Q4 2019 Earnings Call
Good day, and welcome to the thermogenesis Holdings conference call and webcast to review financial and operating results for the year ended December 31st, 2019. As a reminder of all participants will be in listen-only mode. There will be an opportunity to ask questions at the end of today's presentation. If you'd like to ask a question, please press * then 1 on your phone. If you wish to withdraw your question, please press * then two. If you should need assistance during the conference call, please signal an operator by pressing star then zero as a reminder. This conference call is being recorded. I would now like to turn the conference over to our host Paula Schwartz of RX Communications, please go ahead.
Thank you operator this conference call contains forward-looking statements within the meaning of the federal Securities laws. The company's actual results May differ materially from those projected in the forward-looking statement will information concerning factors that might cause actual results to differ materially from those in the forward-looking statements is contained in the company's periodic reports filed with the Securities and Exchange Commission. The information. Today is time-sensitive and is accurate only as of the date of this call, March 24th, 2019 a 2020, excuse me, if any portion of this call is being rebroadcast rebroadcast retransmission or redistributed at a later date. Thermogenesis will not be reviewing or updating this material participating in today's call our doctor Chris Shu chief executive officer and Jeff Kabul Chief Financial Officer. I now like to turn the call over to Chris, please go ahead click.
Thank you, Paula and thank you for everyone for joining the courses afternoon. We appreciate you taking the time to the saying especially during this unprecedented Life Time of their coronavirus playing Dynamics.
We have achieved significant improvements in our operational performance in 2019. Our net revenue has increased 35% compared to age twenty eighteen gross profits increased 156% compared to 2018 and operational expenses decreased 77% off compared to 2018 and we achieved two quarters of cash flow positive as indicated by adjust in 2019 during 2019. We continued the transformation of thermogenesis by taking a number of steps aimed at becoming a leading provider for cell processing tools and services in the emerging cell in gene therapy field.
To better refresh our new corporate focus on November 1st of last year. The company changed its name from cesca Therapeutics through so my Genesis home think since the 90s thermogenesis has been a Pioneer and a well-recognized brand for automated cell processing systems isolate purify inquire genic restored hematopoietic stem cell stem cells for the Cobra Bank industry. We open now leverage on that steps position to develop and commercialize a full range of automated medical devices and Technologies for sales or service.
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Which stem cell banking?
Pulling up here applications and large-scale cell manufacturing for immunotherapy drugs and therapies F we discussed off on the last call. We have achieved a major commercialization milestone in 2019 with the signing of a global distribution agreement with calling for our at serious products, which is part of our cutting-edge car key Express technology platform as part of the agreement samaja received a two million up front distribution fees and will continue to receive future marketing support from Corney. We expect that this this distribution agreement to expand the awareness and sells of exteriors products.
and through the Global Research Market
Sourcing the sales and marketing of the F-series products to a global company which well-established the sales Channel such as corny will also allow us to maintain a greater focus on developing additional tools and services for the cell gene therapy and point-of-care Market wage another important advancement in 2019 was the execution of a joint venture agreement with health Banks biotech USA to form a site, which is the first cgmp compliance immune cell Bank in the US.
Insights mandate is to provide individuals with the opportunity to bank their own healthy immune cells for future use as a resource for immunotherapies such as sales and car T-cell therapy if needed immune size isolates healthy immune cells from 150 to 200 of peripheral breath using our proprietary car key Express automated sales processing platform for immune cell banking joint venture also has an exclusive rights to purchase car to express for other Salvage the CMO or CDMA or services.
We were priests that immune side has received a screen mirroring Equity investment from a third-party private investor with an implied country money variation of fifty meeting the investor the investment coming not long after the establishment of the joint venture validates the potential of immune sites business model and growth prospects and also increases the value of similar Genesis investment in this important joint venture off as part of the immune side joint venture, we divested our clinical programs as a result. Thermogenesis is now singularly focused off addressing the critical limit cell processing and Manufacturing needs of the cell gene therapy market and positioning the company page.
the full front of this effort with Grace
products and services
on the product and we continue to drive Revenue with new product launches in 2019. We were pleased to have completed the commercial launch of the next generation of a XP to system which introduced an important enhancement to replace our original market-leading a device which has been used broadly among among top corporate events worldwide since its introduction the Innovative system has defined the processing standard for the corporate industry the significant upgrades including in the back to system have been well received by the market since its introduction American America's largest cover Bank TV are dead.
And the court live group a leading provider of cover banking service in Asia have both upgraded upgraded to the SP2 system and many others are following. We have also received Health Canada approval of the companies PHP system for automated processing at the point-of-care subsequently. We have entered into a strategic surprise agreement with also heating Centre may want to provide the PSP system to also heating methods network of physician members, which is an important step forward for our point of care Market.
It's a reminder the company currently markets three cell processing platforms. The first one is the car key Express platform wage Innovative buoyancy activated cell sorting or fax dacs technology fax technology is a password protect it high-efficiency cell sorting technology using lipids microbubbles. The the Box technology is a key component of the car key Express technology platform, which is intended to address the critical and math needs for large-scale cellular manufacturing of coffee syrup.
The second platform is the axp for clinical banking which allows for automated processing and storage of Cobra and clinical samples.
in the
3rd platform is the PHP platform for point-of-care applications allowing automated processing of autologous peripheral blood or bone marrow derived the stem cells ft point-of-care locations such as surgical centers or clinics.
It's robust further line has positioned. So my Genesis to take advantage of the exponential growth in the global cell and gene therapy Market wage, according to clinicaltrials.gov the number of ongoing and pain in clinical trials in the car. T-cell therapy space alone has already surpassed when thousand worldwide.
With more of the revolutionaries in service in the development coming closer to Market cellular drug developer must address the issue challenges of how to manufacture clinical-grade cell therapies at the commercial scale with a reasonable cost.
Traditional cell processing methodologies still in widespread use a manual and time-consuming presenting an obstacle to large-scale manufacture of cell Gene therapies. We believe our revolutionary party Express technology platform can well address these critical needs in the cell gene therapy.
I'm patient accessibility side several recent study on the eligibility of patient for Karthik clinical trials have shown that as many years Thirty to fifty percent of the cancer patients may not be eligible to Enloe or in load the failed to get sufficient cut itself manufactured for the same factors driving. This province includes the fact that the body's immune system Decay with age in is also severely compromised during chemotherapy and radiation therapy additionally in many cases of the advanced cancer cancer cells metastasizing enter the bloodstream not only contaminating The Source, but also interfering with the body's natural production of healthy T cells
So my Genesis is helping to address this issue through the immune site joint venture, which will put the car key express cellular processing platform at The Cutting Edge of solving the current manufacturing shot coming for the sales Market immune site. Well offer people wage ability to bank healthy immune cells for later use in cell Therapies.
We have undertaken strategic changes to thermogenesis and are focused on becoming a key solution provider for several manufacturing jobs and services in the cell gene therapy Market the products launched last year are expected to continue to drive Revenue off. Where's the continued growth in revenue and reduction in cost. We expect to see continued to trend of growth and our goal of twenty years to achieve cash real positive for the entire year.
in summary
In addition to what I have summarized for the year of 2019. I want to provide some additional updates on the newest development of the company.
The current Global pandemic of coronavirus covid-19 has not affected more than 180 countries and regions include over forty thousand cases in the United States alone. And actually by today it has already been increased to over $46,000 off. The disease has spread rapidly leading to a tremendous impact on the US Healthcare System and closing societal disruption off the health the public health threat posed by covid-19 is extremely hot both globally and in the US.
The company wants to take are more social responsibilities and to develop critical trolls Andre agents that could help fight this Global threat month.
To effectively respond to the covid-19 pandemic somewhere Genesis and its joint-venture immuno side are working together to working two jobs mobilizing their expertise global resources and relationships in the Medical Technology field to develop register in Port and see us FDA approval for the advanced point-of-care test that will allow rapid diagnosis of the covid-19 virus.
including asymptomatic cases
The test would be able to be done both at the point of care setting all potentially at home result furthering the already stressed Health Care system.
A quick do you get yourself testing kit a simple as a routine pregnancy test or home diabetic glucose test if approved with low millions of people currently quarantined at home to conduct itself test.
The first upset rapid point-of-care test could be available as early as second quarter through thermogenesis and immune site, We expect to file for an expedited review process with the FDA forces tests.
And which side let me turn the call over to Jeff to share the key financial results from 2019. Yep. Thank you. Chris Rock net revenues for the year ended December thirty first two thousand nineteen thirteen million as compared to nine point seven million per 2018 and increase of 3.3 million thirty percent. The increase was driven by XB revenues which increased by three point 1 million in 2019, the approximately 1300 more cases sold as compared to 2018 additionally device sales increased by approximately 700,000 a 2019 driven by customers upgrading to x p two devices in the current year.
Party Express sales also increased by approximately $600,000 year-over-year.
Gross profit was five point seven million or 44% of net revenues for the year ended December 31st, 2019 as compared to two point two million or 23% of net revenues for the year of December 31st, 2018 and increase of 3.5 million or 156% The increase was primarily due to XP sales which generated approximately 2.25 million more and gross profit from disposables and new device sales. The remainder of the increase is due to lower overhead costs approximately six hundred thousand dollars and increase sales expert to express products, which resulted in approximately $300,000 more gross profit.
Sales and marketing expenses were one point seven million or the year in December 31st, 2019 as compared to one point four million for the year ended December 31st, 2018 and increase of $300,000 or 22% The increase was driven by stock compensation and salaries and benefit expenses research and development expenses were 2.4 million for the year ended December 31st, 2019 as compared to three million for the year ended December 31st, 2018 a decrease of $600,000 or 20% It decreases primarily due to a decline in person related to the June 2018 reorganization.
General and administrative expenses for the year ended December 31st 2019 were six point four million compared to 8.3 million for the year ended December 31st, 2018 a decrease of 1.9 million or 23% decrease was driven by a decline in Personnel cost of approximately 1.2 million and 2019 and a lost in the disposal of fixed assets of approximately 1.3 million that was incurred in 2018 RX G&A expenses were also down approximately 300000 / 2018 wage increases were offset by one point four million dollar expense as a result of the Mavericks lawsuit interest expense increased to 4.5 million for the year ended December 31st, 2019 Escalade the two point seven million for the year ended December 31st, 2018 a difference of one point eight million. The increase was driven by the amortization of the debt discount and interest expense for the convertible notes wage.
by the company during 2019
Additionally current your head higher interest expense and amortization of the debt discount on the beneficial conversion feature related to the revolving credit agreement.
Company recorded a non-cash loss on extinguishment of debt of $840,000 for the year ended December 31st, 2019 related to the modification convertible note completed in July.
For the year ended December 31st, 2019 the company reported a comprehensive loss attributable to Common stockholders of 9.5 million or $3.36 per share based on faith. Only two point eight million weighted average basic and diluted common shares outstanding this compares to a comprehensive net loss of 39.7 million or $21.57 per share based on approximately 1.8 million weighted average basic and diluted common shares outstanding for the year ended December 31st, 2018. In addition to the results reporting underneath. The company also uses a non-gaap measure adjusted ebitda to evaluate performance and best approximate operational cash flow. Just a deep at a loss for the year ended December 31st, 2019 was 3.3 million as compared to a loss of 9.1 million for the year ended December 31st, 2018 and increase of 5.8 million.
At December 31st 2019 the company had cash and cash equivalents totaling 3.2 million compared to 2.4 million at December 31st. 2018 off working capital was three point two million at December 31st, 2019 as compared to point three million at December 31st, 2018.
This concludes our prepared remarks. So now we like to open the call to your questions operator.
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it's concludes. Our question-and-answer session. I'd like to turn the conference back over to doctor for any closing remarks. Thank you operator. We look forward to updating our progress in the coming months and thank you to everyone who participated in today's call and for your interest in summer Genesis Holdings.
Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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