Q3 2021 Orgenesis Inc Earnings Call
Good morning, ladies.
And what can the audience. This third quarter of 2021 business update call.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments. After the presentation. It is not my pleasure to turn the floor over to your host David Goldman Investor Relations sort of the floor is yours.
Thank you Matthew good morning, everyone and welcome to the or Genesis third quarter of 2021 business update conference call on the call with US. This morning are very capital and Chief Executive Officer, and you'll write finger Chief Financial Officer. If you have any questions. After the call. It would like any additional information about the company. Please contact crescendo communications at.
2126711020 is conference call contains forward looking statements, which are made pursuant to the safe Harbor position provisions of section 27, eight Securities Act of 1933 as amended in section 21 of the Security Exchange Act of 1934 as amended these forward looking statements involve substantial uncertainties and risks and or <unk>.
Used upon our current expectations estimates and projections and reflect our beliefs and assumptions based upon information available to us and the date of this call. We caution listeners that forward looking statements are predictions based on our current expectations about future event. These forward looking statements are not guarantee of future performance and are subject to risks uncertainties and assumptions they are difficult to predict.
Our actual results performance or achievements could differ materially from those expressed or implied by the forward looking statements. As a result of a number of factors, including but not limited to the risks and uncertainties discussed under the heading risk factors in item one a of our annual report on Form 10-K for the fiscal year ended December 31st 2020th or other filings with the Securities and Exchange Commission.
<unk>, we undertake no obligation to revise or update any forward looking statement for any reason I'd now like to turn the call over to or Genesis C. M is very caplin. Please go ahead varied.
Thank you day, and thanks to everyone for joining us and I'll call. Today. Once again, we can I did song you'll be you'll have a new glow revenue for the third quarter increased over 400% of Pfeifle versus the same period last year.
So the nine month revenue increase to $28.6 million compared to $5.3 million for the same period last T, which we believe reflects both the pogos and sustainability of popcorn.
Oh Gee.
Feedback home was in and just pay has been extremely positive and we are now working with some of the leading research center hostels in back of companies around the world.
J, H U and U C Davis and the United States.
Will network now stands and also <unk> Asia, and the Middle East compromise with pen regional distribution.
In addition to a song iced tea, we haven't distinct first movement.
We began planning and implementation of the strategy a number of years ago and has invested heavily in the platform cause. This way you can we have established itself not only as a leader but does it differ.
Challenging for P market.
And although industry possible catching on to what these bills. It can pull this toy me is the way to the status for investors.
The most cell and gene Filipino manufactured using centralized connection either flew in house production Awesome C. D. M O, which is standard the coffin. This thing Centralised production requires massive capital investment is very expensive to authenticate can take he has to make production online meaningful scale.
Both of those in place of fulfillment of a major Balkan maximum capacity shortages, which is an estate advice.
Excellent X cause it didn't cost with many of me slow fees and ongoing manufacturing igloo.
A good example of coffee for things, which are face supply chain issues and can range in the hundreds of thousands nullification within the system. Okay.
However by producing personalized scent <unk> at the point the scale weren't able to add new cat capacities and free to sit within three to six months.
When compared to C V. Moseley M O into an old house production may take up to you to build up teams in terms of expenses rollovers time is to reduce the cost of <unk> to tens of thousands hundreds of thousands of dollars.
We recognize the challenge just facing within this really known as a result, we've made the decision to sell all masked the sauce, absolutely four o'clock can be $300 million, which provided us over $100 million with Nam they need of capital to go up on the platform.
Time of the sale NASA Fellow Avenue School awfully $30 million to put this in perspective Avenue for my point of kill business was over $25 million off with just the first nine months.
We believe with those action to sell NAFTA style with life decision at the time and we are more consensus than ever now and you said that you'd given positive feedback weed.
We believe it at that point of kill business is more advanced cost effective scalable than any other solution on the market today.
Let me explain why could.
Could you please cell and gene therapy is an extremely complex multi step closer.
Sales are highly sensitive to any changes in environment impulses and could you think cell and gene products must be done in a highly spill island vitamins since such products cannot be still alive.
Under four point of care model, we all also servicing I'll pop in customer two closest to develop which includes G. M. P compliance closest development development of quality control methods adaptation of supposed to still automation close loopholes with my system qualification of the closest combined with a utilized it.
Whitman and integration of the combined system into all mobile 15 minutes on pills qualification for the entire system together. These stages of what <unk>, what we call in with we have a fifth to ask <unk>. Once this is completed we can mobilize the armfield cause it was quiet.
Production site is apply all all pills for the designated medical site.
A small capacity if required we can't <unk> add more isolated posted things and it's in the same <unk> at a second stage, we can blink additional appeals to the Saint <unk> and they actually quite a expand to even more point of kill sensitive.
Why it was a goal of maintaining exactly the same environment in the same boat.
Current industry Slack. This is quite different it involves developing upholstery and implementing he's gonna cleaning facility in most cases involving involving many manual sex expanding.
Expanding production capacity of transferring subjection to another location is a lengthy and complex both building in qualifying new cleaning and transferring products can take months, Oh, and you could using products at the central location requires expensive and complex logistics of supplying source material from the patience and left.
Do any of that final product to the patient communication bye.
By two lives in both the initial assets maybe slightly ninth between now have a product that can be made with many locations.
Clued in close proximity to the clinical site and we can then expand capacity quickly and efficiently.
Since we have invested menus and popping and co development was automation solution provide of we have a thousand disposable toolbox a system, which we can incorporate into the on pills.
I asked me develop more appoint a feeling so a beauty products, we become more efficient that's explosive since many of the products a variation on the same theme.
Well, we may need to make modifications, we can still utilize many of the same components as we have developed in the past.
The key to off the sex success and the appointment of kill business is standardization.
Closest is exactly the same that's with well painful regardless before the product is produced so this season, we have established finding pull up the call. If we if we are using audited and consistent suppliers and vendors of materials involved in production of quality control we are implementing.
Validate an automated solutions minimize human and.
And was taking advantage of closed units to control infections standardization in a consistent consistent closest thing environment, we could math two of these calls.
We believe a strategy of decent the lines of supply of selling Jean <unk> based on standardization of the manufacturing environment will ultimately becomes a solution for this industry, enabling low cost accelerated developing and ultimately providing a scalable longterm option to overcome the industry wide capacity comes but.
We all also advancing appoint a feel silky, which now standing you know quality empty vial with the Bollock felt immune disease tissue regeneration and will strategy involved in licensing filthy, leaving research Institute hospitals, biotech companies and utilizing all possible customers to outlicensing.
<unk>, we do so in with them for future royalties as well as exclusive service contacts for Industrialising and supplies and supplying these fell in June so healthy.
At the heart to five business model being the optimal industrial if possible, whether we are providing a developing supply services to all possible customers based on that Outlicensing B O providing similar services to our customer for the one for the role as though was the thing that makes me feel if he's available.
I'll I'll go with the large number of patients with the deep cough, so decentralized closest thing and supply using the point of two accountable.
Unlike its additional by a tech with a handful of therapies in a pipeline, which require constant investment in clinical trials. We continue to evaluate mississippi's. It's all stages of development floor going partnerships with research and commercial commercial entities in hospitals and streamline the development of these politics along next week.
Providing us with shortened short of income fill out to development stage and potential upside once they get the market's approval.
Had built a robust <unk> pipeline, which includes more than 40 advanced selling potential <unk> and we.
You need to evaluate new technologies the.
The fact that we can combine appoint a few that's one of the closest thing technologies, such as automation solutions involve people's without clinical and manufacturing expertise providers have distinct advantage department licensing and service models with biotech companies research institutes and hospitals, and then advance is new and exciting too.
See the clinic, much fast and cost effectiveness.
Then it's additional biopsy.
We continue generating revenue by armed Penalizing, J, a felon gene products and supplying such Baltic add existing sent to fill all customers in Boston All Avenue cramps complex naturally flow from both with development protect plants up the batch supply. These are long term complex and that's all customers and thought.
So those advanced the politics the supply requirements.
We'll still investing although with a much reduced like an expanding capacity finalizing the set up to the point of two sent the rolling out out on pills, incorporating new technologies and implementing L qualities.
But we all minimizing investments I have will seem both public and private info has been supporting local and regional expansion and development.
So two laptop we are more enthusiastic whatever by the outlook for the business appointment because Saturday is no longer a vision with a growing reality, Wisconsin.
Cool, playing new technologies, and we have a growing pipeline of cell and gene therapy for which we provide development and focusing so.
We have an expanding global network of point of care Center, which we provide G. M people froze utilizing of technologies and all appeals we have assembled some of the top talent and then this thing and in much the same way with Amazon and first let me pull up to go with both of them off it's by investing in a scalable infrastructure first in class.
Technologies I'll go as well.
The cell and gene therapy market.
Building a sustainable Avenue model that we believe will support the growth of the industry in general and the growing capacity requirements with alcohol smoking weed.
We believe providing such solutions and die value for sure I'm going to see if the come on that's no amount to them to call over at the new life <unk> Chief Financial Officer.
Thank you very.
Our revenues for the three months ended September 30th 2021, or 8.7 million compared to 1.7 million for the three months and it's September 30th 2020, an increase of over 400% increase in our revenue was attributable to increased activity under that for sure which agreements with our customers and increase services <unk>.
Right and expanded activities in accord up to your service.
Cost of churches, and other research and development expenses for the three months ended September 30th 2021, or 10 million compared to 7 million for the three months ended September 30th 2020, representing an increase of 44% that increase during the quarters attributable to two two different factors. There was an increase in salaries and related expenses as a <unk>.
Bolt of additional staff hired to continue the development of our C. G T product pipeline as we expand our P. O care operations globally. We've continued to invest in the development of automated processing units and processes owned and licensed advance therapies to enable commercial production and additional work with partners that addressed quite a cure needs. We also.
Experienced an increase in sub contracting professional in consulting fees related to those investors.
So in general and administrative expenses for the three months ended September 30th 2021, more 6.1 million compared to $4 million for the respective dreary last year, representing an increase of 51%.
Increase in showing in general administrative expenses is primarily a tribute tried to increase in salaries and related expenses in terms of liquidity. We ended the third quarter of 2021 with cash and cash equivalents approximately 15 million.
Operator will now open the call to questions.
Certainly ladies and gentlemen, before is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that will posing a question. Please pick up your handset if you're listening on speakerphone to provide optimum sound quality.
Once again, if you have any questions or comments. Please press star one on your phone.
Your first name is coming from Bruce Jackson from the Benchmark Company. Your line is alive.
Thank you. So you mentioned earlier that do you off the walls are currently and validation fifth so when do you think that we might see some of those <unk> shift into production.
So we actually have some of these already located on site.
So.
When we qualify that we just want as opposed to Susan This is a standard industry practice you.
No different than what you would do is any other kind of closest development. So it doesn't mean the not usable just name is with you know we qualify them.
<unk> on site or at the at the location was the manufacturer.
So what I'm, what I'm driving at here is.
When the when the customer start from using them to transfer production then there should be a royalty stream that flows from that in certain cases, depending upon the the agreements that you've got that so what I'm trying to get a handle on here is.
When will the <unk> be like slowly.
Slowly and.
Working at the customer site, it's in generating revenue from licensing that's kind of what I'm trying to get at.
So we already have some initial sites working away and that's what I.
I think maybe maybe I should correct something it's not the customer views and we are using lay off part of al infrastructure. So it's not the customer uses and we utilize the appeals to produce the products.
And we'll all his money matches and some of them. That's the whole concept here is this is al capacity, it's not the customer review for small people.
I just want to make sure that's clear.
Okay. Good that's that's helpful.
At one point Bill like roughly about 30 of these projects under way is that still roughly the number of them uncles that are coming online at some point or is has that number changed at all.
So again I want to explain.
A product can go into <unk> that can go into closest developer. Please with no you don't post.
Oh I'll be July the closest and several sites to get that you do feel it's 151.
Five point of kill sides. Once this is done once this is completed then you can supply at as many sites as needed.
So it's not that you know you can have one product we have one product that will be utilized in.
Five five another that can be utilized in three sides and another was as it used the lives maybe and 15.
Okay. So I just Wanna again, just to be precise on the terminology that idea here a product if something is a is a cell and gene for beats a specific process.
That is all of July made in a non pill. According to all the G. M. P requirements and then can be supplied after the quiet site. So for example, if you're doing a clinical trial, you're providing a folder at three different sites you can play sleep different all appeal, but there's no cough.
Nation between the number of phone pills and the number of products okay.
Uhm I hope I gave a good enough explanation is that is that can you.
Uhm, Yes W. That's clear.
And then just one final question I'll hop back in queue. So last you we.
Yeah can we go back position I was wondering if that generated any revenue during the quarter.
And that's it for me thank you.
Thanks.
So there was some revenue meal you have exact numbers I'm not sure we have them, but again.
Number four but <unk> acquisition will still looking.
Kind of lighting and on penalizes. Those this process. Okay. Just thought it will also working on getting it into the it's it's approved in the U S and will taking steps to get this approved in locations in Asia and in Europe.
So I think revenue will not jumped up until we finalized population <unk> I think it's been pretty consistent.
I got this correct, it's under 100000 <unk>.
The small it much more a part of our road.
Thank you. Your next question is coming from John Ink from beyond capital. Your line is alive.
Alright have you congrats on a great quarter. So could you share of us more about the call us all so he says and other research and development and extra benefits that will input this quarter, what is one off and what is Kobe. Thanks.
Yeah do you like them.
I wouldn't say, there's any one off research and development again, it's part of an ongoing and again investment along with our JV partners in terms of developing this platform I would say that's b continuing expense with regard to personnel and that's why that increase to to build that platform is is.
This is pretty stable with regard anything growing in that regard to the personnel is required but as far as one off <unk> <unk> certain clinical developed maybe one off as far as quantifying that it's hard to quantify though in that regard, but but it's all part of the investment of building a platform. Okay. So as you see.
<unk> grow you're gonna continue to see certain costs grow on a scale way, but then there'll be new costs it'll come into play as well. Okay. So so it's really hard to really quantify a one off charge in that regard okay. Maybe in the future there may be some more ways to quantify that but at this point, it's really not something that I think is <unk>.
Certainly something we can say maybe at one point in time or a certain period of time, maybe quantifiable, but that may not be repeating itself. It may be different in another coke okay.
Okay, maybe I'll.
I think also what's this is listening to when we present a financial the cost of providing services is combined was on the cough I think maybe this was what you were saying too. So we typically have so a lot of this on the cost it's under.
All N D expensive, but it's actually the cost of providing services does this maybe what you all kind of applying to.
Yeah, that's about it so I'm not a question are happy song kind of salad that is a really approve fall color show us. So could you show lost some visibility in pubs I'll give you one S. You make dish therapy available tomorrow hospitals.
So again. This is this is typical of the whole industry I you have a therapy. It's <unk>, it's a wonderful therapy and there's certainly no requirement for for patients who undergo.
Complaint pancreatectomy and they need a product bye bye.
But if you can only supply this thought after today specific locations and you can kind of make it available whenever needed it limits the ability to kind of knowledge that.
So one of the things as you know we've spoken with US about another calls and again. This is not a two months. So since this is a licensed process, but I believe little advancing that will allow us to.
Actually make these thought of this product at additional locations in a cost efficient manner.
So in Kansas.
Just the meat by patients.
He was a significant amount of pancreatectomy and.
Again adoption of <unk> is very much based also on availability.
Typically if you looked at census today, there's very few centers in the U S. Even if clinicians want to do this procedure. So just calm or if they want a supply eyelets to patients has gone through a complete. Thank you. It's asking me to just call him do that.
Got it that that's all that's all I have very restaurant, you always have to <unk> J that'd be affordable and accessible all patients. Thank you all for your <unk> and have a great day.
Thank you very much.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time.
Your next question is coming from <unk> from New group capital Your line is alive.
Hi girls.
Oh graduation for your results again.
Can you share with us.
I find all of the in the next few quarters.
We just leave you I've checked and that about.
And then the next one or two Ya, okay chassis some colors.
In the next few quarters, how would this be.
Thank you.
Thank you. So we have kind of formally shows any kind of predictions, but I, but we haven't made the same public cats, but I can't explain again and you know you can.
See from the existing contracts.
One four the current work with doing mostly Oh closest development or what we call him purely nation. Okay. So working making these therapies. So the D. M P compliant and done in a efficient manner and this is very similar to work we used to do in math.
The self opposes development.
This sounds yeah, well not just doing it in a clean well actually combining this with automation closed-loop P C and putting it in an op ya. Okay. So that allows US then the ability to laptop laid off but so far so all the products we've been working on.
There's been no issues in terms of continuing was apophis I think our customers are happy I think I'll pass those all happy.
As we progress so naturally what we are now doing a slowly moving over and and this goes back to what bush was asking of pools going over from a stage, where we're doing posters development to actually running the batches and that's kind of a different level of <unk>.
So when you charge revenue for the next stage. The way. This is typically done and and again very similar to what we used to do in the past you charging for what kind of overall capacity usage.
No charging per batch so as these posts have developed contacts go over it and move over and and we actually have some additional ones coming in.
As they told us towards batch production, then Oh actually a avenue thoughts depending on how many batches are produced and again, you'll have a very much of a safety factor because you'll also kind of charging noise for maintaining capacity.
Sickly youth of specific capacity for citizens bought it. So it was a a customer or partner is doing 10, 20 or 50 patients then you'll still observing the same capacity on top of that you have the specifics Avenue for batch. So that's okay.
What we all hoping we call them be sure. That's so fall since we're looking okay filled with posters of open.
As these complex move from one stage and have they also possessing more to batch processing and supply. These contacts will expand as the batches the number of batches, but you've expand.
So I hope that gives some kind of clarity on how this business books [laughter].
Sure. Thanks, a mirror.
Is that do you.
You'll see that the next few quarters will be and it means it will be a cool moving forward.
<unk> Oh.
Oh, Oh, Oh, so just to see that it feel better thing is what it is now.
So again of his fault I'm not even sure I'm allowed to say that [laughter], so but in terms of foul planning I can say that we have very quiet capacity.
Not only maintain the existing avenue, but actually to expand.
So that's something we've we have ready for Arkansas.
And in terms of the way just the way this industry progresses. It typically these contact for the first year or two or more or less at the same scale and once you move on to more expanded.
[noise] batch manufacturing Willow Avenue extends with it but again, it's a very case by case, then I mean, it's it really depends if suddenly one of the products is going into more massive clinical trials of course, when he goes up.
Oh, Yeah, if in another case one of the politics is stopped for some reason kind of cool if you have that coming down but as you can see we we are expanding and we have more products. We all.
So the thing so.
I personally I'm optimistic.
Thank you. Thank you very much I love that optimism and the follow up to the great results with you.
Thank you all my life.
Mhm.
Thank you. Your next question is coming from Bruce Jackson from Benchmark. Your line is alive.
Hi, Thanks for the the follow up question I was curious to know how much disability you have on your Master service agreement.
In the future and can you give us a rough idea of how much unrealized business to his left on those agreements.
Again, we have made this public but as I said. These these I mean, we discussed within the past, but these Massa service agreements with typically go on for too sometimes even for Ya.
Hey, because I think it's a company or to talk now if we have a product working for a certain posted development I mean, <unk>, it's very difficult to suddenly take it then moved to another kind of production or another kind of Ah supply arrangements I was.
Can take many years so.
I think you know in terms of just still Avenue.
As I said, we have the conflicts we haven't you know and I'm optimistic that many of them will expand and hopefully we have additional ones coming in.
So and I think we have the capacity and the capability to service that.
And I know there was a big industry shortage. So.
Again, we can't say exactly how much and how much. This I mean, you can calculate how much revenue it had sofa. So [laughter] I mean, it's pretty easy to realize how how this revenue kind of building.
Okay, Great. That's it for me thank you.
Thank you.
Thank you there are no further questions in the queue I will now hand, the conference back to bird Caplin for closing remarks. Please go ahead.
[noise]. Thank you I'd like to thank everyone for participating in now so it's cool to 2021 business update conference call. We are very excited about the outlook for the business and I appreciate the strong support off on shareholders.
Executing on a point of cancel repeated business model as evidenced by a song revenue growth looking out had a goal is to continue the validation of a point of care platform, while building the foundations for a market expansion in this geographical region.
I look forward to providing citizen updates as we work in close collaboration was off partners to deploy up like just get a status you build one thank you.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day.
Thank you for your participation.