Applied DNA Announces Third Quarter Fiscal Year 2024 Financial Results

Rhea-AI Summary

Applied DNA Sciences (NASDAQ:APDN) announced its Q3 FY2024 financial results, revealing a revenue decline to $798,000 from $2.9 million in Q3 FY2023. The decrease was primarily due to the conclusion of a COVID-19 testing contract. Gross profit fell to $245,000 with a 31% margin, down from $1.3 million and 44% margin in the prior year. Operating expenses decreased to $3.6 million, while the operating loss increased to $3.3 million. The company ended the quarter with $10.4 million in cash, bolstered by a recent $10.5 million public offering.

Despite financial challenges, Applied DNA reported progress in its business segments. The company is on track to launch a GMP facility for Linea™ IVT templates, secured new customers for its Linea™ IVT platform, and established a potential $25 million annual revenue opportunity for its TR8™ PGx testing service. The company also entered a multi-year commercialization agreement with Indus Group for its CertainT® platform.

Positive

• On track to launch GMP facility for Linea™ IVT templates with capacity to produce up to 15 million mRNA vaccine doses annually
• Secured new customers and evaluations for Linea™ IVT platform
• Established TR8™ PGx testing service with potential $25 million annual revenue opportunity
• Entered multi-year commercialization agreement with Indus Group for CertainT® platform
• Strengthened balance sheet with $10.5 million raised through public offering

Negative

• Revenue declined 72.5% year-over-year to $798,000
• Gross profit decreased to $245,000 from $1.3 million in the prior year
• Gross profit margin fell to 31% from 44% in Q3 FY2023
• Operating loss increased to $3.3 million from $2.9 million in the prior year
• Adjusted EBITDA worsened to negative $3.2 million from negative $2.1 million in Q3 FY2023

Insights

Financial Analyst

Applied DNA's Q3 FY2024 results show significant revenue decline to $798,000 from $2.9 million in Q3 FY2023, primarily due to the end of a COVID-19 testing contract. The gross profit margin decreased to 31% from 44%. Despite reduced operating expenses, the company's loss from operations increased to $3.3 million.

However, the company's cash position improved to $10.4 million, bolstered by a $10.5 million public offering. This strengthened balance sheet provides runway for upcoming initiatives. The company is pivoting towards new revenue streams, including GMP manufacturing of Linea™ IVT templates and TR8™ PGx testing services, which could potentially generate significant revenue in FY2025.

Biotech Industry Analyst

Applied DNA's transition from COVID-19 testing to therapeutic DNA production and pharmacogenetic testing is strategically sound. The company's GMP facility for Linea™ IVT templates, set to launch by FY24 end, positions it well in the growing mRNA therapeutics market. With capacity to produce up to 15 million mRNA vaccine doses annually, this could be a significant revenue driver.

The TR8™ PGx testing service also shows promise, with a potential $25 million annual revenue opportunity at full utilization. However, investors should note that realizing this potential depends on successful commercialization and market adoption. The multi-year agreement with Indus Group for DNA tagging services adds another potential growth avenue, though its impact remains to be seen.

- Conference Call/Webcast Scheduled for Today at 4:30 PM ET -

STONY BROOK, NY / ACCESSWIRE / August 8, 2024 / Applied DNA Sciences, Inc. (NASDAQ:APDN) ("Applied DNA" or the "Company"), a leader in PCR-based DNA technologies, today announced consolidated financial results for its third fiscal quarter ended June 30, 2024. The Company's Form 10-Q can be viewed at https://investors.adnas.com/sec-filings/.

Third Quarter Operational Highlights and Corporate Updates:

LineaRx (Therapeutic DNA Production Services)

GMP roadmap execution:

• On schedule for the FY24 year-end launch of a GMP facility for the manufacture of Linea™ IVT templates with an initial annual manufacturing capacity of over five (5) grams that is sufficient to produce up to 15 million doses of mRNA vaccine[1].

Linea™ IVT template commercialization:

• Selected as an approved GMP vendor by two customers. A third customer approval is pending.

• GMP production runs are expected to begin in early CY25 to supply clinical trial materials to existing customers.

• Recorded multiple successful customer evaluations of Linea IVT templates for conventional mRNA and self-amplifying mRNA (sa-mRNA).

Linea™ IVT platform commercialization:

• Gained two new Linea™ IVT platform (Linea DNA + Linea™ RNAP) evaluation customers consisting of a multi-national biopharma company and a large, APAC-based CDMO.

Linea™ DNA commercialization for IVT diagnostics:

• Shipped part of a multigram Linea DNA order for use in a cancer diagnostic application to a multi-national, repeat customer.

Applied DNA Clinical Labs (MDx Testing Services)

TR8™ PGx testing service commercialization:

• Established testing capacity that at full utilization equates to a potential annual revenue opportunity of over $25 million[2].

• Secured expansion of CLEP/CLIA laboratory permit authorizing genetic (molecular) testing.

• Received full approval from the New York State Department of Health for pharmacogenetic (PGx) testing service.

• Targeting concierge doctor practices for initial service launch with planned expansion to enterprise customers in early CY25.

DNA Tagging and Security Products and Services

Broader CertainT® platform commercialization:

• Entered into a multi-year commercialization agreement with no minimum purchase commitment with Indus Group after the close of FQ3. Indus is a multi-national apparel manufacturing and sourcing company that utilizes an average of 450 million pounds of cotton annually.

• Anticipate receipt of first purchase order before FY24 year-end.

• CertainT platform to scale to multiple spinning facilities contingent on Indus demand.

Management Commentary

James A. Hayward, Ph.D., president and CEO of Applied DNA, stated, "FQ3 was characterized by strong execution across all three business segments. With a talented team and a strengthened balance sheet, we believe we are approaching key inflection points in each of our three business segments to drive total revenue growth year-over-year starting in the first half of fiscal 2025."

[1] Based on internal company assumptions and modeling using a 1/100 DNA-to-RNA amplification ratio and an mRNA vaccine dose of 30μg. Manufacture of the final mRNA drug substance will be conducted by therapy developers or their CDMO.

[2] Based on company internal modeling using currently forecasted capacity and projected unit price.

Summary Third Quarter Fiscal 2024 Financial Results:

Note: On April 25, 2024, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the Secretary of State of the State of Delaware that effected a one-for-twenty (1:20) reverse stock split of its common stock, par value $.001 per share, effective April 25, 2024. All warrant, option, share, and per share information in this press release gives retroactive effect to a one-for-twenty reverse stock split that was affected on April 25, 2024.

• Total revenues were approximately $798 thousand for the three-month period ended June 30, 2024, compared to $2.9 million for the three-month period ended June 30, 2023. The decrease in revenue of approximately $2.1 million was due to an expected decline in COVID-19 testing services revenue of $1.8 million, resulting from the conclusion of a testing contract with the City University of New York (CUNY) in June 2023. There was also a decrease in service revenues of $200 thousand related to lower research and development activity levels and a decline in isotopic testing within the Therapeutic DNA and DNA Tagging segments, respectively.

• Gross profit for the three-month period ended June 30, 2024, was $245 thousand, compared to $1.3 million for the same period in the prior fiscal year. The gross profit percentage was 31% and 44% for the three-month periods ended June 30, 2024, and 2023, respectively. The decline in gross profit percentage was primarily due to the significant decrease in revenues for the Company's MDx (Molecular Diagnostics) testing services segment related directly to the conclusion of the CUNY COVID-19 testing contract in the June 30, 2023, period.

• Operating expenses decreased to $3.6 million for the three-month period ended June 30, 2024, compared to $4.1 million for the same period in the prior fiscal year. The decrease in operating expenses is the result of a decrease in selling, general and administrative expenses of approximately $613 thousand. The decrease in SG&A expenses primarily relates to a decrease in stock-based compensation expense of approximately $310 thousand for the annual option grant to the non-employee members of our board of directors and officer restricted stock unit grants becoming fully vested in January and March 2024, respectively. Additional decreases related to a decrease in consulting expenses of $191 thousand. The decrease in SG&A was offset by an increase in research and development expenses of $77 thousand for the development of an enzyme for use in our Therapeutic DNA Production Services segment.

• Loss from operations was $3.3 million for the three-month period ended June 30, 2024, compared to $2.9 million for the same period in the prior fiscal year.

• Excluding non-cash expenses, Adjusted EBITDA was a negative $3.2 million for the three-month period ended June 30, 2024, compared to a negative $2.1 million for the same period in the prior fiscal year.

• Cash and cash equivalents stood at $10.4 million on June 30, 2024, compared with $7.2 million as of September 30, 2023. The Company raised approximately $10.5 million in net proceeds through a public offering of its common stock, pre-funded warrants, and warrants that cannot be exercised until their terms have been approved by the Company's stockholders at a stockholders' meeting.

Third Quarter Fiscal 2024 Conference Call Information

The Company will hold a conference call and webcast to discuss its third quarter of fiscal year 2024 financial results on Thursday, August 8, 2024, at 4:30 PM ET. To participate in 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, not all questions may be answered.

To Participate, please ask to be joined to the ‘Applied DNA Sciences' call:

• Domestic callers (toll free): 844-887-9402

• International callers: 412-317-6798

• Canadian callers (toll free): 866-605-3852

Live and replay of webcast: https://qa6.choruscall.com/contexweb/ViewQA/loginSortQA.htm

Telephonic replay (available 1 hour following the conclusion of the live call through February 15, 2024):

• Domestic callers (toll free): 1-877-344-7529

• Canadian callers (toll free): 1-855-669-9658

• Participant Passcode: 9045385

An accompanying slide presentation that will be embedded in the webcast can be accessed under ‘News & Events' tab and ‘Company Events' section of the Applied DNA investor relations website at https://investors.adnas.com/

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 businesses. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our businesses 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 Sciences is a biotechnology company developing technologies to produce and detect deoxyribonucleic acid ("DNA"). Using the polymerase chain reaction ("PCR") to enable both the production and detection of DNA, we operate in three primary business markets: (i) the enzymatic manufacture of synthetic DNA for use in the production of nucleic acid-based therapeutics and, through our recent acquisition of Spindle Biotech, Inc. ("Spindle"), the development and sale of a proprietary RNA polymerase ("RNAP") for use in the production of mRNA therapeutics; (ii) the detection of DNA and RNA in molecular diagnostics and genetic testing services; and (iii) the manufacture and detection of DNA for industrial supply chain security services.

Visit adnas.com for more information. Follow us on X and LinkedIn. Join our mailing list.

Forward-Looking Statements

The statements made by Applied DNA in this press release may be "forward-looking" in nature within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and 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 its history of net losses, limited financial resources, unknown future demand for its biotherapeutics products and services, the unknown amount of revenues and profits that will result from our Linea IVT and or Linea DNA platforms, the fact that there has never been a commercial drug product utilizing PCR-produced DNA technology and/or the Linea IVT platform approved for therapeutic use, the unknown amount of revenues and profits that will result from its TR8 PGx testing service, the limited market acceptance for its supply chain security products and services, as well as various other factors detailed from time to time in Applied DNA's SEC reports and filings, including its Annual Report on Form 10-K, as amended, filed on December 7, 2023 and Quarterly Report on Form 10-Q filed on February 8, 2024, May 10, 2024 and August 8, 2024, and other reports it files 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 or to reflect the occurrence of unanticipated events, unless otherwise required by law.

Investor Relations Contact: Sanjay M. Hurry, 917-733-5573, sanjay.hurry@adnas.com
Web: www.adnas.com
X: @APDN

APPLIED DNA SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,				September 30,
		2024				2023
ASSETS		(unaudited)
Current assets:
Cash and cash equivalents		$	10,442,131			$	7,151,800
Accounts receivable, net of allowance for credit losses of $75,000 at June 30, 2024, and September 30, 2023, respectively			513,871				255,502
Inventories			469,871				330,027
Prepaid expenses and other current assets			416,427				389,241
Total current assets			11,842,300				8,126,570
Property and equipment, net			530,735				838,270
Other assets:
Restricted cash			750,000				750,000
Intangible assets			2,698,975				2,698,975
Operating right of use asset			868,081				1,237,762
Total assets		$	16,690,091			$	13,651,577
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	2,440,688			$	2,270,388
Operating lease liability, current			533,679				498,598
Deferred revenue			51,285				76,435
Total current liabilities			3,025,652				2,845,421
Long term accrued liabilities			31,467				31,467
Deferred revenue, long term			194,000				194,000
Operating lease liability, long term			334,402				739,162
Deferred tax liability, net			684,115				684,115
Warrants classified as a liability			186,000				4,285,000
Total liabilities			4,455,636				8,779,165
Commitments and contingencies (Note G)
Applied DNA Sciences, Inc. stockholders' equity:
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- shares issued and outstanding as of June 30, 2024 and September 30, 2023, respectively			-				-
Series A Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- issued and outstanding as of June 30, 2024, and September 30, 2023, respectively			-				-
Series B Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- issued and outstanding as of June 30, 2024, and September 30, 2023, respectively			-				-
Common stock, par value $0.001 per share; 200,000,000 shares authorized as of June 30, 2024, and September 30, 2023, 10,299,385 and 682,926 shares issued and outstanding as of June 30, 2024, and September 30, 2023, respectively			10,301				683
Additional paid in capital			318,757,698				307,397,623
Accumulated deficit			(306,376,012	)			(302,447,147	)
Applied DNA Sciences, Inc. stockholders' equity			12,391,987				4,951,159
Noncontrolling interest			(157,532	)			(78,747	)
Total equity			12,234,455				4,872,412
Total liabilities and equity		$	16,690,091			$	13,651,577

APPLIED DNA SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended June 30,
		2024				2023
Revenues
Product revenues		$	246,644			$	316,950
Service revenues			226,145				425,694
Clinical laboratory service revenues			324,730				2,174,697
Total revenues			797,519				2,917,341
Cost of product revenues			230,188				368,902
Cost of clinical laboratory service revenues			322,099				1,279,121
Total cost of revenues			552,287				1,648,023
Gross profit			245,232				1,269,318
Operating expenses:
Selling, general and administrative			2,678,894				3,292,304
Research and development			913,031				836,123
Total operating expenses			3,591,925				4,128,427
LOSS FROM OPERATIONS			(3,346,693	)			(2,859,109	)
Interest income			36,295				26,783
Transaction costs allocated to warrant liabilities			-				-
Unrealized gain (loss) on change in fair value of warrants classified as a liability			5,160,000				(278,400	)
Unrealized loss on change in fair value of warrants classified as a liability - warrant modification			-				-
Loss on issuance of warrants			-				-
Other (expense) income, net			(101	)			(3,469	)
Income (loss) before provision for income taxes			1,849,501				(3,114,195	)
Provision for income taxes			-				-
NET INCOME (LOSS)		$	1,849,501			$	(3,114,195	)
Less: Net loss attributable to noncontrolling interest			30,295				14,429
NET INCOME (LOSS) attributable to Applied DNA Sciences, Inc.		$	1,879,796			$	(3,099,766	)
Deemed dividend related to warrant modifications			-				-
NET INCOME (LOSS) attributable to common stockholders		$	1,879,796			$	(3,099,766	)
Net income (loss) per share attributable to common stockholders-basic and diluted		$	0.47			$	(4.80	)
Weighted average shares outstanding- basic and diluted			4,014,261				645,426

APPLIED DNA SCIENCES, INC.
CALCULATION AND RECONCILIATION OF ADJUSTED EBITDA
(unaudited)

		Three Month Period Ended June 30,
		2024				2023
Net income (loss)		$	1,849,501			$	(3,114,195	)
Interest income			(36,295	)			(26,783	)
Depreciation and amortization			134,163				349,146
Provision for bad debt			-				34,169
Stock-based compensation expense			30,336				340,042
Unrealized (gain) loss on change in fair value of warrants classified as a liability			(5,160,000	)			278,400
Total non-cash items			(5,031,796	)			974,974
Consolidated Adjusted EBITDA (loss)		$	(3,182,295	)		$	(2,139,221	)

SOURCE: Applied DNA Sciences, Inc.

View the original press release on accesswire.com

FAQ

What was Applied DNA's revenue for Q3 FY2024?

Applied DNA's revenue for Q3 FY2024 was $798,000, down from $2.9 million in Q3 FY2023.

How much cash did Applied DNA (APDN) have at the end of Q3 FY2024?

Applied DNA had $10.4 million in cash and cash equivalents as of June 30, 2024.

What is the potential annual revenue opportunity for Applied DNA's TR8™ PGx testing service?

Applied DNA reported a potential annual revenue opportunity of over $25 million for its TR8™ PGx testing service at full utilization.

When does Applied DNA expect to launch its GMP facility for Linea™ IVT templates?

Applied DNA is on schedule to launch its GMP facility for Linea™ IVT templates by the end of FY2024.

What was Applied DNA's (APDN) operating loss for Q3 FY2024?

Applied DNA's operating loss for Q3 FY2024 was $3.3 million, compared to $2.9 million in the same period of the prior fiscal year.