PolarityTE Reports Second Quarter Financial Results and Provides Business Update
PolarityTE, Inc. (Nasdaq: PTE) reported its second-quarter financial results for 2021, showing total revenues of $2.54 million, a decline from $4.71 million in Q1:21. SkinTE revenues dropped to $1.20 million from $1.73 million. The company transitioned to a clinical stage with the submission of an IND for SkinTE to treat chronic cutaneous ulcers on July 23, 2021. Cash used in operations decreased to $4.1 million. The company had $32.6 million in cash as of June 30, 2021, which is expected to fund operations into Q3 2022.
- Submission of IND for SkinTE for chronic cutaneous ulcers on July 23, 2021.
- Received an allowance for an additional patent, totaling 12 patents.
- Net revenues increased by 127% for the first half of 2021 compared to the same period in 2020.
- Total revenues fell by 46% from Q1:21 to Q2:21.
- SkinTE revenues declined by 31% from Q1:21 to Q2:21.
- Operating loss decreased by only 42% over six months, indicating ongoing challenges.
PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company developing regenerative tissue products and biomaterials, today provided a business update and reported financial results for the second quarter ended June 30, 2021.
Recent Business Updates
- Submitted an Investigational New Drug application (IND) for SkinTE® on July 23, 2021, for the proposed indication of treatment of chronic cutaneous ulcers
- Reported SkinTE met primary and secondary endpoints in final analysis from Diabetic Foot Ulcer (DFU) trial
- Received notice of allowance for additional patent, bringing the Company’s total number of allowed and granted utility patents worldwide to 12 – 10 abroad and 2 in the United States
In response to the IND submission the Company recently received requests from the FDA’s Clinical and CMC reviewers for additional information and the Company provided initial responses to those requests. The Company appreciates the FDA’s feedback and believes it is generally in line with what the Company anticipated following its pre-IND interactions with the FDA.
Financial Updates for the Quarter Ended June 30, 2021
-
Total revenues were
$2.54 million in Q2:21 compared to$4.71 million in Q1:21 -
SkinTE revenues were
$1.20 million in Q2:21 (April 1, 2021 through cessation of SkinTE sales on May 31, 2021) compared to$1.73 million in Q1:21 -
Contract services revenues were
$1.34 million in Q2:21 compared to$2.98 million in Q1:21 -
Cash used in operations for Q2:21 was
$4.1 million , or an average of$1.4 million per month, representing a38% reduction from Q1:21
Transition to a Clinical Stage Biotech Company
As part of the transition to a clinically focused biotech company and consistent with the conclusion of FDA’s enforcement discretion for certain human cells, tissues, and cellular and tissue-based products under Section 361 of the Public Health Service Act (361 HCT/Ps), the Company ceased commercial sales of SkinTE on May 31, 2021, and has made substantial reductions in costs associated with its commercial operations. The Company previously provided guidance for an IND submission in the second half of 2021 and on July 23, 2021 the Company submitted to the FDA an IND for SkinTE for the treatment of chronic cutaneous ulcers.
David Seaburg, Chief Executive Officer, commented, “We have made great strides to position the Company for the future, most recently with the submission of an IND, and I could not be more impressed by the organization’s commitment to this achievement. We are also incredibly encouraged by the recent outreach and support from physicians and patients after ceasing sales of SkinTE, and we will work expeditiously in the pursuit of a Biologic License Application (BLA).” Mr. Seaburg continued, “The second quarter includes the final two months of SkinTE sales prior to the end of FDA’s enforcement discretion and further solidifies our view that there is sizable market opportunity for SkinTE.”
Financial Results for the Quarter Ended June 30, 2021
There have been significant changes in items affecting the Company’s results of operations for the six-month period ended June 30, 2021, compared to the six-month period ended June 30, 2020, due to:
- The decision in April 2020 to file an IND with the FDA for SkinTE and, as a result, transition from a commercial stage company to a clinical stage company;
- The COVID-19 testing business that began in the last week of May 2020 that generated significant services revenues through March 2021, but has since substantially diminished; and
- The COVID-19 pandemic, which had a negative impact on revenues from the sale of SkinTE and IBEX services in the six-month period ended June 30, 2020, but not in the six-month period ended June 30, 2021.
As a result of the foregoing developments, the Company made a number of changes to its operations that impacted results of operations. These included reductions in the Company’s work force in March and May 2020 and on June 1, 2021, and reducing the services and infrastructure needed to support a larger work force and commercial sales effort.
Net revenues increased
Cost of sales increased
Operating costs and expenses decreased
Operating loss decreased
The table below details adjusted net loss, which is a non-GAAP measure that shows net loss before fair value adjustments relating to the Company’s common stock warrant liability and warrant inducement loss. The Company believes 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 was 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 June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
GAAP Net Loss |
|
$ |
(3,188 |
) |
|
$ |
(12,677 |
) |
|
$ |
(20,598 |
) |
|
$ |
(25,717 |
) |
Change in fair value of common stock warrant liability |
|
|
(1,807 |
) |
|
|
1,591 |
|
|
|
2,220 |
|
|
|
(2,941 |
) |
Inducement loss on sale of liability classified warrants |
|
|
– |
|
|
|
– |
|
|
|
5,197 |
|
|
|
– |
|
Non-GAAP adjusted net loss attributable to common stockholders - basic |
|
$ |
(4,995 |
) |
|
$ |
(11,086 |
) |
|
$ |
(13,181 |
) |
|
$ |
(28,658 |
) |
Gain from change in fair value of warrant liabilities |
|
|
(107 |
) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
Non-GAAP adjusted net loss attributable to common stockholders - diluted |
|
$ |
(5,102 |
) |
|
$ |
(11,086 |
) |
|
$ |
(13,181 |
) |
|
$ |
(28,658 |
) |
GAAP net loss per share attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.72 |
) |
Diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net loss per share attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.06 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.80 |
) |
Diluted |
|
$ |
(0.06 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.80 |
) |
Cash and Liquidity as of June 30, 2021
As of June 30, 2021, the Company had
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 210912 and referencing “PolarityTE Second 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. PolarityTE’s products, including SkinTE, are in the development stage, and are not approved or available for clinical use. 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, future clinical studies, 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.
POLARITYTE, the POLARITYTE logo, SKINTE, WHERE SELF REGENERATES SELF and WELCOME TO THE SHIFT are registered trademarks of PolarityTE, Inc.
POLARITYTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share and per share amounts) |
||||||||
|
|
|
|
|
|
|
||
|
|
June 30, 2021 |
|
|
December 31, 2020 |
|
||
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
32,614 |
|
|
$ |
25,522 |
|
Accounts receivable, net |
|
|
2,042 |
|
|
|
3,819 |
|
Inventory |
|
|
76 |
|
|
|
883 |
|
Prepaid expenses and other current assets |
|
|
2,286 |
|
|
|
992 |
|
Total current assets |
|
|
37,018 |
|
|
|
31,216 |
|
Property and equipment, net |
|
|
8,684 |
|
|
|
10,550 |
|
Operating lease right-of-use assets |
|
|
1,756 |
|
|
|
2,452 |
|
Intangible assets, net |
|
|
447 |
|
|
|
542 |
|
Goodwill |
|
|
278 |
|
|
|
278 |
|
Other assets |
|
|
227 |
|
|
|
472 |
|
TOTAL ASSETS |
|
$ |
48,410 |
|
|
$ |
45,510 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
3,924 |
|
|
$ |
4,148 |
|
Other current liabilities |
|
|
2,509 |
|
|
|
2,106 |
|
Current portion of long-term notes payable |
|
|
– |
|
|
|
2,059 |
|
Deferred revenue |
|
|
86 |
|
|
|
168 |
|
Total current liabilities |
|
|
6,519 |
|
|
|
8,481 |
|
Common stock warrant liability |
|
|
14,059 |
|
|
|
5,975 |
|
Operating lease liabilities |
|
|
550 |
|
|
|
1,476 |
|
Other long-term liabilities |
|
|
514 |
|
|
|
723 |
|
Long-term notes payable |
|
|
– |
|
|
|
1,517 |
|
Total liabilities |
|
|
21,642 |
|
|
|
18,172 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock - 25,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2021 and December 31, 2020 |
|
|
– |
|
|
|
– |
|
Common stock – $.001 par value; 250,000,000 shares authorized; 80,742,443 and 54,857,099 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively |
|
|
81 |
|
|
|
55 |
|
Additional paid-in capital |
|
|
525,496 |
|
|
|
505,494 |
|
Accumulated deficit |
|
|
(498,809 |
) |
|
|
(478,211 |
) |
Total stockholders’ equity |
|
|
26,768 |
|
|
|
27,338 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
48,410 |
|
|
$ |
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 |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
Net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
1,195 |
|
|
$ |
944 |
|
|
$ |
2,924 |
|
|
$ |
1,372 |
|
Services |
|
|
1,342 |
|
|
|
1,322 |
|
|
|
4,322 |
|
|
|
1,827 |
|
Total net revenues |
|
|
2,537 |
|
|
|
2,266 |
|
|
|
7,246 |
|
|
|
3,199 |
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
|
207 |
|
|
|
275 |
|
|
|
448 |
|
|
|
615 |
|
Services |
|
|
717 |
|
|
|
607 |
|
|
|
2,641 |
|
|
|
783 |
|
Total cost of sales |
|
|
924 |
|
|
|
882 |
|
|
|
3,089 |
|
|
|
1,398 |
|
Gross profit |
|
|
1,613 |
|
|
|
1,384 |
|
|
|
4,157 |
|
|
|
1,801 |
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
4,190 |
|
|
|
3,164 |
|
|
|
6,621 |
|
|
|
6,537 |
|
General and administrative |
|
|
4,941 |
|
|
|
5,211 |
|
|
|
11,312 |
|
|
|
15,816 |
|
Sales and marketing |
|
|
1,099 |
|
|
|
2,024 |
|
|
|
2,625 |
|
|
|
5,718 |
|
Restructuring and other charges |
|
|
11 |
|
|
|
2,084 |
|
|
|
436 |
|
|
|
2,536 |
|
Total operating costs and expenses |
|
|
10,241 |
|
|
|
12,483 |
|
|
|
20,994 |
|
|
|
30,607 |
|
Operating loss |
|
|
(8,628 |
) |
|
|
(11,099 |
) |
|
|
(16,837 |
) |
|
|
(28,806 |
) |
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on extinguishment of debt |
|
|
3,612 |
|
|
|
– |
|
|
|
3,612 |
|
|
|
– |
|
Change in fair value of common stock warrant liability |
|
|
1,807 |
|
|
|
(1,591 |
) |
|
|
(2,220 |
) |
|
|
2,941 |
|
Inducement loss on sale of liability classified warrants |
|
|
– |
|
|
|
– |
|
|
|
(5,197 |
) |
|
|
– |
|
Interest expense, net |
|
|
(39 |
) |
|
|
(65 |
) |
|
|
(77 |
) |
|
|
(77 |
) |
Other income, net |
|
|
60 |
|
|
|
78 |
|
|
|
121 |
|
|
|
225 |
|
Net loss |
|
$ |
(3,188 |
) |
|
$ |
(12,677 |
) |
|
$ |
(20,598 |
) |
|
$ |
(25,717 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.72 |
) |
Diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.72 |
) |
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
80,602,931 |
|
|
|
38,428,289 |
|
|
|
78,392,881 |
|
|
|
35,724,141 |
|
Diluted |
|
|
81,162,256 |
|
|
|
38,428,289 |
|
|
|
78,392,881 |
|
|
|
35,724,141 |
|
POLARITYTE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) |
||||||||
|
|
|
|
|||||
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(20,598 |
) |
|
$ |
(25,717 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
3,124 |
|
|
|
3,784 |
|
Depreciation and amortization |
|
|
1,437 |
|
|
|
1,549 |
|
Amortization of intangible assets |
|
|
95 |
|
|
|
95 |
|
Amortization of debt discount |
|
|
– |
|
|
|
13 |
|
Bad debt expense |
|
|
134 |
|
|
|
– |
|
Inventory write-off |
|
|
697 |
|
|
|
– |
|
Gain on extinguishment of debt – PPP loan |
|
|
(3,612 |
) |
|
|
– |
|
Change in fair value of common stock warrant liability |
|
|
2,220 |
|
|
|
(2,941 |
) |
Inducement loss on sale of liability classified warrants |
|
|
5,197 |
|
|
|
– |
|
Loss on restructuring and other charges |
|
|
269 |
|
|
|
– |
|
Loss on abandonment of property and equipment |
|
|
– |
|
|
|
1,529 |
|
Loss on sale of property and equipment |
|
|
7 |
|
|
|
– |
|
Other non-cash adjustments |
|
|
– |
|
|
|
(21 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,643 |
|
|
|
(384 |
) |
Inventory |
|
|
110 |
|
|
|
(29 |
) |
Prepaid expenses and other current assets |
|
|
(1,294 |
) |
|
|
(1,189 |
) |
Operating lease right-of-use assets |
|
|
666 |
|
|
|
899 |
|
Other assets |
|
|
245 |
|
|
|
3 |
|
Accounts payable and accrued expenses |
|
|
(221 |
) |
|
|
(2,109 |
) |
Other current liabilities |
|
|
(14 |
) |
|
|
9 |
|
Deferred revenue |
|
|
(82 |
) |
|
|
(1 |
) |
Operating lease liabilities |
|
|
(728 |
) |
|
|
(903 |
) |
Net cash used in operating activities |
|
|
(10,705 |
) |
|
|
(25,413 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(18 |
) |
|
|
(1,170 |
) |
Proceeds from sale of property and equipment |
|
|
10 |
|
|
|
– |
|
Purchase of available-for-sale securities |
|
|
– |
|
|
|
(14,144 |
) |
Proceeds from maturities of available-for-sale securities |
|
|
– |
|
|
|
16,945 |
|
Proceeds from sale of available-for-sale securities |
|
|
– |
|
|
|
16,171 |
|
Net cash (used in) provided by investing activities |
|
|
(8 |
) |
|
|
17,802 |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from term note payable and financing arrangements |
|
|
1,028 |
|
|
|
4,629 |
|
Principal payments on term note payable and financing arrangements |
|
|
(359 |
) |
|
|
(830 |
) |
Principal payments on financing leases |
|
|
(272 |
) |
|
|
(243 |
) |
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 |
|
|
(188 |
) |
|
|
(6 |
) |
Proceeds from stock options exercised |
|
|
3 |
|
|
|
31 |
|
Proceeds from ESPP purchase |
|
|
28 |
|
|
|
40 |
|
Net cash provided by financing activities |
|
|
17,805 |
|
|
|
27,897 |
|
Net increase in cash and cash equivalents |
|
|
7,092 |
|
|
|
20,286 |
|
Cash and cash equivalents - beginning of period |
|
|
25,522 |
|
|
|
10,218 |
|
Cash and cash equivalents - end of period |
|
$ |
32,614 |
|
|
$ |
30,504 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210812005725/en/
FAQ
What were PolarityTE's total revenues for Q2 2021?
Did PolarityTE submit an IND recently?
What is the cash position of PolarityTE as of June 30, 2021?
How did SkinTE revenues perform in Q2 2021?
What is the future outlook for PolarityTE?
