Q2 2020 Thermogenesis Holdings Inc Earnings Call

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Good day and welcome to the Thermogenesis Holdings Conference call and webcast to review financial and operating results for the second quarter ended June Thirtyth 2020.

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Now, let's turn the conference over to our host Polish Schwartz of Rx Communications. Please go ahead.

Thank you operator this conference call contain 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.

Additional 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 presented today, it's time sensitive and it's accurate only as of the date of this call August 14th 2020, if any portion of this call is being rebroadcast broadcast retransmitted or redistributed that later date. So much else. This will not be reviewing or updating its material participating on today's call. Our dr., Chris you Chief executive.

Officer, and Jeff Cobble, Chief Financial Officer, I'd now like to turn the call over to Chris. Please go ahead Chris.

Thank you Paula and thank you to everyone for joining the call. It's this afternoon. We appreciate you taking the time to do saying.

During the second quarter off Twentytwenty, we I continue to execute our strategy to become a market either using automated cell processing tools for the cell and gene therapy field.

Notably we were pleased to have achieved a major commercial milestones with the launch of our proprietary X theorists cell processing platform by our exclusive global distributor Onedrive scientists.

Vendor D., so more Genesis Corning do Brett.

We are excited to have corny s., our partner and we believe this partnership will make a meaningful impact our market penetration and revenue of the X series.

As a reminder, our core competences comps from our ability to develop a range of cutting edge automated medical devices and systems for use in the cell gene therapy.

Namely first the car T Express platform.

Based on our past temperate casket buoyancy activated sell soaking technology.

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Second.

The growth rate recognized XP oxide platform full clinical biobanking.

Which allows for automated processing and quiet storage of coal breads and that tenneco's and posts.

Answered the P.S.P. path full full point of care applications, namely automated processing of autologous peripheral blood and bone marrow derive the stem cells at the point of care.

Importantly, the platform allows for a simultaneous isolation of convalescent plasma and immune cells.

Which is important for fighting against coping nine king.

As many other company have recent trade reporting it.

Hold business has also being affected by the girl Bokova 19 pandemic.

In particular, you have had they said begins significant impact on the corporate industry as a whole.

Resulting view a corporate units being installed globally. During this time.

Additionally, with many countries and states are locked down some customers opted to costumes their existing safety stock up our X P. Disposables instead of placing new orders during the second quarter.

That said, we do expect AXP disposable sales to increase back to their normal level after the pandemic abates.

I think it is important to note that our long established and deep expertize.

Combined with a unique flexibility of our technology platform.

Has also enabled us to drive that they had rapidly in response to the urgent market need relate to the global pandemic.

Towards that and over the last a few months, we continued working with our joint venture partner immune site mobilizing our knowledge base and global resources in the medical technology field to develop a market aid ranges.

Solutions to five coven 19.

Our strategy is multi faceted, including the development of a multi tiered approach aimed at antibody therapeutics.

Our goal is simple to address unmet medical needs with both preventive and therapeutic treatment after disease.

As we announced the yesterday, we entered into a supply agreement with bow kit healthcare.

Uh-huh fake code limited to market under the similar GNSS brand, a SaaS too cold too.

Im I Gigi antibody test kit.

Which has already had received the emergency use authorization or E U a round the U.S. food and drug administration.

At the same time, we wish to our own previous you a submission.

The change of manufacture allows us to speed up our product to market timeline.

We expect to initiate marketing of this a new test kit next Monday August 19th Oh, Sorry August 17th Twentytwenty.

As a reminder, the antibody test kit is designed to identify Kobe 19, I'd G. III, Jim antibody using a single dropped at of blood from individuals who have encountered the virus in the past and developed an antibody response.

Yes.

Antibodies up proteins that help fight infections, and prevent a and provide protection against against Green factories.

Thereby conferring immunity.

Of course, not everyone, who has the infected with scope in 19 develop symptoms many individual Hassan asymptomatic and do not know they have contract at the virus.

Therefore antibody test is there a widespread use can give india for use in health officers.

A better idea of whereas if someone has encountered the virus and how quickly it spreads.

Given the scientific communities growing understanding of the dynamics of both zero conversions and zero diversions in co benign King. The hope is that as this knowledge mantis people, who taught possess the antibody may safety go back to their norm.

More lives.

We intend to further differentiate our antibody test kits with the addition of a point of care breather device, which improves the speed and accuracy of the lateral throw immuno assay to get tap to covert 19 antibody.

Bye and instant digital read out.

Through to eliminate few my era, and reduce the possibility of false negative and false positive results.

During the quarter, our research team for several key patent applications for the reader.

To further protects our intellectual property.

The reader. He is currently in the final stage of development and once completed we plan to file a separate you a application with the FDA.

The cockpit reader and the companion Ciro logical assai were present, a next generation product.

Yeah, we'll be a low bust expansive and crowd the connected device, allowing for big data analysis of results.

We believe this could potential rate revolutionize the low off a rapid technological testing and public health monitoring during the Koby 19 crisis.

Serving the needs of government agencies schools, large and small employers and others for massive screening efforts.

As noted our coven 19 strategy it does not stop here.

We are also leveraging our proprietary cetera processing platform in conjunction with our antibody test kit to develop various a therapeutic approach that may help to fight this global pandemic.

Our multi tiered strategy for come Koby 19 therapy.

Include our development of a cover.

The development Alpha convalescent plasma and therapeutic antibody approaches.

Some lessons price about therapy is an exploratory approach that in both giving patients and injection of approximate from people who have recovered from co benign king.

The use of a convalescent plasma as a way to passively transfer antibody and convey disease protection dates back for decades.

With some evidence from a full benefit against several other non viruses.

Such as Bola Saabs Merced.

Influenza H one N one virus.

Previous studies and also most recent clinical study in the U.S. demonstrated safety and efficacy in the survival rates in the reduction of hospital space full Merced, Sop and Cobian 19.

When challenge for developing a successful convalescent plasma strategy is the throughput and as a processing efficiency.

Our proprietary automated cell processing platform. The PXP 1000 allows for high efficiency processing and simultaneous isolation of convalescent plasma and immune cells.

The convalescent plasma can be used alone or to produce polyclonal antibodies therapies, which can potential rate treat more patients and convalescent plasma alone and further mitigates that don't have variability inheritance individual convalescence pradman.

The second part of our antibody strategy revolves around monoclonal antibodies.

As we previously announced our immune sites joint venture has acquired worldwide intellectual property for the development of 40, human monoclonal antibody therapeutics for cobalt 19.

Including full high affinity monoclonal antibody drug candidates against the covert 19 virus.

These monoclonal antibody drug candidates now under development by immune side will further complement the convalescent plasma and polyclonal antibody approach. So we are undertaking for the treatment of Cowen on King.

In summary, we continue to execute our both our core strategy to become a market either in automated tools and services for the cell gene therapy market.

While also leveraging our proprietary technology to develop a market a range of solutions to fight that the global pandemic.

We're continuing to innovate internal rate and overtime, we look forward to introducing a range of additional innovative products aimed at DSL gene therapy I Rina.

Which will expand our long term growth opportunity.

I want to end by no means that we were very pleased to have announced in mid June.

So more definitive addition to Russell Microcap index.

Our inclusion in the index is that refraction our of our gross as a company and allow us for increased the visibility Amanda investment community.

And with that let me turn to the Paul to over to Jeff and share the key financial results from the second quarter Yep.

Thank you Chris.

Net revenues for the quarter ended June Thirtyth 2020 were 2.2 million.

Fair to 4.3 million for the quarter ended June 32019.

Decrease of 2.1 million a decrease was driven by XP sales, which declined by 2.2 million in the current quarter.

The cobot 19 pandemic appears to be the primary driver of the decrease.

With many countries and states on locked down some customers opted to consume their existing safety stock and Lou placing new orders during the current quarter.

We do expect XP sales to bounce back to their prior levels as the health emergency subside.

Offsetting a decrease in X.P. sales was an increase of a half million and Carty express sales due to Corning.

Our distributor in this product line, adding hearty express to a suite of products initiating sales to customers in the quarter ended June 32020.

We experienced a negative gross profit of 2.6 million for the quarter ended June 32020.

The loss was driven by an inventory reserve of approximately 3.6 million.

Related to the on hand inventory of Cobot 19 testing kits purchase from the company's original manufacturer.

Excluding this reserve gross profit was approximately 1 million or 44% of net revenue for the quarter ended June Thirtyth 2020.

Which is in line with the gross profit of 45% of net revenues we had in the quarter ended June Thirtyth 2019.

For the quarter ended June 30 to 2020.

Sales and marketing expenses were 442000 compared to 384000 for the quarter ended June Thirtyth 2019.

An increase of 58000 increase was driven by expenses related to our short term incentive program.

Research and development expenses were 578000 for the quarter ended June Thirtyth 2020, as compared to 611000 for the quarter ended June Thirtyth 2019, a decrease of 33000.

The decrease was driven by lower project expenses in the quarter ended June Thirtyth 2020.

General and administrative expenses for the quarter ended June 32020 were 1.5 million compared to 1.2 million for the quarter ended June 32019 and increased 300000.

Interest was driven by noncash stock compensation expense incurred in the quarter ended June Thirtyth 2020.

Interest expense for the quarter ended June 32020 was one point threemillion.

Compared to 1.2 million for the quarter ended June Thirtyth 2019, an increase of 100000.

The increase was driven by additional interest and amortization of the debt discount related to the company's credit agreement with Boyalife.

For the quarter ended June Thirtyth 2020, we reported a comprehensive loss attributable to common stockholders.

Six point Fourmillion or one dollar two per share based on 6.3 million weighted average basic and diluted common shares outstanding.

This compares to a comprehensive net loss of one point threemillion.

Or 47 cents per share based on 2.8 million weighted average basic and diluted common shares outstanding for the quarter ended June Thirtyth 2019.

At June 30 to 2020, the company had cash and cash equivalents totaling 7 million as compared to 3.2 million at December 31 2019.

Working capital improved to 8 million at June Thirtyth 2020, as compared to 3.2 million at December 31 2019.

This concludes our prepared remarks, so now we'd like to open the call to your questions operator.

We will now begin the question and answer session.

You asked a question you May Press Star then one on your Touchtone phone.

If you are using a speakerphone please pick up your handset before pressing the keys.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then too.

At this time, we will pause momentarily to assemble our roster.

Our first question is from Sean Lee with H.C. Wainwright. Please go ahead.

Good afternoon, Christian Jeff and thanks for taking my questions.

Oh, just my first one is on the existing PXP and car T X.

Mrs. So you mentioned part of the a major car. They decreased revenues. This quarter was due to the a less ordering from the XP customers now with the with the country's sorry that are gradually reopening around the world do we expect the revenues to bounce back was that the real quick.

Yes, we do.

Do you expect a timetable for that for example, you mentioned.

Your customers have been using using their existing safety stocks.

You have any insight into how much of that its last or why would they be a do you expect to be glad you gradual rebound or do you expect to like for the to go back up to pre pandemic levels very quickly for yourselves on me.

I think it'll it'll be a little bit of a gradual increase but we will start to see or the increase in the third quarter. So right now.

As things open up a more and more over the next few months.

We will expect those the sales to get back closer to normal at that time.

I see and Scorpio car T Express sales has to Corning launch being up to the going according to your expectations or do you feel that there was no major impact from the pandemic as well.

So for they X_e_r_s Ah so those are the business.

The business card customers. So so we're happy that corn and launched asking June and the engines that says we are a facilitator. So we'd facilitating the marketing efforts of calling in for it stands and where we are happy to see that the seat.

Tire sale volumes start to pick up so so but.

I mean, a in term of a pandemic global pandemic, the which a fast the entire industry. In January. So currently is there are asked to uncertainty as far as how the pandemic well goal, which due to our directionally well go. So so we are eager to see.

How is that that pandemic develop but we're very optimistic on the overall outcome.

I see the good.

My next question with our on the antibody detection and coated testing kits. So I was wondering.

What prompted the switch.

To a new manufacturer.

Yesterday and also the previous stock that you have oh, you're going to market that alongside with the new one and.

As far as the also as a follow up on market goes.

The majority of that has been done those still the antigen test so what sort of institutions are you, mostly targeting with the antibody test.

Have any have many customers being we sell to you for the sense yet.

Okay. So so.

To answer as there are two part of your question. The first is or what prompted the switch of a manufacturer. So we have a submit that as we reported previously and that we have received policy D or.

Authorization.

Under the F.D.A. guideline.

However, we have submit that you a and waiting for that or.

FDA decision on that our submission of a 125 tests showed a moment sat.

This week has not being a test it by the end see I at the at the.

FDA level. So we have made a quick decisions that sense, we reach out to two various different a manufacturer and this particular to manufacture it gets have a OEM approved sorry, you a approved product bye.

Changes Zap really speed up our product to customer a timeline because over the past. The mine saw so we have received quite a bit of ER order and diesel orders are all pending now a EA ups.

Provable. So we felt a quick change our fate and you a products as that's pretty speed up our delivered to our app.

Customers and to to fulfill their orders.

The second part of the a the crushing yes with regard to whereas there our test test the a that response.

Alpha antibody or test the a response of the encouraging I presume. It's the virus here per se. So so currently our asked say a assets approved by that you eight yes, the attaching the antibody the individual seemed antibody response.

Another words, it's an indirect.

Past attached to it yeah answers with the when it has been exposed to the virus or not but it did not how whereas or someone having ongoing viral infection at that particular a moment.

It has a different purpose Dan testing the virus per se.

Just to true to make this a is just too to give a full can't answer to go go crashing we are contemplating developing various different assay that well address the a the encouraging in this case the virus in the body. However, we use it says that.

Yes, well, we haven't had a existing products ready to release, yet, but keep keep to me to our our conference call and our web site and we will update so sad periodically with any advances.

Oh great.

Thanks for taking my questions.

Your next question is from Andrew Eli a private Investor. Please go ahead.

Hi, gentlemen, I wanted to ask you what are the particular numbers of units that you sold of each of the products that you offer.

That's the.

As you may you, including the different antibody or the automation.

So those side they are detailed in the car express.

I think that detailed the itemize the number yet seeing our quarterly reports there there are a number of cable that elucidates those out and Jeff you want to add some more yeah no. Yeah. So the expertise is 2.2 0.2.

Million the card to express is about 700000 this quarter.

And that's the number of units correct.

That's that's dollars.

Okay, I was asking for number of units.

Yes, I'd have to follow up with that with that question I don't have the number of units in front of me just dollars.

Okay.

Thank you.

Well see back the time.

This concludes our question and answer session I would like to turn the conference back over to Chris you for any closing remarks.

Thank you operator, we look forward to updating you on our progress in the coming months and thank you to everyone, who will participate on todays call and for your interest. So again a his holdings. Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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