we have set our sights on
generating top-line growth from our linear DNA manufacturing
platform, that should be driven by textiles and cannabis, as well
as biotherapeutic and diagnostics, as we begin to convert our
business-building activities in fiscal 2019 into pre-commercial and
commercial revenues in fiscal 2020. Having recently completed an
equity raise, re-established our compliance with the Nasdaq listing
requirements, and eliminated our Going Concern opinion, we have our
strongest balance sheet in years and the financial resources to
support a sustainable growth trajectory."
2019 Full Fiscal Year Financial Highlights:
- Revenues for fiscal 2019 totaled $5.4 million, an increase of
38% from $3.9 million from the prior fiscal year. The increase in
revenues was due to an increase in service revenues of $1.2
million, or 57%, and an increase in product revenues of $308
thousand, or 17%. The increase in revenue was primarily
attributable to an increase of $1 million from our now terminated
cannabis licensing agreement, as well as an $889 thousand increase
in textiles relating to shipments of DNA concentrate to protect the
cotton supply chain. These increases in revenue were offset by a
decrease in consumer asset marking sales.
- Effective October 1, 2018, the Company was required to adopt
Accounting Standards Update (ASU; the “Update”) No. 2014-09,
Revenue from Contracts with Customers (Topic 606), utilizing the
modified retrospective method. Had the Company not adopted the
Update, the Company would have recognized additional revenue of
approximately $915 thousand during fiscal 2019. This amount was
primarily comprised of the recognition of $766 thousand during the
twelve-month period ended September 30, 2019, under a $1.15 million
cotton order shipped in June 2018, with extended payment terms. The
total cumulative impact of the Update that was recorded to opening
retained earnings in fiscal 2019 was approximately $493 thousand.
See Cumulative Effect Adjustment and the Impact on Current Period
Financial Statements of Adopting Topic 606 attached.
- Operating expenses for the fiscal year ended September 30, 2019
decreased by $707 thousand or 5% as compared to the prior fiscal
year. The decrease is primarily attributable to approximately an
$890 thousand decrease in payroll, due to a realignment of the
sales force and reductions in overall headcount. This decrease in
payroll was offset by an increase in legal fees.
- Net loss for the twelve months ended September 30, 2019 was
$8.6 million or $9.69 per share, compared with a net loss of $11.7
million or $15.86 per share for the twelve months ended September
30, 2018, an improvement of 26%.
- Excluding non-cash expenses and interest, Adjusted EBITDA for
the fiscal year ended September 30, 2019 was a negative $7.6
million as compared to a negative $9.8 million for the prior fiscal
year, an improvement of 22%. See below for information regarding
non-GAAP measures.
Fiscal Fourth Quarter 2019 Financial Results:
- Revenues increased 40% for the fourth quarter of fiscal 2019 to
$1.7 million, compared with $1.2 million reported in the same
period of the prior fiscal year and decreased 19% from $2.1 million
for the third quarter of fiscal 2019. The increase in revenues year
over year was due primarily to an increase in product revenues from
shipments of DNA concentrate to protect the cotton supply chain.
The decrease in revenue quarter over quarter was due to the
recognition of $1 million in revenue from a licensing agreement in
the cannabis industry during the third fiscal quarter of fiscal
2019.
- Total operating expenses decreased to $3.2 million for the
fourth fiscal quarter of 2019, compared with $4.4 million in the
prior fiscal year’s fourth quarter. This decrease is primarily
attributable to an approximate $231 thousand decrease in payroll,
due to a realignment of the sales force and reductions in overall
headcount as well as a decrease of $954 thousand in stock-based
compensation expense.
- Net loss for the quarter ended September 30, 2019 was $1.2
million, or $1.44 per share, compared with a net loss of $3.5
million, or $4.62 per share, for the quarter ended September 30,
2018, an improvement of 69%, and a net loss of $1.5 million, or
$1.60 per share, for the quarter ended June 30, 2019.
- Excluding non-cash expenses, Adjusted EBITDA was negative $1.6
million and a negative $2.2 million for the quarters ended
September 30, 2019 and 2018, respectively. See below for
information regarding non-GAAP measures.
Select Recent Operational Highlights:
- On November 26, Applied DNA’s majority-owned subsidiary focused
on next-generation biotherapeutics and diagnostics, LineaRx, signed
a definitive agreement with Tyme Technologies, Inc. to supply the
Company’s Vita-AssayTM invasive Circulating Tumor Cell (iCTC)
capture assay and associated services for use in the pivotal stage
of the TYME-88-PANC clinical trial for patients with third-line
pancreatic cancer. The potential value of the Agreement is the
largest contract to-date for LineaRx, and we believe the largest in
the development history of the iCTC assay;
- On November 12, the Company announced the successful DNA
tagging of leather at one of the world’s largest tanneries based in
Asia. The work follows a successful research project undertaken
within the UK that demonstrated SigNature® DNA could be
successfully used to trace the hide of an animal from a farm to the
product in a store;
- On October 16, Applied DNA announced that it had entered into a
partnership with Molecular Isotope Technologies, LLC (“MIT LLC”), a
pioneer and leader in the application of natural-abundance
stable-isotopic analysis provided under the trademarks Nature’s
Fingerprint® and IsoPedigree™. MIT LLC’s technology utilizes stable
isotopic "fingerprints" as a method for verification of product
origin and supply chain processing to support product claims. MIT
LLC’s technology will be offered by Applied DNA as an additional
component of its CertainT® platform to tag, test and track raw
materials and finished goods. MIT LLC will support and promote the
CertainT platform as a service complementary to its own;
- On October 1, LineaRx announced that its invasive Circulating
Tumor Cells (iCTCs) platform demonstrated superior correlation over
Prostate Specific Antigen (PSA) in an ongoing Phase II trial in
recurrent prostate cancer. The Company believes that the study
shows that iCTCs may be used to accurately follow therapy success
in prostate cancer while also providing new tools for cell and gene
therapy design and production;
- On September 24, the Company announced that it received a $1
million order to supply SigNature® T taggant for cotton in the
upcoming 2019 – 2020 ginning season that began in October. The
Company’s SigNature T technology, paired with its genotyping and
digital systems, will be used to tag, test and track the Pima
cotton variety grown in the San Joaquin Valley, California that is
sold under the PimaCott® brand nationwide and online by the largest
home goods retailer in the U.S. Since 2014, and including the
cotton tagged with this order, over 250 million pounds of cotton
will have been tagged as the key to a total end-to-end traceability
solution that is substantiated by forensic test data;
- On September 19, LineaRx announced that its collaborators
Takis/Evvivax have completed pre-clinical animal studies of two
vaccine candidates produced with linear DNA. Tests of both vaccines
in mouse models demonstrated their ability to eliminate tumors in
vivo, and to potentially prevent initial occurrence. Clinical data
accumulated from linear DNA vaccines for companion animals can be
used to accelerate translation to human therapies by Evvivax and
Takis;
- On September 5, Applied DNA announced a sales and marketing
partnership with Navarpluma that extends the Company’s Textiles
business to include the global down and feather supply chain.
Navarpluma S.L., one of the world’s premier suppliers of down and
feathers to the textile industry, will be the first to offer this
new system to its customer base that counts some of the world’s
most prestigious brands as clients.
Fiscal Fourth Quarter 2019 Conference Call
Information
The Company will hold a conference call and webcast to discuss
its fiscal fourth quarter-end 2019 results on Thursday, December
12, 2019 at 4:30 PM ET. To participate on the conference call,
please follow the instructions below. While every attempt will be
made to answer investors’ questions on the Q&A portion of the
call, due to the large number of expected participants, not all
questions may be answered.
To Participate:
- Participant Toll Free:1-844-887-9402
- Participant Toll: 1-412-317-6798
- Please ask to be joined to the Applied DNA Sciences call
Live webcast:
https://services.choruscall.com/links/apdn190808.html
Replay (available 1 hour following the conclusion of the live
call through December 19, 2019):
- Participant Toll Free: 1-877-344-7529
- Participant Toll: 1-412-317-0088
- Participant Passcode: 10136194
- Webcast replay:
https://services.choruscall.com/links/apdn191212.html
For those investors unable to attend the live call, a copy of
management’s PowerPoint presentation will be available for review
under the ‘Events and Presentations’ section of the company’s
Investor Relations web site:
https://adnas.com/molecular-based-security/investors/
Information about Non-GAAP Financial Measures
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. To supplement our
condensed consolidated financial statements prepared and presented
in accordance with GAAP, this earnings release includes Adjusted
EBITDA, which is a non-GAAP financial measure as defined in Rule
101 of Regulation G promulgated by the Securities and Exchange
Commission. Generally, a non-GAAP financial measure is a numerical
measure of a company’s historical or future performance, financial
position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. The presentation of this non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information presented in accordance
with GAAP. We use this non-GAAP financial measure for internal
financial and operational decision making purposes and as a means
to evaluate period-to-period comparisons of the performance and
results of operations of our core business. Our management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding the performance of our business
by excluding non-cash expenses that may not be indicative of our
recurring operating results. We believe this non-GAAP financial
measure is useful to investors as they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making.
“EBITDA”- is defined as earnings (loss) before interest expense,
income tax expense and depreciation and amortization expense.
“Adjusted EBITDA”- is defined as EBITDA adjusted to exclude (i)
stock-based compensation and (ii) other non-cash expenses.
About Applied DNA Sciences
Applied DNA is a provider of molecular technologies that enable
supply chain security, anti-counterfeiting and anti-theft
technology, product genotyping, and pre-clinical nucleic acid-based
therapeutic drug candidates.
Applied DNA makes life real and safe by providing innovative,
molecular-based technology solutions and services that can help
protect products, brands, entire supply chains, and intellectual
property of companies, governments and consumers from theft,
counterfeiting, fraud and diversion.
Visit adnas.com for more information. Follow us on Twitter and
LinkedIn. Join our mailing list.
Common stock listed on NASDAQ under the symbol ‘APDN’.
Forward-Looking Statements
The statements made by Applied DNA in this press release may be
“forward-looking” in nature within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements describe Applied DNA’s future plans, projections,
strategies and expectations, and are based on assumptions and
involve a number of risks and uncertainties, many of which are
beyond the control of Applied DNA. Actual results could differ
materially from those projected due to our ability to successfully
enter into commercial contracts for the implementation of our
CertainT® platform, the possibility of failure to make timely
payment on its outstanding secured convertible notes and resulting
enforcement by noteholders of remedies on collateral which includes
substantially all of Applied DNA’s assets, the Company’s history of
net losses, limited financial resources, limited market acceptance,
the uncertainties inherent in research and development, future
clinical data and analysis, including whether any of Applied DNA’s
product candidates will advance further in the preclinical research
or clinical trial process, and various other factors detailed from
time to time in Applied DNA’s SEC reports and filings, including
our Annual Report on Form 10-K filed on December 12, 2019, and
other reports we file with the SEC, which are available at
www.sec.gov. Applied DNA undertakes no obligation to update
publicly any forward-looking statements to reflect new information,
events or circumstances after the date hereof to reflect the
occurrence of unanticipated events, unless otherwise required by
law.
Financial Tables Follow
APPLIED DNA SCIENCES,
INC.
CONSOLIDATED BALANCE
SHEETS
SEPTEMBER 30, 2019 AND
2018
September 30,
2019
2018
ASSETS
Current assets:
Cash and cash equivalents
$
558,988
$
1,659,564
Accounts receivable, net of allowance of
$4,500 and $13,133 at September 30, 2019 and 2018, respectively
839,951
1,485,938
Inventories
142,629
221,369
Prepaid expenses and other current
assets
604,740
635,174
Total current assets
2,146,308
4,002,045
Property and equipment, net
226,221
419,774
Other assets:
Deferred offering costs
109,698
-
Deposits
62,351
62,325
Goodwill
285,386
285,386
Intangible assets, net
734,771
864,203
Total Assets
$
3,564,735
$
5,633,733
LIABILITIES AND (DEFICIT)
EQUITY
Current liabilities:
Accounts payable and accrued liabilities
(including related party of $5,844 at September 30, 2018)
$
1,616,997
$
965,167
Deferred revenue
628,993
1,856,693
Total current liabilities
2,245,990
2,821,860
Long term accrued liabilities
621,970
470,739
Secured convertible notes payable, net of
debt issuance costs (including related party of $1,139,490 at
September 30, 2018)
1,442,447
1,586,631
Secured convertible notes payable, net of
debt issuance costs, recorded at fair value
102,777
-
Total liabilities
4,413,234
4,879,230
Commitments and contingencies
Applied DNA Sciences Inc. Stockholders’
(Deficit) Equity:
Preferred stock, par value $0.001 per
share; 10,000,000 shares authorized; -0- shares issued and
outstanding as of September 30, 2019 and 2018
-
-
Series A Preferred stock, par value $0.001
per share; 10,000,000 shares authorized; -0- issued and outstanding
as of September 30, 2019 and 2018
-
-
Series B Preferred stock, par value $0.001
per share; 10,000,000 shares authorized; -0- issued and outstanding
as of September 30, 2019 and 2018
-
-
Common stock, par value $0.001 per share;
500,000,000 shares authorized; 1,200,399 and 752,802 shares issued
and outstanding as of September 30, 2019 and 2018, respectively
1,200
753
Additional paid in capital
255,962,930
249,119,833
Accumulated deficit
(256,805,589
)
(248,366,083)
Applied DNA Sciences, Inc. stockholders’
(deficit) equity
(841,459)
754,503
Noncontolling interest
(7,040)
-
Total (deficit) equity
(848,499)
754,503
Total Liabilities and (Deficit) Equity
$
3,564,735
$
5,633,733
APPLIED DNA SCIENCES,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
YEARS ENDED SEPTEMBER 30, 2019
AND 2018
2019
2018
Revenues:
Product revenues
$
2,136,055
$
1,827,626
Service revenues
3,253,034
2,075,717
Total revenues
5,389,089
3,903,343
Cost of revenues
877,613
1,206,814
Operating expenses:
Selling, general and administrative
10,278,045
11,043,463
Research and development
2,967,278
2,751,578
Depreciation and amortization
390,424
547,796
Total operating expenses
13,635,747
14,342,837
LOSS FROM OPERATIONS
(9,124,271)
(11,646,308)
Other (expense) income:
Interest (expense) income, net (including
related party interest of $46,586 and $5,844 for the years ended
September 30, 2019 and 2018, respectively)
(162,432
)
(9,615)
Other expense, net
(43,299
)
(37,005)
Loss on extinguishment of debt
(1,260,399
)
-
Unrealized gain on change in fair value of
secured convertible notes payable
1,972,955
-
Loss before provision for income taxes
(8,617,446)
(11,692,928)
Provision for income taxes
15,000
-
NET LOSS
$
(8,632,446
)
$
(11,692,928)
Less: Net loss attributable to
noncontolling interest
9,323
-
NET LOSS attributable to Applied DNA
Sciences, Inc.
$
(8,623,123)
$
(11,692,928)
Deemed dividend related to warrant
modifications
(309,607)
-
NET LOSS applicable to common
stockholders
$
(8,932,730)
$
(11,692,928)
Net loss per share attributable to common
stockholders-basic and diluted
$
(9.69
)
$
(15.86)
Weighted average shares outstanding-basic
and diluted
921,809
737,441
APPLIED DNA SCIENCES,
INC.
CALCULATION AND RECONCILIATION
OF ADJUSTED EBITDA
(unaudited)
Three Months Ended September
30,
Twelve Months Ended September
30,
2019
2018
2019
2018
Net Loss
$
(1,224,137)
$
(3,475,282)
$
(8,623,123)
$
(11,692,928)
Interest expense (income), net
55,226
9,615
162,432
9,615
Depreciation and amortization
70,385
124,452
390,424
547,796
Loss on extinguishment of debt
1,260,399
-
1,260,399
-
Change in fair value of convertible notes
payable
(1,972,955)
-
(1,972,955)
-
Stock based compensation expense
(income)
217,468
1,171,657
1,129,110
1,356,351
Income tax expense
15,000
-
15,000
-
Bad debt expense
16,281
-
7,648
20,552
Total non-cash items
(338,196)
1,305,724
992,058
1,934,314
Consolidated Adjusted EBITDA (loss)
$
(1,562,333)
$
(2,169,558)
$
(7,631,065)
$
(9,758,614)
APPLIED DNA SCIENCES,
INC.
CUMULATIVE EFFECT ADJUSTMENT
AND THE IMPACT ON CURRENT PERIOD FINANCIAL STATEMENTS OF ADOPTING
TOPIC 606
Fiscal Year ended September
30, 2019
Prior U.S. GAAP
Topic 606 impact
As reported
Statement of Operations
Revenues
Product
$
2,902,247
$
(766,192)
$
2,136,055
Service
3,402,138
(149,104
)
3,253,034
Total revenues
6,304,385
(915,296
)
5,389,089
Cost of revenues
884,281
(6,668)
877,613
Loss from operations
(8,215,643
)
(908,628)
(9,124,271)
Assets
Prepaids and other current assets
$
611,408
$
(6,668)
$
604,740
Liabilities and equity
Deferred Revenue
$
802,107
$
(173,114)
$
628,993
Accumulated Deficit
(256,805,589
)
-
(256,805,589)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191212005745/en/
Investors: Sanjay M. Hurry, 212-838-3777, LHA Investor
Relations, shurry@lhai.com Web: www.adnas.com
Twitter: @APDN
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