Q4 2020 Thermogenesis Holdings Inc Earnings Call
Yes.
Good day and welcome to the Thermogenesis Holdings Conference call and webcast to review final and operating results for the year ended December 30 of 2020 as a reminder, all participants will be in a listen only mode. There will be an opportunity to ask questions at the end of todays presentation. If you would like to ask a question. Please.
Star then one on your phone if you wish to withdraw your question. Please press Star then two.
If you should need assistance during the conference call. Please signal 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 ma'am.
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 statements 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 from.
With the Securities and Exchange Commission.
The information presented today is time sensitive and is accurate only as of the day of this call March 17th 2021, if any portion of this call is being rebroadcast retransmitted or redistributed at a later date thermogenesis will not be reviewing or updating this material.
Dissipating on todays call are Dr. Chris Xu Chief Executive Officer, and Jeff Cobble, Chief Financial Officer, I'd like to now turn the call over to Chris. Please go ahead Chris.
Thank you Paula.
Thank you to everyone joining our call this afternoon.
Appreciate you, taking the time to day, saying.
2021 yes, the companys 35th year at any bursary.
Well more than three decades, similar Genesis has proven its leadership position to develop and produce a long day of stop cutting edge automated technologies and products for the cell banking in cell therapy field.
Some of these such as the market best setting X P devices and the bio archive system have been broadly adopted by leading stem cell banks and medical institutes that around the world.
Our bar archive, a smart cloud storage system, that's why what's used to warehouse close to 90% of all FDA approved drug to use cold blood units has shown by far to be the best device for cell survival for long term self storage.
We believe you will gain new applications and new life in the era of car T therapies by becoming the best choice of cloud storage for high value each clinical cell therapy products.
Yes, that's a reminder, in 2020, so my goodness it market a range of automated technologies and products for cell banking cell processing and cell therapies.
Which includes four large scale cell processing and bio manufacturing, we offer our ex CEO Rich laboratory grade products.
Which include the X labs for cell isolation that ex wash for Sal watching and the X. Many full high efficiency small scale south purification.
Our PX piece here, it's about technical grade products, which including the T X T 1004 cell isolation and PSP laboratory, a newly approved products for sale walking and reformulation.
And our Kashi Express platform for large scale bio manufacturing, which utilized our patent prop patent protected buoyancy activate itself salting or BACS technology instead of the traditional magnetic beads activate itself faulting or the Max techs.
Apologies.
The car T Express platform, where provides a comprehensive and cost effective cell manufacturers solution for both car T car NK and many other cell based therapeutics.
And for clinical bio banking applications.
We offer the XP two automated south separation system, which we launched recently to replace the market best setting XP system.
This represents a significant advancement in automating cord blood processing and you neutralized by a desktop largest colbert banks drawn the world, including the cord blood registry in the U S and the global wholesale bank the global Cobra cooperating outside.
Yes.
The bio archive automated to crowd preservation system, which is the industry's leading smart crowd because of atrium and storage system. What provides the ultimate performance and protection for today's high value itself for Tomorrow's critical therapy needs.
And third for the point of care application in clinical applications, we have the PX T point of care system, which he is a five 10-K medical Dubai.
That allows for rapid and automate automated processing of autologous cells from peripheral blood and bone marrow at the point of care.
S surgical centers and clinics.
Thank you Budd.
<unk> been robust product line is a strong testimony of the commitment and our leadership in the automated cell processing field force cell and gene therapy field.
In June of 2020, as part of a more exclusive global distribution agreement honing in life scientists began to distribute our X series cell processing products under the thermogenesis and colony deal brains.
Also in June of 2020, the company was added to the Russell Microcap Index, which reflects our continued growth as a company.
In the past here in responding to the girl with COVID-19 pandemic. The company quickly mobilize its resource and expertise and work with our partners to develop COVID-19, diagnostics therapeutics and either solutions.
The company had received U S. P. T O patent approval for each grew their technology in the later half of the year.
The COVID-19 landscape is changing quickly with.
With over 100 million doses of vaccines are really being administrated in the country. We are quickly adjusting and preparing the company for going back to the normal business in the post Covid era.
As we begin our 35th year of operation in 2021, we will continue to serve our global customer in the Celgene therapy field by providing them with cutting edge tools to meet your cell processing needs.
During 2020 in subsequent periods, we completed the development and submitted a letter to file with the F. D. A for our newest PX T Laboratory system.
Which is like GMP comprised systems that allows for fast automated and reliable watching and reformulating up cell therapy products.
DXP laboratory system isn't it is an optional accessory designed for use around the <unk> thousand system, which is an FDA five 10-K cop two approved medical device designed to process and purified different component from the blood under a GMP comprise.
Condition.
We are committed to the expansion of our brand, especially within immuno oncology area.
And aim to continue providing improvement and new technologies and devices, especially in our proprietary cocky Express platform.
To elucidate the significant market potential and the unmet need.
The cell gene therapy field.
Currently there have already been for car T therapies approved by the F D. A.
But each will cost between 300000 to close to 500000 per dose.
Car T cell therapy, although proven to be highly effective for treatment of certain blood cancers, creating a huge cosby area for thousands and millions of patients who could benefit from it.
Our mission is to increase patient accessibility, twosies lifesaving therapies by reducing their future manufacturing costs.
According to a recent report from Detroit Zero over 1000 cell gene therapy clinical trials currently underway.
The industry could see a wave of FDA approvals.
With as many as 10 to 20, new therapies per year, starting in 2025.
And this will likely accelerate overtime.
Jeremy it's a significant unmet need in manufacturing these highly promising cell based therapies not.
Not only are these not only are they complicated and expensive to manufacture.
Currently 65% to 70% of the cell gene therapy companies outsource their manufacturing.
And as there is only very limited capacity in the industry.
It is therefore more important than ever to ensure these cell therapy development companies can rely on the manufacturing of high quality clinical grade cell therapies at a commercial scale.
With that in mind somewhat Genesis in plans to utilize its highly efficient cocky express platform, which could significantly increase cell processing efficiency by up to 16 volt as compare to the traditional method and to decrease the manufacturing.
Costs by up to 60%.
In the coming year, we plan to initiate our own commercial manufacturing services by using our Cartage Express platform.
Under this new direction, we intend to convert the company from a product only medical device company to a contract manufacturing service provider in the cell gene therapy field.
This will provide our customer with best cell manufacturing solutions and address significant unmet needs for the field.
They're seeing all of my mind will also significantly increase our shareholder value in the future.
In summary, we continue to explore and execute strategies.
That will position. So again this is as a neither is the leading provider in automated cell processing tools and services for the Celgene therapy market.
We will be increasingly focused on the service side of the business and we will we are continuing to explore opportunities to co develop in license and acquire additional innovative products and service capacity, which could be synergistic with our current.
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And with that let me turn the call over to Jeff who share the key financial results from 2020.
Yeah.
Thank you Chris.
As we've previously discussed reported.
Blood units were stored globally in 2020.
Due to the COVID-19 pandemic impacting our core business.
Net revenues were down 25 per cent to $9 7 million for the year ended December 31 2020.
The decrease was primarily due to fewer X P disposable bio archive device sales.
And we do expect these revenues to rebound increasing back to pre pandemic levels.
After the health emergency subsides.
Our gross profit was $1 3 million for the year, a decrease of $4 4 million or <unk> 78 per cent.
The decline was primarily due to a disposition expense of approximately $2 8 million for the remaining inventory of COVID-19 testing kits purchased in the second quarter.
Operating expenses were $10 2 million for the year ended December 31, 2020, as compared to $10 4 million for the year ended December 31, 2019, a decrease of 3%.
Interest expense increased to $7 9 million for the year ended December 31, 2020, as compared to $4 5 million in 2019.
Increase was driven by a $2 $5 million noncash accelerated expense.
Amortized debt discount associated with the portions of the revolving credit agreement with boy light oil asset holding too which were converted in 2020.
For the year ended December 31, 2020, the company reported a comprehensive loss attributable to common stockholders of $16 3 million from $2 60 per share.
Based on approximately six 3 million weighted average basic and diluted common shares outstanding.
This compares to a comprehensive net loss of $9 5 million or 3.3 dollars 36 per share based on approximately $2 8 million weighted average basic and diluted common shares outstanding for the year ended December 31 2019.
The company finished the year with an improved balance sheet.
From a cash on hand of $7 2 million as compared with $3 2 million at December 31 2019.
Working capital also increased up to $9 2 million at December 31, 2020, as compared to $3 2 million at December 31 2019.
This concludes our prepared remarks, and now we'd like to open the call to your questions operator.
Thank you we will now begin the question and answer session.
You ask a question you May press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
And the first question will come from Sean Lee with H C. Wainwright. Please go ahead.
Good afternoon, Chris and Jeff and thanks for taking my questions.
My first question is on the ongoing pandemic and its effect on our business. So with vaccine efforts are in full swing in most countries around the world have you seen any rebound so far in your core blood business and when do you expect business levels could potentially return to pre pandemic.
<unk> levels.
Okay.
So yes, thank you Shaun and I would take a take a try to answer your question, yes, and I wish the global pandemic and there has been a year since the start of the pandemic, we start to see we start to see gradually some of our users of our technologies.
Start to rebound.
And the rebound.
Yes, the price imbalance in between the different countries and.
So yes, yes are on they're on the verge of a rebounding in lots of as I was co pulp at the business side, but are we where C. We anticipate probably used are going to be another.
A quarter or two before we actually came mature arise G DS rebound non numbers.
I see thanks for the.
Thanks for that.
All right. My second question then is on the Corning partnership I was wondering if you can provide some metrics on how that's going so far for example have any significant clients signed on to the cardiac space or are there any clinical studies that currently use the system.
Finally can we expect any.
Milestone payments from Corning in the next 12 months.
Okay, I'll take a try and for Corning certainly a pony is the main market leader for our X series of products and we are glad that last year made up of last years. They stopped the full launch of that product and that we can't see that E zero website and Oh Dear.
Our media campaigns. So so a very unfortunate tease that this launch a processing is in the middle of the Covid global pandemic. So there's not a lot certainly we can see it may a fast colognes efforts and launching this in different regions, but we are optimistic.
Thick and though in this regards we are more providing a supporting role we left the call need to be the main driver for our for this exterior is a product.
So at this moment I think we're yet to see what's the what's the number what it looked like in the in the post Covid era.
If you have anything to add.
No I I.
Agree I think once a corning sales team is able to get.
Get out and go visit these customers and do some demos I think will really start to see some significant adoption of the technology I think that's where the real value is is where customers can see you know what what it can do for them and you know how much you know how much are existing customers like it we expect new customers to to like it as well.
And then once they are able to go out and do the demos, we'll see those customers begin to adopt but we're still not quite there yet or you got to get to a point hopefully hopefully very soon where they can go out and kind of hit that hit the streets and start visiting the customer sites.
For your second question no. We don't anticipate any any additional milestone payments. This year, we did receive the $2 million payment and a 2019, but.
But we don't anticipate any new ones this year.
Sean Let me add a few additional comments so that you understand that the company has a strategy on.
On vesting tire.
Platform relate to Katja Express. So so we have the X series product line, which was designed for laboratory juice and the value continues to expand to.
I suppose there's technology to more labs around the world. So calling it is really a great partnership around that with their penetration and he in medical laboratory in January that the company. However, he is not sitting back and that the company is at.
Our focus on its own efforts, which is providing the service and are we we are using our are higher and the clinical grade a day.
The PX P series, which deliver a clinical a manufacturer service S. I eluded to India in the earning call Liberty. So that is where we see a significant significant unmet need for the entire Saudi and therapy field.
And not only so the that the market is a tremendous the bigger and the device itself and the potential margin yes.
He is also much much more significant I think somewhat genesis with its own proprietary technology really has a had a has a competitive advantage in moving into that direction. So hopefully we can update you and all our.
Shareholder with more exciting news seems that direction, especially if it hits the <unk> fifth year that we are in this field I felt that its new strategic direction. He is gone the group.
Revolutionizing revives this company to be a significant player in this area.
I see that was helpful.
Maybe you to elaborate a little more on this topic then.
Terms of the <unk>.
You go from having becoming a service provider in cell processing. So whats the approximate timeline you are targeting for this service and also are you looking to launch in the U S. First and then move to other geographies or do you have another marketing mind to go.
Well go first.
Yeah. So so.
Great.
Good question and the Celgene therapy, I'd say its a number one day outcomes either drops it's a cell based correct as compared to chemical drugs compared to a protein dripped. The difference you can sell drug compared to others is that Sal GAAP drop.
Cash do we have to be manufactured locally it's not like aspirin, which you can manufacturing volume spend Pittsburgh and ship true globally everywhere Celgene therapy, you have to be manufactured in close proximity to your patient.
So our intention is to launch a global a C. M O N T D M O bitterness in major a major countries solid bridging probably not starting with covering every where but are we we are very actively looking to our strategies.
Bye bye.
By either co partnering by partner or acquire.
Service capacity to enable us to moving to that direction quickly.
So two two sharp answer it it's already a long answer but basically.
We were looking at this opportunity as a global opportunity and that the key issue. Yes, we are quite different than any other ones, saying they can moving into the contract manufacturer area that differentiates we assume again that says moving to just the area with a strong patent protected.
Put pie toward technology Saturday diverse high efficiency and low manufacturing costs that could be a strong competitive advantage for us to moving into this field.
Thank you Chris that's all the questions I have.
Thank you Sean Thanks, Sean.
This concludes our question and answer session I would like to turn the conference back over to Dr. Chris Yu for any closing remarks. Please go ahead Sir.
Thank you operator, we look forward to updating you on our progress during our first quarter 2021, Cole and thank you to everyone who participated today and for your interest in someone Genesis holdings.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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