Q3 2022 Thermogenesis Holdings Inc Earnings Call

Good day and welcome to the Thermo Genesis Holdings Conference call and webcast to review financial and operating results for the third quarter ended September 32022.

As a reminder, all participants will be in glisten 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 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.

One 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 Polish warts of Rx Communications. Please go ahead.

Thank you operator. This conference call contains forward looking statements within the meaning of the federal Securities laws.

<unk> 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 Companys periodic reports filed with the Securities and Exchange Commission.

Information presented today is time sensitive and is accurate only as of the date of this call November 10 2022.

Any portion of this call is being rebroadcast retransmitted or redistributed at a lay.

Date, so much on this this will not be reviewing or updating this material participating on today's call are Dr. Chris Xu Chief Executive Officer, and Jeff <unk>, Chief Financial Officer, I'd now like to turn the call over to Chris. Please go ahead Chris.

Thank you Paul and thanks to everyone for joining the call. This afternoon.

We appreciate you taking the time to defeat.

During the third quarter 2022 we continue to progress our transition to become a high performing integrated C. D. M O for the Celgene therapy market.

As announced in October we completed a financing raising a aggregate gross proceeds of approximately 2.05 met him.

Which will help to support the planned launch of our Chi biosynthesis Division.

As most of you know for over 35 years. So more Genesis has pioneered the development of manufacturers and manufacturer a series of innovative automated technologies and products, especially for the cell banking south therapy industry.

So again, if it has been the provider of choice for automated cell processing and automated smart cryogenic storage technologies for some of the worst most important public and private cell banks.

Our bar a bio archive quiet storage system has warehouse close to 90% of all U S. F. D. A BLA approved clinical great colebreath units or C. B use.

And our E X P system has been used to process well over a million samples from many institutes globally.

In addition to our manufacturing know how in cell and gene therapy. The intellectual properties, we have amassed over the years, you're seeing battery a bowl.

As more cell based therapeutics, such as car T cell therapies received FDA approval the demand for manufacturing of these life life saving therapies continues to grow.

As we speak there are more than 350 U S companies alone working in the cell therapy Arena and.

And more than 1000 pipeline assets are in clinical development globally.

Targeting a range of blood and solid tumors.

The continued explosion in research and development is made possible by the incredible potential you inherited in current commercialized the therapies.

And that the future possibilities provided by additional personal lives the cell gene therapy.

Since 2017.

Six autologous car T therapy has been approved by the F D. A.

Recent reports show that the industry anticipates additional FDA approvals with as many as 10 to 20, new therapeutics each year stocking in 2025.

At the same time, Jeremy remains a critical and growing unmet need for manufacturing of these compact therapies due to the continued challenges created by the high production cost technological efficiencies and limited global capacity.

Drug manufacturing today, you're still the largest component of the cost of car T cell therapy.

With it with listing price ranging as I've mentioned, many times around 373000 to 475000, depending on the specific drugs and indications.

Thus there is a significant need for high quality cgmp manufacturing at a reasonable cost.

These dynamics have led to a rise in sea BMO partnership activities as more and more biopharmaceutical companies and other industrial participants recognize the urgency of the increased demand for cell therapies and the limited available of.

Good manufacturing practices facilities moving away from manual process will be the key to facilitating faster timelines and getting these life saving drugs from bench to bedside.

There in lies the opportunity for thermo Genesis to play a crucial role in the availability and use of these emerging celgene therapy in both the research and real world clinical settings.

In response to this tremendous Blackhawk.

For us it's always product after research clinical and commercialization stage as outlined earlier similar Genesis is working to contribute by adding needed the cgmp manufacturing space.

Promoting cost efficiency through automated and fast processing time.

And providing comprehensive manufacturing services.

That said, we continue to make significant progress towards launching our TD Boston This see the motivation.

And building out our approximate 35000 square feet of laboratory and office space in Sacramento, California too.

To create a state of art Cgmp compliant facility with 12, cgmp Crane boom suites to support the industry's manufacturing requirements.

As an integral integral part of this plan, we will leverage our proprietary high efficiency semi automated cocky express platform.

Which has shown to which has shown the ability to tangibly reduce processing time, Inc.

Improve south of Calgary and potential rate cut manufacturing cost associated with car T and other cell gene therapy by up to 50%.

The aim of the new division, yes to address the growing needs.

Borat integrated the CD, most services by providing high quality development and manufacturing capacity.

Salary and tissue processing development.

Alrighty system regulatory compliance and other cell manufacturing solutions for clients with therapeutic candidates in various different stage of development.

In summary, <unk> has strong intellectual property cutting edge technology.

In manufacturing and service expertise.

And we build out the ability to address scalable demands for access the state of art manufacturing capacity.

We remain laser focused on launching the TG biosynthesis division and our CD and most services to customers in the cell and gene therapy field in the coming months.

And with that let me turn the call over to Jeff to share the key financial results for the third quarter.

Yep. Thank.

Thank you Chris.

Net revenues were $2 1 million for the quarter ended September 32022, as compared to $3 2 million from the same quarter last year.

The current quarter's revenues were lower it was primarily just a timing difference related to XP disposable sales to our distributor in China.

In 2021, they place their annual order in the third quarter.

2022, it was ordered in the second quarter.

Overall year to date sales have increased by almost $1 million from $6 9 million for the first three quarters of 2021 to $7 $8 million this year.

Our gross profit for the quarter ended September 32022 was 400000 or 21% of net revenue compared to $1 1 million or 35% of net revenue for the quarter ended September 32021.

The decrease was driven by lower revenues in the current quarter and by higher costs from XP disposable contract manufacturer.

Selling general and administrative expenses were $2 million for the quarter ended September 30 of 2022 as compared to $1 7 million for the quarter ended September 32021, driven by rent expense with the company's new C. D O facility.

For the quarter at September 30 of 2022, the company reported a net loss attributable to common stockholders of $3 2 million or <unk> 10 per share based on approximately $13 31 3 million shares outstanding.

This compares to a net loss of $1 8 million or <unk> 15 per share based on approximately 11 9 million shares outstanding for the quarter ended September 32021.

The company ended the quarter with $3 9 million in cash.

This concludes our prepared remarks, so now I'd like to turn the call over to your questions operator.

We will now begin the question and answer session.

Ask me a question you May Press Star then one on your telephone keypad.

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.

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

Oh, hi, guys good afternoon.

Thanks for taking my questions I just have a simple.

Hum.

Current business on the Alex I was wondering you mentioned in your prepared remarks that the difference from last year is due to the timing of their bulk order from a distributor in China I was wondering.

How does that look like in the fourth quarter is that going to be normalized back to previous levels.

Yes.

The international sales will be roughly equivalent for the fourth quarter, but we do anticipate that year over year revenues will be up we are seeing a fairly significant increase in our domestic revenues.

This year as opposed to 2021.

A lot of factors there were lower in 2021 Covid was one some restocking issue amongst our service was another but all of that is kind of flushed itself out and we're back on a normal trajectory.

With revenues increasing.

That's likely so we should see the full year 2020 to be higher than 2021.

Great good to hear that.

Moving on to the CMO business.

I was just wondering what's the expected timing for when.

The manufacturing facility will be able to come online and once it does how much business per year do you expect you'll be able to handle at the new facility.

Sure Hi, Sean.

With regards to <unk> up.

Operationally, we are on target to have the facility sandy over to us and in the first quarter next year and we're still operating from day.

And Meanwhile, we do have internal activities. So that's ongoing in two to address many of the core key system and also process of due process development.

The facility once it debuted a content 12 cgmp.

Rooms, so that the design capacity is about 10000 barrels per year. So that's a.

The design capacity and what is your SaaS that Oh.

Cgmp suite, where mainly attribute to manufacturer to different products.

One yes.

Traditional nine gene modified cell products, such as <unk> and so on and we target to two launched those products at about in that range between 15000 to $25000 per dose range.

But as.

As we speak nothing has been finalized this is Stuart again that the final planning stage.

The car T therapy, which currently the market.

And the market produce though its car T therapy at between 100200 20000 per dose and Thats, the direct cost of which has been problematic.

With our new cutting edge technology. We are we hope we can launch the service at hop over that price, but still quite significant in terms of revenue hoped for right for the company.

Yeah.

Hmm.

Very helpful.

My final question is also on the new facility. So you've mentioned the cost savings potential from the new facility compared to what our companies are currently using what about in terms of timing.

Timing like.

Sure, what's the time savings with the new facility and also you mentioned that you could help improve the cell yields itself. So how does that look like.

Yeah sure. So so the benefit of our proprietary system is that we can get much higher yield the initial rate and sharpen the processing times, so when you're a we'd have more stocking material.

What what spanning pit to the patient is that and require less double-ring.

To get to that clinical dose. So so zelle is less double-ring are beneficial not only in term of its time saved.

But probably more importantly pumps scientific perspective.

Make the cell less exhausted or less energetic.

Because one thing that non treat the feel is that if you expand the cell to many times.

And when you expand the sales too many times as well.

<unk> costs, yes, due to the cells are the cells become exhausted.

And they undergone a process court, a pop ptosis or energy.

Basically, making those cells less physiologically active and hopefully the with the new technology, we have more starting material. We can benefit the final production up there so celgene therapy by by causing the sour less likely to.

And neurologic or exhausted.

Where it makes sense to you.

Oh, yes that was helpful. Thanks for the additional color and that's all the questions I guess.

Alright, Thank you Sean.

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

Thank you operator, and we look forward to updating you on our progress during our fourth quarter 'twenty.

22 call and thank you to everyone, who participated today and for your interest in <unk> Holdings.

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

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