PolarityTE Reports Fiscal Year 2019 Financial Results

SALT LAKE CITY–(BUSINESS WIRE)–PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company developing and commercializing regenerative tissue products and biomaterials, today reported results for calendar fourth quarter and year ended December 31, 2019. PolarityTE will host a conference call and webcast with Q&A today, Thursday, March 12, 2020 at 8:00 a.m. Eastern Time. Please see details below.

Year Ended December 31, 2019

  • 154% YOY Increase in Total Revenue; $5.652M for YE:2019 vs $2.223M for YE:2018
  • 166% YOY increase in SkinTE Revenue; $2.353M for YE:2019 vs $0.886M for YE:2018
  • 95% increase in paid cases from 1H:19 to 2H:19; 170 in 2H:19 vs 87 in 1H:19
  • 94% increase in SkinTE revenue from 1H:19 to 2H:19; $1.55M in 2H:19 vs $0.801M in 1H:19

Q4:2019 Results

  • 10% QOQ increase in paid cases; 89 in Q4:19 vs 81 in Q3:19
  • 15% QOQ decrease in SkinTE revenues; $0.714M in Q4:19 vs $0.839M in Q3:19
  • 26% QOQ increase in repeat paid users; 29 in Q4:19 vs 23 in Q3:19
  • 4% QOQ decrease in new paid users; 23 in Q4:19 vs 24 in Q3:19

Financial Results for the Year Ended December 31, 2019

Total revenue for the three months ended December 31, 2019 was $1.466 million of which $714 thousand was from sales of SkinTE and $753 thousand was associated with PolarityTE’s contract research operations. This compares to total revenue for the three months ended September 30, 2019 of $1.395 million, of which $839 thousand was from sales of SkinTE and $556 thousand was associated with PolarityTE’s contract research operations.

Research and development expenses for the three months ended December 31, 2019 were $3.33 million versus $2.96 million for the three months ended September 30, 2019. Research and development expenses for the three months ended December 31, 2019 included a $243 thousand expense for stock-based compensation, which is a noncash expense, versus a $164 thousand credit for the three months ended September 30, 2019.

General and administrative expenses for the three months ended December 31, 2019 were $14.9 million versus $16.0 million for the three months ended September 30, 2019. As we stated in November 2019, general and administrative expenses for the three months ended September 30, 2019 were negatively affected by the accrual of payments to the former CEO pursuant to a settlement agreement reached in August 2019. General and administrative expenses for the three months ended December 31, 2019 included $6.9 million of stock-based compensation versus $4.8 million for the three months ended September 30, 2019.

Sales and marketing expenses for the three months ended December 31, 2019 were $4.1 million versus $5.0 million for the three months ended September 30, 2019. We finished 2019 with 25 sales representatives.

Net loss for the three months ended December 31, 2019 was $21.1 million compared to a net loss of $23.0 million for the three months ended September 30, 2019.

Cash and Liquidity as of December 31, 2019

As of December 31, 2019, our cash, cash equivalents and short-term investments balance was $29.2 million, compared to cash and cash equivalents and short-term investments of $61.8 million at December 31, 2018.

Cash used in operating activities for the three-month period ended December 31, 2019 was $16.0 million or $5.3 million per month. This is greater than the $11.9 million for the three months ended September 30, 2019. This is attributable to accruals in the third quarter that were paid in the fourth quarter, including $1.7 million of cash paid to the former CEO under the settlement arrangement reached in August 2019.

On February 14, 2020 the Company completed an underwritten offering of our common stock and warrants to purchase shares of our common stock. The net proceeds to the Company from the offering are estimated to be approximately $22.7 million after estimated offering expenses payable by us.

Based on product development and commercialization plans, the Company believes existing cash, cash equivalents and short-term investments, with planned operating cost reductions, will be adequate to meet capital needs for at least the next 12 months.

Conference Call and Webcast Details

The conference call can be accessed by calling 1-800-239-9838 (U.S. and Canada) or +44 (0)330 336 9105 (International) with confirmation code 5420396 and referencing “PolarityTE Fiscal Year 2019 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 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®.

About SkinTE™

SkinTE is a human cellular and tissue-based product derived from a patient’s own skin intended for the repair, reconstruction, and replacement of skin tissue. SkinTE has been proven to regrow skin over exposed bone, muscle, joint and tendon and has been used to treat a variety of skin defects, including burns, wounds, traumatic injuries, surgical reconstruction, scars, and failed skin grafts or conventional treatments for wounds and burns.

SkinTE is intended to be used by physicians or other appropriate healthcare providers for homologous uses of skin tissues/integument. Patients who have suffered from an event, disease, process or acquired deficit that results in the functional loss or void of skin/integument systems can receive SkinTE as an adjunct and/or in place of split-thickness skin grafting, full-thickness grafting, temporizing skin coverage and/or skin substitute products. SkinTE is for autologous use only. Aseptic technique during harvest and deployment of SkinTE is mandatory. SkinTE is marketed as an HCT/P regulated by the FDA solely under Section 361 of the Public Health Service Act and 21 CFR 1271.

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 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, WHERE SELF REGENERATES SELF, WELCOME TO THE SHIFT, and SKINTE are trademarks or registered trademarks of PolarityTE, Inc.

POLARITYTE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

 

December 31,

2019

 

December 31,

2018

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

10,218

 

$

55,673

 

Short-term investments

 

19,022

 

 

6,162

 

Accounts receivable, net

 

1,731

 

 

712

 

Inventory

 

252

 

 

336

 

Prepaid expenses and other current assets

 

1,264

 

 

1,432

 

Total current assets

 

32,487

 

 

64,315

 

Property and equipment, net

 

14,911

 

 

13,736

 

Operating lease right-of-use assets

 

4,590

 

 

 

Intangible assets, net

 

731

 

 

924

 

Goodwill

 

278

 

 

278

 

Other assets

 

602

 

 

913

 

TOTAL ASSETS

$

53,599

 

$

80,166

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

$

7,095

 

$

6,508

 

Other current liabilities

 

2,338

 

 

316

 

Current portion of long-term note payable

 

528

 

 

529

 

Deferred revenue

 

98

 

 

170

 

Total current liabilities

 

10,059

 

 

7,523

 

Long-term note payable, net

 

 

 

479

 

Operating lease liabilities

 

2,994

 

 

 

Other long-term liabilities

 

1,630

 

 

131

 

Total liabilities

 

14,683

 

 

8,133

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 17)

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Preferred stock – 25,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2019 and 2018

 

 

 

 

Common stock – $.001 par value; 250,000,000 shares authorized; 27,374,653 and 21,447,088 shares issued and outstanding at December 31, 2019 and 2018

 

27

 

 

21

 

Additional paid-in capital

 

474,174

 

 

414,840

 

Accumulated other comprehensive income

 

72

 

 

36

 

Accumulated deficit

 

(435,357

)

 

(342,864

)

Total stockholders’ equity

 

38,916

 

 

72,033

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

53,599

 

$

80,166

 

 

POLARITYTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

 

 

 

For the Year

Ended

 

For the Two

Months Ended

 

For the Year

Ended

 

 

December 31,

2019

 

December 31,

2018

 

October 31,

2018

Net revenues

 

 

 

 

 

 

 

 

 

Products

$

2,353

 

$

210

 

$

689

 

Services

 

3,299

 

 

463

 

 

874

 

Total net revenues

 

5,652

 

 

673

 

 

1,563

 

Cost of sales

 

 

 

 

 

 

 

 

 

Products

 

1,365

 

 

194

 

 

500

 

Services

 

1,114

 

 

187

 

 

502

 

Total costs of sales

 

2,479

 

 

381

 

 

1,002

 

Gross profit

 

3,173

 

 

292

 

 

561

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

Research and development

 

16,397

 

 

3,458

 

 

19,376

 

General and administrative

 

63,189

 

 

12,639

 

 

48,252

 

Sales and marketing

 

16,980

 

 

2,725

 

 

2,365

 

Total operating costs and expenses

 

96,566

 

 

18,822

 

 

69,993

 

Operating loss

 

(93,393

)

 

(18,530

)

 

(69,432

)

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest income, net

 

151

 

 

80

 

 

395

 

Other income, net

 

749

 

 

32

 

 

 

Change in fair value of derivatives

 

 

 

 

 

3,814

 

Loss on extinguishment of warrant liability

 

 

 

 

 

(520

)

Loss before income taxes

 

(92,493

)

 

(18,418

)

 

(65,743

)

Benefit for income taxes

 

 

 

 

 

302

 

Net loss

 

(92,493

)

 

(18,418

)

 

(65,441

)

Deemed dividend – accretion of discount on Series F preferred stock

 

 

 

 

 

(1,290

)

Deemed dividend – exchange of Series F preferred stock

 

 

 

 

 

(7,057

)

Cumulative dividends on Series F preferred stock

 

 

 

 

 

(373

)

Net loss attributable to common stockholders

$

(92,493

)

$

(18,418

)

$

(74,161

)

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted:

 

 

 

 

 

 

 

 

 

Net loss

 

(3.70

)

 

(0.86

)

 

(4.29

)

Deemed dividend – accretion of discount on Series F preferred stock

 

 

 

 

 

(0.09

)

Deemed dividend – exchange of Series F preferred stock

 

 

 

 

 

(0.46

)

Cumulative dividends on Series F preferred stock

 

 

 

 

 

(0.02

)

Net loss per share attributable to common stockholders

$

(3.70

)

$

(0.86

)

$

(4.86

)

Weighted average shares outstanding, basic and diluted

 

24,966,355

 

 

21,343,446

 

 

15,259,731

 

 

POLARITYTE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

For the Year

Ended

 

For the Two

Months Ended

 

For the Year

Ended

 

 

December 31,

2019

 

December 31,

2018

 

October 31,

2018

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net loss

$

(92,493

)

$

(18,418

)

$

(65,441

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

Stock based compensation expense

 

31,402

 

 

8,946

 

 

38,821

 

Change in fair value of derivatives

 

 

 

 

 

(3,814

)

Depreciation and amortization

 

2,992

 

 

330

 

 

1,394

 

Loss on extinguishment of warrant liability

 

 

 

 

 

520

 

Amortization of intangible assets

 

193

 

 

33

 

 

100

 

Amortization of debt discount

 

49

 

 

10

 

 

35

 

Change in fair value of contingent consideration

 

(36

)

 

57

 

 

20

 

Loss on disposal of property and equipment

 

914

 

 

 

 

 

Other non-cash adjustments

 

20

 

 

86

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(1,019

)

 

228

 

 

(940

)

Inventory

 

84

 

 

(98

)

 

(238

)

Prepaid expenses and other current assets

 

193

 

 

(279

)

 

(911

)

Operating lease right-of-use assets

 

1,651

 

 

 

 

 

Other assets

 

(249

)

 

(535

)

 

(378

)

Accounts payable and accrued expenses

 

1,269

 

 

1,621

 

 

2,136

 

Other current liabilities

 

32

 

 

 

 

 

Deferred revenue

 

(72

)

 

20

 

 

150

 

Operating lease liabilities

 

(1,578

)

 

 

 

 

Net cash used in operating activities

 

(56,648

)

 

(7,999

)

 

(28,546

)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

(2,773

)

 

(834

)

 

(9,221

)

Purchase of available-for-sale securities

 

(40,072

)

 

(10,200

)

 

 

Proceeds from maturities of available-for-sale securities

 

23,327

 

 

4,003

 

 

 

Proceeds from sale of available-for-sale securities

 

3,901

 

 

 

 

 

Acquisition of IBEX

 

 

 

 

 

(2,258

)

Net cash used in continuing investing activities

 

(15,617

)

 

(7,031

)

 

(11,479

)

Net cash provided by discontinued investing activities

 

 

 

10

 

 

60

 

Net cash used in investing activities

 

(15,617

)

 

(7,021

)

 

(11,419

)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net proceeds from the sale of common stock

 

28,073

 

 

 

 

92,676

 

Proceeds from stock options exercised

 

529

 

 

 

 

687

 

Proceeds from ESPP purchase

 

99

 

 

 

 

 

Cash paid for tax withholdings related to net share settlement

 

(679

)

 

 

 

 

Payment of contingent consideration liability

 

(225

)

 

 

 

(30

)

Principal payments on financing leases

 

(453

)

 

(11

)

 

(74

)

Principal payments on term note payable and financing arrangements

 

(534

)

 

(257

)

 

 

Net cash provided by/(used in) financing activities

 

26,810

 

 

(268

)

 

93,259

 

 

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(45,455

)

 

(15,288

)

 

53,294

 

Cash and cash equivalents – beginning of period

 

55,673

 

 

70,961

 

 

17,667

 

Cash and cash equivalents – end of period

$

10,218

 

$

55,673

 

$

70,961

 

 

Contacts

Investors:
Rich Haerle

VP, Investor Relations

PolarityTE, Inc.

ir@PolarityTE.com
(385) 315-0697

Media:
Angela Ziegler

VP, Marketing and Public Relations

AngelaZiegler@polarityte.com
(385) 239-0363

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