Q3 2021 Thermogenesis Holdings Inc Earnings Call

Good day and welcome to the Thermogenesis Holdings Conference call and webcast to review the financial and operating results for the third quarter ended September 30th 2021, as a reminder, all participants will be in listen only mode.

There'll be an opportunity to ask questions at the end of todays presentation.

If you would like to ask a question. Please press 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 an operator by pressing Star then zero.

As a reminder, this conference call is being recorded.

I'd 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 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 filed with the Securities and Exchange Commission the.

The information presented today is time sensitive and is accurate only as of the date of this call November 12, 'twenty 'twenty. One 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 participating on today's call is Jeff Cobble, Vice president of finance and principal accounting.

I'd now like to turn the call over to Jeff. Please go ahead, Jeff.

Thank you Paula and thank you to everyone for joining the call. This afternoon. We appreciate you taking the time to listen in.

Throughout our 35 year history Thermogenesis has proven its ability to pioneer the development and production of a long list of cutting edge automated technologies and products for the cell banking and cell therapy industries.

As the overall life Sciences industry has continued to innovate personalized treatments have become the wave of the future.

Within the market cell and gene therapies are becoming more and more important and are poised to continue to revolutionize many areas of medicine.

For its part thermogenesis intends to remain a leader in the development and commercialization of <unk>.

Automated cell processing technologies that provide more efficient higher quality and cost effective manufacturing solutions to bring these therapies through the clinic to the patients in need.

In September we were awarded a 250000 dollar phase one small business innovation research grant to develop and test the single use sterile cell processing disposable they will be used by the fully automated quintessence system for gene engineering a toggle.

Cell therapies.

The work taking place as a result of this grant is another reflection of our pledge to continue to bring groundbreaking solutions to the industry.

And will serve to booster our product line of automated cell processing tools.

It utilizes a contract development and manufacturing or C. D M O services company.

To drill down today's drug developers must address the key challenge.

How to manufacture high quality clinical grade cell and gene therapies at a commercial scale to provide these unique treatment to as many patients as possible.

We believe our proprietary automated car T Express platform.

Can help revolutionize cell processing and ultimately reduce overall cost.

Therefore, we intend to leverage our technologies to transition thermogenesis device only company to a provider of C. D. M O services for the global cell and gene therapy market.

Now, let me share some of the key financial results from the first from the quarter.

Net revenues increased 34% to $3 2 million for the quarter ended September 32021, the increase was primarily driven by a S. P cells.

Which rose $1 1 million or <unk>, 98% and three months ended September 30th 2021 as compared to the same period in 2020.

Gross profit was $1 1 million or 35% of net revenues for the three months ended September 32021, compared to $1 5 million or 64% of net revenues for the quarter ended Sept 30 September 30th 2020.

Selling general and administrative expenses were $1 7 million for the quarter ended September 30 of 2021 as compared to $1.8 million for the quarter ended September 32020, the decrease was driven by lower personnel expenses.

Research and development expenses were 500000 for the quarter ended September 30th 2021 compared to 700000 for the quarter ended September 32020. The decrease was primarily driven by development expenses for the company's COVID-19 cartridge reader incurred in the three months ended September 32020.

Interest expense was flat year over year due to the interest expense and amortization of the debt discount related to the revolving credit agreement with boy Light boy life asset holding to being essentially the same in both periods.

For the quarter ended September 32021, the company reported a comprehensive loss attributable to common stockholders of $1 8 million or <unk> 15 per share based on approximately 11 9 million weighted average basic and diluted common shares outstanding.

This compares to a comprehensive net loss of $2 5 million or <unk> 37 per share based on approximately $6 7 million weighted average basic and diluted common shares outstanding for the quarter ended September 32020.

At September 30 of 2021, the company had cash and cash equivalents totaling $7 6 million compared with $7 2 million at December 31, 2020.

Working capital was $2 1 million at September 32021, as compared to $9 2 million at December 30, <unk> 2020.

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

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad if.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

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

Okay.

Okay.

Yeah.

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

Good afternoon, Jeff and thanks for taking my question.

My first question is on the C. D M O business. So the switched from a device company to a CMO.

<unk> has been the stated goal for the company for the last couple of quarters. So I was wondering whether you could update us with some more details on the plans and also the time expected timeline.

Yes. The plan is progressing it has been moving forward, we do have some.

Some of them some.

Progress that we've made.

As far as working on some.

New contracts in and are bringing in some new facilities and operations for C. D. M. O M. We have we're not really at a point, where we're ready to talk too much about that certainly as we move into our 2021 annual meeting will be ready to talk in more detail.

Oh great.

In terms of the rest of the business.

Once you have the CMO up on money would you still be selling the X series product.

Mindy.

Yeah. So those are those are sold through Corning right now in that distribution agreement. So that that agreement is still in.

<unk> for another two and a half years and then they there are options to extend even beyond that period and then we also have.

So.

The the DXP devices, which will also continue to sell our independently. In addition to the C D Mall business.

Yeah, and what I see and my last question is on the CFO Grant so.

He used to develop a new single use processing disposables. So how is that different from the existing X series cartridges.

So it's it's different because it is the design of that project is to fully automate the process like when you look at the you look at the process now you know a lot of the car T therapies. The reason why there is so expensive is because it's it's a very manual process you know it takes.

You know roughly two weeks or so in order to from the pit.

And the time that the cells are drawn until the time they were ready to be inserted back into the patient just of processing and that's one of the reasons why the cost is so much. So in order to really bring that cost down you need to automate that whole process. So that's what the quintessence process is and it will help to not only reduce.

The time frame, but also significantly reduce the cost.

I see thanks for the additional clarification, that's all the questions I have.

Okay. Thank you Sean.

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

Yes. Thank you operator, we look forward to updating you on our progress during our year end call and thank you to everyone who participated today and your interest in Thermogenesis holdings.

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

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