Q2 2023 ThermoGenesis Holdings Inc Earnings Call

Good day and welcome to the Thermogenesis Holdings Conference call and webcast to review financial and operating results for the second quarter ended June 30th 2023 as a reminder, all participants will be in listen only mode. There will be an opportunity to ask questions at the end of today's call.

Patient if you would like to ask a question. Please press Star then one on your phone if you wish to withdraw from the question queue. 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 would 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 may cause actual results to differ from those in the store looking statements.

And in the company's periodic reports filed with the Securities and Exchange Commission.

The information presented today is time sensitive and it's accurate only as of this call August 10th 2023, 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 purchases.

Participating on today's call are Dr. Chris Xu Chief Executive Officer, and Jeff <unk>, Chief Financial Officer, I would now like to turn the call over to Chris. Please go ahead.

Thank you Paula and thank you to everyone for joining the call. This afternoon we.

We appreciate you taking the time to do the same.

During the second quarter, we continued to make progress to transform from a medical device company T. A C. D M O cell manufacturer for the cell and gene therapy market.

To which we will leverage our unique and proprietary automated and semi automated cell processing technologies, including the cocky Express platform.

We are getting close to completion of the 12th really stopped current good manufacturing practice suites or GMP suite at our 35000 square feet GMP facility Sacramento.

These costs seven kingdoms are designed for early stage businesses and organizations striving to speed up the process to bring novel cell gene therapies to clinical trials.

Our priority is to provide customers with solutions that optimize the supply chain, increasing manufacturer for disability and manage overall risk.

We have started advertising this turnkey solution to early stage life science cell gene therapy companies.

Bush team work and knee treat expedites their development efforts from 39 JMP Great research.

We have continued to draw interest from potential customers for the state of art ready stocks Cgmp unit, which remain on target for availability, which is later this year.

As most of you know for over 55 years. So more Genesis has spearheading spearheaded the advancement and production of a variety of revolutionary automated technologies and products tailored for the cell banking and Sarah therapy sector.

Indeed.

Genesis has been the top choice for automated cell processing and stayed up our small smart cryogenic storage technology for numerous renowned public and private cell banks globally.

Our ball archive cloud storage system as safe guard at nearly 90% of all U S. F. D. A V L. A approved clinical grade corporate units or Cpus.

While our XP system has been utilized to handle well over many examples.

For approximately 130 Institute girl Woody.

Yeah, they can treat our expertise in manufacturing cell gene therapies. The intellectual properties, we have acquired over the years is extremely valuable.

The driving force behind our transition to a C. D. M O is the ongoing growth and the industry emphasis.

On the potential of personal lives the celgene therapies.

It seems strange C 17 F D a has a.

Pool, six autologous car T therapeutics, which have demonstrated unprecedented efficacy in patients with b cell malignancy and multiple myeloma.

Although car Ts, where initial rate authorized the final results for patients who did not respond to alternative treatment risa.

The recent trials have demonstrated their ability to outperform second line stand up at a standoff care options.

This suggests that the scope of applications for car T therapies may expand in the future.

Recent resort recent reports indicate that the industry expects additional FDA approvals.

This potential change to 20, new car T therapies approved for commercial right.

Commercialization each year starting in 2025.

As I have noted previously wish that rice in F. D. A approved the regions to Madison treatments and a car T therapies. There is an increasing need for the production of these life saving therapies.

Presently there are over 350 U S companies exclusively focused on cell therapy research and development.

And there are more than 1000 pipe, Brian asset in clinical trials worldwide.

That's a great targeting a wide range of blood and solid tumors.

This exponential growth in R&D is being able to buy the remarkable potential inherit kits in already available services alongside the promising prospects provided by personalized cell N.

Gene therapies.

With thousands of our preclinical and clinical trials currently being conducted.

He is an unprecedented demand for high quality and reliable CVA most services.

Moreover, as I have noted many times approved car T cell therapies in the U S tends to cost between approximately 373000 to 475000 per dose, making us one of the most expansive.

Drug process on the market.

Significantly.

The the manufacturing cost for just one dose of some car T therapeutics exceeds 100000.

With 17, 9% of which attribute it to the label to labor and GMP facility expenses.

Given these dynamics developers need to tackle the issue of producing high quality clinical grade cell therapies at a commercial scale, which will enable more patients to benefit from these revolutionary treatments.

We strongly believe that the cocky express platform. We had holds the potential to considerably reduce processing time, enhancing salad with cover it rights and effectively lowering the the manufacturing cost for car T and <unk>.

Celgene therapies.

Through our sea Theyre, most services, we offer high quality development and manufacturing capacities as well as cell and tissue processing development quality system regulatory comprised and other cell manufacturer solutions for clients with Sara.

Uhm debates in different stage of development.

As mentioned.

An integral aspect of this pad is leveraging our proprietary high at fishing.

She express platform.

Which has demonstrated its ability to significantly reduce processing time, enhancing cell recovery rate and potentially tough manufacturing costs associated with car T and other cell gene therapies by up to 50%.

Additional rate by utilizing our comprehensive comprehensive cell therapy portfolio, we intend to provide clients with the benefit of our extensive expertise in a variety of cell types, such as a chimeric antigen.

And receptor T cells.

TCR T and tumor even food chain Che team think site natural killer cells and quitting.

Other cells, such as inducible pluripotent stem cells and message time of stem cells.

Our all in compute.

Our all in cost.

Passing really stop cgmp suite provide their versatile solution.

Allowing companies to reach their projected milestone faster and more efficiently.

Additionally, our team's expertise in regulatory affair and product commercialization should accelerate the development of our customers' products.

Allowing them to focus on their researched while we manage the regulatory and corporate compliance aspect associated with operating C. N T.

In the second quarter, we invited to additional member to our board of directors doctors be all she and top and Doctor James shoot.

He is a highly regarded lifesize execute our executive with extensive expertise in biopharmaceutical research and drug development and James Spring strong legal IP and business acumen.

Including more than 25 years in the field of pattern culprit law and tax law.

Their contributions are highly valuable to the company.

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

Yeah.

Thank you Chris.

A full discussion of our financials is available in the press release and 10-Q so.

So I'll just take a moment to review our key financials for the quarter ended June 32023.

Net revenues were $2 3 million for the quarter.

That's compared to $3 million in the second quarter of last year.

The decrease was driven by a large X P purchase X P. Disposable purchased from our distributor in China last year, which was offset by increase in domestic disposable and bio archive device revenue in the second quarter of this year.

Selling general and administrative expenses were $1 8 million for the quarter ended June 32023, as compared to 2 million for the same period last year.

The decrease was driven by lower employee benefit and decreased legal expenses in the second quarter of this year.

For the quarter ended June 32023, the company reported a comprehensive loss of $2 3 million or <unk> 91 per share.

Based on approximately $2 5 million shares outstanding.

It compares to a comprehensive loss of $2 7 million or $8 98 per share based on approximately 300000 shares outstanding for the quarter ended June 32022.

At June 32023, and the company had cash and cash equivalents totaling $4 5 million.

Paired with cash and cash equivalents of $4 2 million at December 31st 2022.

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 you are using a speakerphone. Please pick up your handset before pressing the keys.

To withdraw from the question queue. Please press Star then two.

My first question is from Sean Lee of H C. Wainwright. Please go ahead.

Oh, good afternoon, Chris and Jeff. Thank you for taking my questions.

My first question is don't be a GMP facility, so what remains to be done before it Dave.

Hopefully for business shall we say and be ready to put our.

First customers.

Hi, Sean Thanks for the question. So we have completed a majority of the infrastructure build out.

And what's drove many is just to have the facilities certified Fi full ice so and we are really in the last step last few steps. So so we are actually very actively.

Having customers pouring the facilities and are having ongoing discussions with customers.

Okay.

Okay.

It's not that pre opening state.

Okay.

No.

Sure.

Do you have any potential lead some customers so far and.

When do you estimate.

The first one movement.

Yeah, well, we are actively discussing with a very different customer in the AR in the South gene therapy and also in other life science fields that that would require a GMP facility.

So we may have customers moving.

S. Saudi S. A that towards the end of the third quarter, all very early fourth quarter. So so we are we definitely see that the growth of interest.

Great for these facilities.

You mentioned that used for cell therapies.

Particular are there specific types of self service.

It would be well suited for.

Yes. This entire facility is a highly specified.

And the very specific trade designed for cell and gene therapies.

Tests that tradition, a rightful pharmaceutical industry.

And that the tender to them tend to be large and it's that that allows big equipment to be pertain to produce batches of drug and each batch can be thousands of our patients are actually each batch could be millions of a patient and so.

That's the historic.

Way of that.

Historic way out producing drugs.

With cell and gene therapy, and does that change then.

Ah the practicing tightly.

Because cell and gene therapy are very personalized them very individually. So each drug is specifically produced for that particular patient. So you can see this as one drug one patient.

So that the facility is designed into small G. M. P unit almost like a like a beehive.

And side that allow our individual drugs.

Individual personal lives the Celgene therapy can be produced in each unit and there is and you could produce S. Mainly batch asset that Laos and allowed the quick turn over for each individualized medicine.

So this facility.

Yes, particularly designed for that purpose and is there such a shortage of facility designed for Celgene therapy at this moment.

Yeah.

Thanks for that.

Very helpful.

My last question is off the Oh.

Potential revenues, we can see from this study what are what's the average.

Revenue, we can expect to see from each one of these suites and what are your key cost for maintaining this.

Yeah. So currently weed runs 12, GMP unit and each unit.

Average a 500 square feet.

The size and Florida, 500 square feet. The average market cost if it's available mostly are not available because of the the big demand and that the average cost per 500 square feet GMP suite.

Yes about 75200 50000 per months.

So.

Today, we have 12 JMP units on hand.

Yes, John I mean on an annualized basis I mean, you know we're looking at you know roughly a million dollars a per per suite.

And in a cost per suite.

Are fairly minimal to us because most of the or most of the expenses.

Expenses the companies are coming in and renting the room I mean, so so realistically we're looking at a pretty small number probably 50 to 100000.

Per room on an annualized basis and expenses for us.

Yeah, Yeah, that's all very helpful. Thanks, Chris and thanks, Jeff That's all I have.

Thanks Shar.

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

Thank you operator, we look forward to updating you on our progress this during our third quarter 'twenty 'twenty St. Paul and thank you to everyone, who participated today and for your interest in similar Genesis Holdings.

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