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PolarityTE Reports Fiscal Year 2019 Financial Results

·12 mins read

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20200312005145/en/

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