Q3 2023 ThermoGenesis Holdings Inc Earnings Call
Speaker 1: Good day and welcome to the thermogenesis holdings conference call and webcast to review financial and operating results for the third quarter ended September 30 2023. As a reminder, please call.
Good day and welcome to the Thermogenesis Holdings Conference call and webcast to review financial and operating results for the third quarter ended September 32023.
As a reminder, this call is being recorded today.
Speaker 1: I would now like to turn the conference call over to our host, Paula Schwartz of RX Communications. Please go ahead.
I would now like to turn the conference call over to our host policy 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.
Speaker 2: 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 statement.
Additional information concerning factors that might cause actual results to differ materially from those in the forward looking statements.
Speaker 2: 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.
And in the company's periodic reports filed with the Securities and Exchange Commission.
Speaker 2: The information presented today is time-sensitive and is accurate only as of the date of this call, November 13, 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. Participating on today's call are Dr. Chris Hsu, Chief Executive Officer, and Jeff Kabal, Chief Financial Officer. I would now like to turn the call over to Chris. Please go ahead.
The information presented today is time sensitive and is accurate only as of the date of this call November 13th 2023 if any portion of this call is being rebroadcast retransmitted or redistributed at a later date thermogenesis will not be reviewing or updating the material participating on today's call are Dr. Christian <unk> Chief Executive Officer.
And just cobble Chief Financial Officer, I would now like to turn the call over to Chris. Please go ahead.
Thank you Paula.
Speaker 3: And thank you to everyone for joining the call today. We appreciate you taking the time.
And thank you to everyone for joining the call today.
We appreciate you taking the time to listening in.
Speaker 3: During the third quarter and subsequent period, we continue to make significant progress in executing our plan to transform from a medical device company to an integrated contract development and manufacturing organization, or CDMO, for the cell gene therapy market.
During the third quarter and subsequent period, we continue to make significant progress in executing our plan to transform from a medical device company to an integrated contract development and manufacturing organization or C. D. M O.
For the Celgene therapy market.
Speaker 3: To that end, we completed and officially launched our 35,500 square feet CGMP cleanroom suite in Sacramento.
To that end, we completed and officially launched our 35500 square feet Cgmp Crane boom suite in Sacramento.
G N P stands for current good manufacturing practice.
Speaker 3: GGMP stands for Current Good Manufacturing Practice.
Our 12 ready start cgmp Chamberlain suites are designed to meet the highest scientific authority and regulatory requirements for Celgene therapy field.
Speaker 3: Our 12 ready-start CMP clean-loom suites are designed to meet the highest scientific quality and regulatory requirements for selgin therapy fields.
Speaker 3: and will be ideal for early and mid-stage companies and institutions that are currently developing cell and gene therapies and advanced therapy medicinal products, or ATMP.
And will be ideal for early and mid stage companies and institutions that are currently developing cell and gene therapies and advanced cell advanced therapy medicinal product or a T. M P.
We provide this turnkey solution too early and mid stage life Science day about pharmaceutical companies, who look to jumpstart your R&D efforts and to scale up for clinical development quickly.
Speaker 3: We provide this turnkey solution to early and mid-stage life science and biopharmaceutical companies who look to jumpstart their R&D efforts and to scale up for clinical development quickly.
Our goal is to establish solutions for customers in order to streamline the supply chain increased manufacturing predict turbidity and manager overall risk, while reducing overall cost.
Speaker 3: Our goal is to establish solutions for customers in order to streamline the supply chain, increase manufacturing predictability, and manage overall risk while reducing overall cost.
Speaker 3: As most of you know, for over 35 years, thermogenesis has pioneered the development and manufacturing of a series of innovative or automated technologies and products, especially for the cell banking and manufacturing industry.
As most of you know well over 35 years, so more Genesis has pioneered the development and manufacturing.
Theorists innovate kipp or automated technologies and product spec.
Especially for the cell banking and cell therapy industry.
Speaker 3: The driving force for us to transition into a CDMO is largely due to the continuous growth on personalized cell and gene therapy.
The driving force for us to transition into a C. D. M. O is largely due to the continuous growth and personal life cell and gene therapies.
Speaker 3: Since 2017, the FDA has approved six autologous CAR T therapeutics.
James 2017.
The F D. A has that pool six autologous car T therapeutics.
Speaker 3: While CAR-Ts were initially authorized as the last resort for patients who did not respond to other therapeutic treatments.
While car Ts, where initially authorized as the last resort for patients who did not respond to other therapeutic treatments.
Speaker 3: Recent CAR T-trials have demonstrated that these treatments can surpass second-line standard care options.
Recent car T trials has demonstrated that these two months can surpass second line standard of care options.
Speaker 3: suggesting that the scope of the application for CAR-T may expand in the future.
Yes that does.
Scope of the application for car Ts may expand in the future.
Speaker 3: According to recent reports, the industry anticipates further FDA approvals, potentially of 10 to 20 new cell gene therapies per year starting in 2025.
According to recent reports the industry anticipate further FDA approvals potentially 10 to 20, new cell gene therapy per year, starting in 2025.
At this very moment there are over 350 U S companies operating in the field of cell therapy alone.
Speaker 3: At this very moment, there are over 350 U.S. companies operating in the field of cell therapy alone.
Speaker 3: with over 1,000 pipeline assets worldwide.
With over 1000 pipeline assets worldwide.
The ongoing search in research and development are you seeing a boat by the remarkable potential that exist in the current commercial lives the therapy.
Speaker 3: The ongoing search in research and development is enabled by the remarkable potential that exists in the current commercialized therapy.
As thousands of our preclinical and clinical trials are currently underway for innovative cell therapies.
Speaker 3: As thousands of preclinical and clinical trials are currently underway for innovative cell therapies, there is increasing need for dependable and quality CDMO cell manufacturing services.
There is increasing needs for dependable and called a T. C D M O cell manufacturing services.
Our C D. Most services will provide clients with high quality development and manufacturing capabilities.
Speaker 3: Our CDMO services will provide clients with high-quality development and manufacturing capabilities, along with cell and tissue processing development, quality systems, regulatory compliance, and other cell manufacturing solutions for the therapeutic candidates at different stages of development.
Along with cell tissue selling tissue processing development quality system regulatory comprise and other cell manufacturing solutions for this therapeutic candidates at different stage of development.
Speaker 3: A crucial aspect of our plan is to leverage our proprietary, highly efficient, semi-automated Carkey Express platform.
A crucial aspect of our plan is to leverage our proprietary highly if fishing semi automated cocky express platform.
Speaker 3: which has already demonstrated the ability to significantly reduce processing time, improve cell recovery rates, and potentially lower the manufacturing costs associated with the cell gene therapies by up to 50%.
Which has already demonstrated the ability to significantly reduce processing time improve sound recovery rates and potentially lower the manufacturing cost of shell associated.
Associated with the Celgene therapies by up to 50%.
Yeah.
Speaker 3: Additionally, our team's strong expertise in regulatory affair and product commercialization will help accelerate the development of our customers' products.
Additional rate our teams strong expertise in regulatory affairs and product commercialization will help accelerate the development of our customers' products.
Speaker 3: allowing them to focus on their science while thermogenesis will manage the regulatory and quality confines associated with running a CGMP facility.
Allowing them to focus on their side.
While some will genesis well manage the regulatory and quality combined associated with running a cgmp for CDP.
Utilizing our extensive and comprehensive knowledge and <unk>.
Speaker 3: Utilizing our extensive and comprehensive knowledge and experiences in the cell therapy field,
Experiences in the south therapy field.
Speaker 3: We aim to offer clients the advantage of our broad expertise across the manufacturing of many different cell types.
We aim to offer our clients the advantage of our broad expertise.
Crossed the manufacturing of many different cell types.
And with that let me turn the call over to Jeff to here are the key financial results for the third quarter.
Speaker 3: And with that, let me turn the call over to Jeff to share the key financial results for the third quarter.
Yeah. Thank you Chris.
A full discussion of our financials is available in the earnings release and 10-Q. So I'll just take a moment to review the key financial information for the quarter ended September 32023.
Speaker 4: A full discussion of our financials is available in the earnings release in 10Q. So I'll just take a moment to review the key financial information for the quarter ended September 30th, 2023.
Speaker 4: Net revenues were $2.2 million for the quarter, up approximately $100,000 from the same period as last year.
Net revenues were $2 2 million for the quarter up approximately 100000 from the same period as last year.
Speaker 4: Current revenues continue to be driven by AXP disposable sales, which are up approximately $400,000 from the third quarter of last year.
Current revenues continue to be driven by X P disposable sales, which were up approximately 400000 from the third quarter of last year.
With the completion of our ready start clean rooms in October we will begin recording revenues from C. D. Most C D M O services in the fourth quarter.
Speaker 4: With the completion of our Ready Start cleanrooms in October , we will begin recording revenues from CDMO services in the fourth quarter.
Gross profit for the third quarter was 400000 or 18% of net revenue in line with our gross profit from the same period in 2022.
Speaker 4: Gross profit for the third quarter was $400,000, or 18% of net revenue, in line with our gross profit from the same period in 2012.
Speaker 4: The expectancy increases in our gross margin in 2024 as a higher percentage of our revenue is derived from CDMOs.
We expect to see increases in our gross margin in 'twenty 'twenty four is a higher percentage of our revenue is derived from C. D. M O services.
Selling general and administrative expenses were $1 7 million for the third quarter as compared to 2 million for the same period last year.
The decrease was driven by lower employee benefit and corporate expenses.
Speaker 4: Interest expense was $2.1 million for the third quarter as compared to $1.4 million for the same period in 2010.
Interest expense was $2 1 million for the third quarter as compared to $1 4 million for the same period in 2022.
Speaker 4: The increase was driven primarily by non-cash amortization expense in the current year.
This was driven primarily by noncash amortization expense in the current year.
For the quarter ended September 32023, the company reported a comprehensive loss attributable to common stockholders of $3 6 million or $1 44 per share based on approximately $2 5 million shares outstanding.
Speaker 4: For the quarter ended September 30th, 2023, the company reported a comprehensive loss attributable to common stockholders of 3.6 million or $1.44 per share, based on approximately 2.5 million shares outstanding. This compares to a comprehensive net loss of 3.2 million or 466 per share, based on approximately 700,000 shares outstanding for the quarter ended September 30th, 2023.
This compares to a comprehensive net loss of $3 2 million.
466 per share based on approximately 700000 shares outstanding for the quarter ended September 32022.
Speaker 4: At September 30, 2023, the company had cash and cash equivalents totaling $4 million compared with cash and cash equivalents totaling $4.2 million at December 31, 2023.
At September 30 of 2023, the company had cash and cash equivalents totaling 4 million compared with cash and cash equivalents totaling $4 2 million at December 31, 2022.
This concludes our prepared remarks, so now we'd like to open the call for your questions operator.
Speaker 4: This concludes our prepared remarks, so now we'd like to open the call for your questions. Operator?
We will now begin the question and answer session.
Speaker 1: To ask a question, you may press star, then one on your touch-tone phone.
To ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing piece.
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Speaker 1: or for any reason you would like to withdraw a question, please press star, then two.
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Speaker 1: At this time, we will take our first question, which will come from Sean Lee with HC Wainwright. Please go ahead.
At this time, we will take our first question, which will come from Sean Lee with H C. Wainwright. Please go ahead.
Speaker 1: Good afternoon, everyone, and thanks for taking my questions. My first question is on the response so far to the launch. So, I was wondering, how have you been marketing your CDMO services since its launch, and how would you gauge the response so far from the market?
Good afternoon, everyone and thanks for taking my questions.
My first question's on the Oh the response, so far to the launch. So I was wondering how long have you been marketing your C. D. M O services since its launch and what how would you gauge. The response so far from the market.
I think so far.
Speaker 3: Hi Sean, thanks for following up on our company.
For a for a flooring company.
Speaker 3: So we officially launched and had a ribbon cutting event in October .
So we officially launched and had that Rick and Red Bull have uncapped event in.
In October.
And we have since then had has.
Has the kind of start to moving any of this.
And Zara.
There are certainly a S. You may aware a nation wide shortage on C D AMOLED for cities and services.
Speaker 3: There are certainly, as you may aware, a nationwide shortage on CDMO facilities and services across the entire country.
Across the entire country.
Speaker 3: So there are an increasing number of biotech and pharmaceutical companies looking for not only just the CDMO service, but also facilities.
So there are a increasing number of by biotech and pharmaceutical company unlocking for not only just the C D and more surface service, but also put city piece sarcastic pool, a cgmp capability to help them develop and manufacture.
Speaker 3: that has the full CGMP capability to help them develop and manufacture product candidates for clinical trials.
Your product candidates for clinical trials.
Speaker 3: So we certainly, with regards to how we market this, and the long-term goal is to use some of the new suites by ourself by launching the service. But in the short term, we are actually engaging a few different.
So we certainly are the with regards to how we market. This ed.
And the longtime go yes to use some of the the suites.
Suites by ourself by launching the service, but you have shocked him we are actually engaging a few different.
Different agents and brokers in the laboratory space in the life Science area.
Speaker 3: different agents and brokers in the laboratory space in the life science area.
Where they see a creative shop catch up at such Cgmp space C. C. D E P lapse and they are really helping marketing our newly opened facilities nationwide.
Speaker 3: where they see a clear shortage of such CDMP space, CDMP labs. And they are really helping marketing our newly open facility nation.
And our financial and it will probably I would eat that's true Yep Battle worth probably start to recording the a D. A.
Speaker 3: And on a financial end, we will probably, I will leave that to Jeff, but we will probably start to recording the revenue in the fourth quarter.
Revenue.
In the fourth quarter.
Yeah, that's correct I mean, we do have several where we're actively engaged with with several customers right now on our contracts are better or that are in process. We have a couple that are finalized right. Now. So we do anticipate seeing some revenues this quarter, but is it.
Speaker 4: Yep, that's correct. I mean, we do have several, we're actively engaged with with several customers right now on on contracts that are that are in process. We have a couple that are finalized right now. So we do anticipate seeing some revenues this quarter. But as as a lot of the companies are just be moving in, I think we'll see the larger revenues begin to
As a lot of the companies are just be moving in.
I think we'll see the larger revenues begin to hit in 2024.
Speaker 1: That's great to hear. Thank you for that. My next question is on the future direction. So you mentioned you have the suites ready. Would you be able to expand additional suites if deemed there's enough demand for it? And would these suites be able to be upgraded with the Cartier Expresses?
That's great to hear thank you for that Oh.
My next question is on the.
Future direction. So you mentioned you had the suites ready would you be able to expand additional suites yesterday, you've deemed there's enough demand for it and would these suites to be able to be upgraded with the Oh D streets view. It is absolutely it with a cocky express system.
Okay. So so currently we have a 12.
Speaker 3: So currently we have 12 CDMPs.
Cgmp suites.
Speaker 3: And just putting that into perspective, I mean, for instance...
Yep, just putting that into perspective and.
I mean for instance.
Speaker 3: UC Davis as a major research-oriented university has six gyms.
You see day rates as a major research RNA that the University has six GMP suites and many of the academic center at single digits.
Speaker 3: and many of the academic centers have single digits.
Manufacturing suites. So so does that put us in pretty good shape.
Speaker 3: So that put us in a pretty good shape.
Speaker 3: satisfying the need of the market.
Satisfying the need of the market.
We do have extra space and that is that we can't expand to building more such GMP suite yep that if needed.
Speaker 3: We do have extra space that we can expand to building more of such GMP suites if needed.
And with regards to whether we can upgrade that to a car T. Current T. We designed our CGM she.
Speaker 3: And with regards to whether we can upgrade this to CAR-T, currently, we design our CGMT in the highest quality and standards. These suites are ready to take on CAR-T manufacturing as yet.
In the highest quality and standards. These suites are ready to take calls cocky manufacturing as yet.
Speaker 3: So in that regard, we really don't have to upgrade.
So so long.
In that regard, we really don't have to upgrade them.
With regards to future.
Speaker 3: with regard to future to lease out some of the
Two to lease out some of the.
Speaker 3: some of the GMP suite is really just so that we can use these extra space for the time being.
Some of the GMP suite is really just to just so that we can't use these extra space.
For the time being.
Speaker 3: The long-term goal is actually we leverage our proprietary manufacturing platform.
The long term, though yes, actually we leverage our preparatory proprietary manufacturing.
Possible.
As you know the khaki express platform, which significantly reduce the manufacturer cost by 50%.
Speaker 3: as you know, the Kachi Express platform, which significantly reduced the manufacturer cost by 50%.
Speaker 3: By providing a CDMO service ourselves, we can save our clients a lot more in terms of the manufacturing.
By providing a C D and more service ourself, we can't save our clients a lot more in term of our income over the manifest cell manufacturing needs.
Speaker 3: So that's the long-term goal. It's not just to lease out those, but actually providing the drug manufacturing service for the cell gene therapy field.
So that's the long term goal is not just to lease out shows, but actually providing the drug manufacturing service for the Saudis therapy field.
Thank you for the additional color that's all the questions I have.
Thanks, Sean.
And this concludes our question and answer session I'd like to turn the conference back over to Dr. Schuh for any closing remarks.
Speaker 1: And this concludes our question and answer session. I'd like to turn the conference back over to Dr. Hsu for any closing remarks.
Thank you operator, we look forward to updating you on our progress during our year end 2023 cool.
Speaker 3: Thank you, operator. We look forward to updating you on our progress during our year-end 2023 call.
Speaker 3: And thank you to everyone who participated today and for your interest in somogenesis holding.
And thank you to everyone, who participated today and for your interest and so my goodness there's holdings.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Speaker 1: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.
Yeah.
Yeah.
Yeah.