Q2 2022 Orgenesis Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to the old Genesis business update call.
At this time, all participants have been placed on a listen.
Mode and the floor will be open for questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host David Waldman from Investor Relations, Sir the floor is yours.
Thank you and good morning, everyone and welcome to our Genesis second quarter 2022 business update conference call on the call with US. This morning are very cap Leong, Chief Executive Officer, and Neil Risinger, Chief Financial Officer. If you have any questions. After the call or would like any additional information about the company. Please contact crescendo communications at 2126711.
020. This conference call contains forward looking statements, which are made pursuant to the safe Harbor provisions of section 27, a well the Securities Act of $19 33, as amended and section 21 E of the Securities Exchange Act of 1934 as amended these forward looking statements involve substantial uncertainties and risks are based upon current expectations estimates.
And projections and reflect our beliefs and assumptions based upon information available to us at the date of this conference call. We caution listeners that forward looking statements are predictions based on our current expectations about future events. These forward looking statements are not guarantees of future performance and are subject to risks uncertainties and assumptions that are difficult to predict our actual 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 risk factors and uncertainties discussed under the heading risk factors and I don't want any of our annual report on Form 10-K for the fiscal year ended December 31, 2021, and our other filings with the Securities and Exchange Commission, we undertake no obligation to revise dropped.
Any forward looking statement for any reason I'd now like to turn the call over to our Genesis as CEO . It's very Catherine. Please go ahead.
Thank you David.
Thanks to everyone for joining us on our call today, I'm always glad to have it.
So that's a mix issue.
And as many of you know.
Right.
Craveable food.
Okay.
Yeah.
The support we have received.
Wonderful.
Yeah.
The last several months have been one off much to them.
Typical issues economic instability.
Danielle still suffering from the latest.
While no new biological sex appeal.
These issues have not had the right.
So now it's physically.
They have affected investors too.
Biotech endlessly.
And many companies have not survived.
That had been frozen.
When does that happen.
We had to liquidate assets quickly and the general mood of the biotech investment.
We are extremely fortunate that we have.
With the sum of all shareholders.
And then our suppliers and customers have gone out of the way to make sure we maintain our stability.
We appreciate very much thinks this is.
Thanks for saying that.
The point of care.
We have woven together in the last few years.
We are also not a typical biotech company for me.
There is not a typical taxi company is Amazon is not a typical bookstore chain, if you'll remember when Amazon books.
And B, if not I'll tell check.
We are a new breed of biotech just this is development of software hardware and communications technology enabled.
The capability to share resources products and services to many more people around the globe more efficiently.
In April new sources of employment and deployment of goods.
So are we building and UX the stability <unk> innovations in silsbee.
Our point of care network enables clinicians and patients the axis.
Access lifesaving lifesaving therapies and paid a pathway for new innovative synchronous to reach clinical use in a decentralized manner.
It should be licensed from one hospital might be made available to any hospital in the next week.
Network allows clinical and scientific data to be sure. So instead of each hospital and trying to face the challenges of supplying these therapies to patients.
We'll come to the pitfalls that doesn't face we provide well I believe that approach.
Oh for point of care services now, we grouped under more Genesis.
Have the know how and infrastructure to provide such therapies across the neck.
Okay.
Just quick was quick and efficient capability to expand.
Services to new hospitals and clinical sites.
Work at companies, who wish to access this network and develop and supply the products.
Utilizing our point of care network benefit from sepsis.
Enabling them to have a robust supply chain not limit.
Not limited access to the not limiting access to the products by complex supply issue with the law.
I from our centralized processing facility.
The biotech industry in general takes a cell and gene therapy manufacturing.
But no biotech company as far as I know has ever manufactured themselves.
<unk> expanded into new Tulsa elite program.
Sales may be used to manufacture proteins or other materials.
And by doing so may be utilized in our manufacturing.
Both of US such as is done in traditional biotech industry, but no cell and gene therapies based on someone actually infection, making yourself.
The source material is always taken for biological tissue.
This is a subtle difference but of course the ones.
All therapies based on the Knowhow and research scientists around the world that have studied the behaviour and have established the scientific message within the Abel Lee programming a function that yourselves.
Well the capability of selecting and growing.
These technologies are the pinnacle's human achievement, allowing us in some cases to cut free some of the friction that evolution has imposed on ourselves and in other cases, providing us the insight to utilize the intelligent system design.
<unk> in our sales based on such a solution.
Cell and gene therapies, though about Youtube utilizing scientific knowledge.
Sophisticated biological algorithms and tools to reprogram cells.
If it somehow.
Our success depends on the processing system. The hull was the biological techniques and the software.
<unk> uses one low cost and high quality applications.
Our approach to this industry space.
On the missiles, we work closely with many cellular processing system developer to optimize these devices and in some cases have even developed zone, which all integrated into our own people.
We work closely with the suppliers and developing different technologies, which enabled post this thing in a lethal than themselves. We utilize these technologies to optimize the quality and the safety of fatalities.
We have set up a network.
Europe Asia Middle East and the U S. We now have a tool deployed Europe , the middle East and a set of point of care centers and strategic hubs.
We have managed to generate revenues with cover more activity in Europe , and Asia, and we will now use the additional funds we have received for melanoma.
Announced this morning to deploy additional people to provide services for our customers in Europe and in the U S.
I'll focus this year has been and will continue to be to establish a point of scale development of processing service with a strong focus on expanding capacity in England.
One excellent example is our partnership with Johns Hopkins, who we have established a point of kill sensors supported by generalists listening. So this will be utilized for the construction of the cell and gene therapy processing facility.
Development services already excellent.
We have managed to provide our customers with all the services, we committed to in a timely manner and believe that they continue to see the value of our decentralize the foods.
We are also expanding our marketing and so as we believe we have now the resources to expand our capacity.
Turning in more detail to our funding announcements. This morning I'm pleased to report, we secured a $10 million for metal more capital policy.
Amir investment firm with deep expertise in the health care sector.
Those of you.
Familiar with medical malls targets investments in middle market companies seeking to build long term value through active and collaborative partners.
That's a mark is managed in excess of eight billions of books in Coors.
By this vessel Sun.
They are committed path of and we look forward to working closely with them to.
To help us accelerate the rollout of our point of care platform.
<unk>.
Equally important is the fact that we skus as investments at the subsidiary level for those of you who've known us over the years, we have two major priorities November one delivering lifesaving cell and gene therapies to patients around the world, that's cost, which will allow widespread adoption and <unk>.
<unk> board and protecting and preserving all shareholder value by avoiding the usual toxic funding that often slows the capital structure and its doing value for small cap biotech company.
I saw only believes that the underlying value of what we're building is not with flex it in the public market.
Bringing in a qualified as metal models, who has deep expertise in the health care sector and understands the valuation classic services companies are getting into five or six so.
Who will help establish that film. Additionally, they understand I believe the growth potential of our business and we could not be more excited to have them.
As a fall snow, while preserving our capital structure and minimizing exiting things.
The reason our point of care businesses lesson hating Wellington to sleep.
Because we are able to lower the call streamline logistics expand capacity enhance distribution with both the Singapore office close to the hospital setting.
Which we hope will support the uptake and makes me flu piece more broadly available to patients. We believe this is a crucial step that is necessary for celsius to become widely available.
Utilizing our own pool based approach. We believe we are uniquely positioned to address the challenges of <unk> centralized production.
Ample shortens implementation time of building out some capacity from 18 to 24 months to six months.
In terms of expenses, our goal overtime to reduce the cost.
Yes.
Tens of thousands hundreds of thousands of them.
Importantly, we believe we have built a highly scalable scalable business model and expect to benefit from tools.
Arjun re occurring revenue stream.
And based on future royalties and long term contracts, that's the long and supplying these cell and gene therapies.
Yeah.
At the same time, we've only started generating revenue.
And I'll still be out licensed and Zoe.
Not at the same level as themselves is still we believe this will provide a longer term source of future <unk>.
From an additional value for shareholders.
Point of care therapeutic pipeline now stands over 16 distinct clinical programs.
Talked immuno oncology antiviral, Mr. Bullock in autoimmune disease as well as tissue regeneration.
Saturday involves leveraging leveraging government grants and local sources of non diluted funding from regional partners.
In order to advance life seasoning.
And by designing these therapies from the ground up using our own people based model. We believe these therapies can be advanced in clinical trials.
The fraction of the cost of additional things.
By leveraging our network.
Academic institutes and health care systems around the world.
We're also taking advantage of non diluted funding such as a recent award in May 2022 totaling 4 million you. The European Innovation Council passed final thing to advanced technologies for the production of personalized autologous and you truly pills and stem cell.
The grant is aimed at the development of technologies to feed production supervised by T cells.
Yeah.
The significantly reducing manufacturing costs.
In turn these products can be utilized for wider indications, including autologous doctors cancel immunotherapies in psoriatic stem cell transplantation and regenerative medicine. We believe also to the pipeline full tremendous unlock potential.
We are now pausing as advanced advance each of these assets with clinical and preclinical models.
And when you compare also to the pipeline against other biopharmaceutical companies have found market cap as well as many of those much laws on the books.
I have only a small hand full of related programs.
Complex, we have access to many therapies across various indications at all stages of development.
<unk> partnerships.
So to wrap up we are executing on everything we said, we're going to do now with metal amongst support we look forward to accelerating the rollout of our point of view. So this isn't deployment twofold.
How partners and customers.
And it's a full consolidation development in clinical trials.
Rupees utilizing the point of care platform within.
Within their respective markets.
And we continue generating revenue while transitioning from the first the.
Second stages, so remember our business model.
All agreements with our customers on long term contracts and as we advance our respective.
Pipelines, we expect to benefit from growth in high margin reoccurring revenue stream.
Overall, we are more enthusiastic than ever about the outlook of the business and believe we are well positioned to expand our market position not only as a leader.
Sure.
Selling into the market.
We have built a highly scalable business levered by value for shareholders for years to come.
On that note I'll now turn the call over to Neal I think Oh, Chief Financial Officer.
Thank you Barry.
Decrease of 8% the changes contributing to the decrease during the quarter were attributable to an increase of 531000 in salaries and related expenses, mainly attributable to an increase in salaries and related expenses. Following the scale up for increased production a decrease of $2 2 million in sub contracting professional and consulting service fees, where we invest.
Heavily and sub contracting and professional and such service fees in previous years, and we reduce such expenditures this year and an increase in 991000 on other research and development expenses.
Selling general and administrative expenses for the three months ended June 30 were $2 8 million as compared to $2 9 million for the comparable period.
The decrease in selling and general administrative.
<unk> for the three months ended June 30, compared to the three months ended June 30, 'twenty. One it was primarily attributed to a decline in stock based compensation professional fees and other general and administrative expenses. This was partially offset by an increase in salaries and related expenses and accounting and legal fees.
Terms of liquidity and current assets. We ended the period with approximately $25 5 million, including cash and accounts receivable of approximately $21 million. This does not include the funds from metal market for $10 million that was received subsequent to the balance sheet date in this quarter.
We remain focused on carefully managing expenses through cost effective international partnering partnering strategic funding and non dilutive grant funding we have been fortunate to receive government support from several countries and believe we will continue to benefit from such support to further grow our appeal care platform. We also look forward to benefiting benefiting from our recent loan in collaboration with metal market.
Operator, we will now open the call to questions.
Ladies and gentlemen, the floor is now open for questions.
If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question. Please pickup your handset listening on speaker phone to provide optimum sound quality.
Please hold while we poll for questions.
Your first question for today is coming from Bruce Jackson. Please announce your affiliation then pose your question.
Hi, Bruce Jackson, the benchmark company.
I'd like to start with a comment you made in the fourth quarter call, where you said that you had commitments from customers for future revenue in excess of $30 million for 2022 and $55 million for 2023 I wanted to know if.
There were any updates to your thoughts on the contract pipeline for the remainder of the year.
I think we'll still on track for our commitments, we have had some additional contract not major but I think we have.
Maybe a change of about $5 million, but I'm not doing some level of exact number but certainly the complex. We we have a we all we are growing well in them.
Progressing well.
Okay, Great and then the other question I had was about the formation of the more Genesis subsidiary is that.
With the asset so those physical assets for example, the arm pools and does include any intangible assets like <unk>.
Patents are knowhow anything anything in there. So just just broadly what's the composition of the assets and the more Genesis subsidiary.
So we have subsidiaries that are focused on services.
And we have the armfield flu.
And I don't know call weather related to providing services such as social development.
And processing of the cell.
This does not include any knowhow IP related or any thing related to the therapy themselves.
We have subsidiaries that are focused in different lines of therapy declines and which supports the out licensing and and 11 new generated from these out licensing.
Hum.
Okay, great. Thank you for taking my questions.
What was the pleasure.
Your next question for today is coming from Kevin Sito. Please announce your affiliation then pose your question.
Yes.
Hey, Barrett, Kevin from a screenshot tepid, though yes, so I'll just share a few observations before asking my question and I think you would really guide the shoulders and thinking about where this business is hate it. So I'm looking at our cash that we are right now is.
Dropping so we are left with about $3 million of cash and of course, we do have quite a big chunk in economy Assumable, but I'll. Just this is called the account we see most while now because time is needed to collect those so this quarter. We can cut about 5 million of losses, so without the extra financing for our met him up partners we might not.
Net loss for two quarters I'm, sorry, with just wonder how are you balancing our own growth.
You know all investing in Oslo. This we spent about 4 million investing in deep met Io and other companies. So I'm. Just wondering how are you balancing our immediate needs of our profitability, because we cannot be diluting and raising money at a time.
Yes, I agree with you.
All this was actually in support of some of the Atlanta activity.
All right.
Actually.
Something that is.
What we hope will be.
Funded by grants.
Sometimes go off when it takes time and you have some expenses in the back.
So we really try to focus not only on the activity of expensive on grants we made it.
Yeah.
Got it.
I also like the us as well because I think a lot of things have changed in D. C are interest rates have definitely gone up theres a weak macro economy. That's a lot of talk about possible recession. So I just wanted to ask about the.
The customers can be medical financial year 'twenty to intrigue do we still expect roughly about $50 million revenue are just starting to see some downward adjustments in those figures.
So at lease for an existing customer and additional potential customers.
I think they.
Typically when a biotech companies go for development of a product, especially if they are going through a clinical trial that make sure they have the <unk>.
Can you kind of.
Expenses kind.
Kind of.
Available because of your commitment to the hospital.
I think most of our customers have the funding at least the ones are there.
And.
I also think in general a lot of our customers are heavily funded by government grants and additionally sources, so not only dependent on additional.
Financing for itself.
So I do think.
Revenues seemed pretty secure.
We are expanding our customer base.
They chose that and that's why it's very important for us to make sure we have.
Let's see.
To expand out.
So.
If we take on new customers and we have an existing customer as well. So everyone. You have to make sure we provide those services.
Got it got it.
If I could just squeeze in one last question in the press release I thought. These we talk about multiple contracts, we biotech companies from the United States U E Asia Middle East as well. So maybe you found a better fit outs other shareholders as well are you able to elaborate more about the profile of the background your clients.
In large client small client.
The data Brad Pitt Bull on these claims the deep that we see in newspaper by a publication in science.
Science publications.
Well I think the science is here with me.
I mean as I said a lot of these have gone through a lot of.
Screening from government grants right.
So I think our science of feel to me.
They sell a lot of them have clinical activity. So they are established.
Kind of not the first products to market, which I think is important we do have smaller ones.
To be a more kind of startup merle.
But I think many of our customers all kind of.
Established in their own kind of activity.
Got it.
So just just to end up right I wanted to share my observations about the spot market right now and I hope it is of value to you because I see that it's my duty to you as a company is a shallow depths. It almost seems like we are entering a different environment right. Now investors are no no longer looking for growth by focusing a lot on profitability.
Just need the economy is understandable why youre looking at published in states. So I really do hope that we can be profitable profitable soon otherwise I think it is going to have a bad effect on us share price and capital raising down there is going to be even harder, but but to add up I. Just wanted to thank you for Doe, how well they are doing as well we really do.
<unk>.
Thank you and.
We all appreciate your phone.
We will do our best to get to that point.
Once again, if there are any questions or comments. Please press star one on your phone at this time.
Yes.
Okay.
There appear to be no further questions in queue I would like to turn the floor back over to MS. Kaplan for any closing comments.
Thank you I'd like to thank everyone for participating on our second quarter update conference call.
We're all excited about the outlook for the business and appreciate the support of <unk>.
And we look forward to providing Susan let's see as we advance our pipeline and all services and deploy all group worldwide. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Okay.