PolarityTE Reports First Quarter 2020 Results

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PolarityTE, Inc. 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.

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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

 

 

$

 

 

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