CollPlant Reports Third Quarter 2018 Financial Results and Provides Business Update

NESS ZIONA, Israel, Nov. 29, 2018 /PRNewswire/ -- CollPlant (NASDAQ: CLGN), a regenerative medicine company utilizing its proprietary plant-based rhCollagen technology for tissue repair products (recombinant human, "rhCollagen"), today announced financial results for the third quarter ended September 30, 2018 and provided an update on the Company's business developments. Certain metrics, including those expressed on an adjusted basis, are non-GAAP measures. See "Use of Non-IFRS (non-GAAP) Measures" below.

CollPlant reported revenues of $224,000 (NIS 813,000) for the third quarter of 2018. The Company ended the third quarter of 2018 with $2.6 million (NIS 9.4 million) in cash and cash equivalents, excluding an additional $5.0 million (NIS 18.1 million) that the Company received from United Therapeutics at the beginning of November 2018. Comprehensive loss for the third quarter of 2018 was $1.3 million (NIS 4.8 million) on a GAAP basis, or adjusted comprehensive loss of $1.3 million (NIS 4.9 million), on a non-GAAP basis.

"Last month we entered into a license, development and commercialization agreement for 3D bioprinted lung transplants with United Therapeutics (UTHR). The agreement combines CollPlant's rhCollagen and BioInk technology with the regenerative medicine and organ manufacturing capabilities of United Therapeutics. This strategic agreement is a major achievement for CollPlant as it aligns us with a global leader, validates our technology and creates value for our shareholders." stated Yehiel Tal, CollPlant's Chief Executive Officer.

"During the third quarter we made progress advancing our other 3D bioprinting business. We are moving forward with our development activities with various companies that are using CollPlant's rhCollagen based BioInk for the bioprinting of organs and tissues," Mr. Tal added.

"In addition to the collaboration with United Therapeutics and progress we made with our BioInks, we are continuing the development of next-generation dermal fillers for the aesthetic market. Based on our work with major market players in the fields of 3D bioprinting and medical aesthetics, we believe that CollPlant's rhCollagen is the ideal building block for regenerative medicine scaffolds available today, and will play a critical role in those markets" concluded Mr. Tal.

Third Quarter 2018 Financial Results on IFRS basis ("GAAP")

Revenues for the three months ended September 30, 2018 increased 209% to $224,000 (NIS 813,000), compared to $73,000 (NIS 263,000) in the third quarter of 2017. Revenues were derived from sales in the U.S. of CollPlant's BioInk for development of 3D bioprinting of organs, as well as sales in Europe of mainly CollPlant's soft tissue repair matrix, VergenixSTR, for treating tendinopathy.

The Company's gross profit for the three months ended September 30, 2018 increased 105% to $148,000 (NIS 539,000) compared to $73,000 (NIS 263,000) in the third quarter of 2017. The increase in gross profit derives from the increase in revenues and includes recognition of $76,000 (NIS 274,000) in cost of revenue in the three months ended September 30, 2018, compared to no recognition of cost of revenue in the third quarter of 2017.

Total operating costs and expenses were $1.7 million (NIS 6.1 million) compared to $1.1 million (NIS 4.0 million) in the third quarter of 2017. The net increase in the amount of $600,000 is attributed primarily to an increase in salaries and share based expenses of $296,000, costs attributed to being a public company traded on the Nasdaq in the United States of $188,000, and a $70,000 decrease in a 2018 grant from the Israel Innovation Authorities.

Operating loss was $1.5 million (NIS 5.6 million) compared to an operating loss of $1.0 million (NIS 3.7 million) in the third quarter of 2017. Comprehensive loss for the third quarter of 2018 was $1.3 million (NIS 4.8 million), or $0.01 (NIS 0.02) per share, compared to a comprehensive loss of $1.0 million (NIS 3.9 million), or $0.01 (NIS 0.03) per share, for the third quarter of 2017. Comprehensive loss per share assumes the full exercise of previously issued pre-paid warrants.

Third Quarter 2018 Financial Results on Non-IFRS Basis ("non-GAAP")

On a non-GAAP basis, the operating costs and expenses for the third quarter of 2018 were $1.5 million (NIS 5.3 million), compared to $1.0 (NIS 3.5 million) for the third quarter of 2017. The comprehensive loss on a non-GAAP basis for the third quarter of 2018 was $1.3 million (NIS 4.9 million), or $0.01 (NIS 0.02) per share, compared to $1.0 million (NIS 3.5 million), or $0.01 (NIS 0.03) per share, for the third quarter of 2017. Non-GAAP measures exclude certain non-cash expenses. The table at the end of this press release titled "Reconciliation of GAAP to Non-GAAP Financial Measures" includes a reconciliation of the Company's GAAP results to non-GAAP results. The net reconciliation reflects non-cash income in the amount of $7,000 (NIS 27,000) in the third quarter of 2018, with respect to (i) fair market value attributed to services received through a securities purchase agreement with an investor (the "Share Purchase Agreement"), (ii) change in fair value of financial instruments and (iii) share-based compensation to employees, directors and consultants.

Use of Non-IFRS ("non-GAAP") Measures

This press release contains certain non-GAAP financial measures for operating costs and expenses, operating loss, comprehensive loss and basic and diluted comprehensive loss per share that exclude the effects of non-cash expense for fair market value attributed to services received through the Share Purchase Agreement, recognition and amortization of unrecognized day one loss, and share-based compensation to employees, directors and consultants. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance that enhances management's and investors' ability to evaluate the Company's operating costs, comprehensive loss and loss per share, and to compare them to historical Company results.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when operating and evaluating the Company's business internally and therefore decided to make these non-GAAP adjustments available to investors. The non-GAAP financial measures used by the Company in this press release may be different from the measures used by other companies.

For more information on the non-GAAP financial measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" table on page _ in this press release. This accompanying table on page _ has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

For the convenience of the reader, the amounts have been translated from NIS into U.S. dollars, at the representative rate of exchange as of September 30, 2018 (U.S. $1.00 = NIS 3.627).

The Company's consolidated financial results for the nine months ended September 30, 2018 are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

About CollPlant

CollPlant is a regenerative medicine company focused on 3D bioprinting of tissues and organs, and on developing and commercializing tissue repair products for orthobiologics, and advanced wound care markets. Our products are based on our rhCollagen (recombinant human collagen) that is produced with CollPlant's proprietary plant based genetic engineering technology.

Our products address indications for diverse fields of organ and tissue repair, and are ushering in a new era in regenerative medicine. Our flagship rhCollagen BioInk product line is ideal for 3D bioprinting of tissues and organs, and our unique Vergenix line of rhCollagen products includes a soft tissue repair matrix for treating tendinopathy and a wound repair matrix to promote a rapid optimal healing of acute and chronic wounds.

For more information about CollPlant, visit http://www.collplant.com

Safe Harbor Statements

This press release may include forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to CollPlant's objectives plans and strategies, as well as statements, other than historical facts, that address activities, events or developments that CollPlant intends, expects, projects, believes or anticipates will or may occur in the future. These statements are often characterized by terminology such as "believes," "hopes," "may," "anticipates," "should," "intends," "plans," "will," "expects," "estimates," "projects," "positioned," "strategy" and similar expressions and are based on assumptions and assessments made in light of management's experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Many factors could cause CollPlant's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the following: the Company's history of significant losses and its need to raise additional capital and its inability to obtain additional capital on acceptable terms, or at all; the Company's expectations regarding the timing and cost of commencing clinical trials with respect to tissues and organs which are based on its rhCollagen based BioInk, VergenixSTR, and VergenixFG; the Company's ability to obtain favorable pre-clinical and clinical trial results; regulatory action with respect to rhCollagen based BioInk, VergenixSTR, and VergenixFG including but not limited to acceptance of an application for marketing authorization, review and approval of such application, and, if approved, the scope of the approved indication and labeling; commercial success and market acceptance of the Company's rhCollagen based BioInk, VergenixSTR, and VergenixFG; the Company's ability to establish sales and marketing capabilities or enter into agreements with third parties and its reliance on third party distributors and resellers; the Company's ability to establish and maintain strategic partnerships and other corporate collaborations; the Company's reliance on third parties to conduct some or all aspects of its product manufacturing; the scope of protection we are able to establish and maintain for intellectual property rights and the Company's ability to operate its business without infringing the intellectual property rights of others; the overall global economic environment; the impact of competition and new technologies; general market, political, and economic conditions in the countries in which the Company operates; projected capital expenditures and liquidity; changes in the Company's strategy; and litigation and regulatory proceedings. More detailed information about the risks and uncertainties affecting CollPlant is contained under the heading "Risk Factors" included in CollPlant's most recent annual report on Form 20-F filed with the SEC, and in other filings that CollPlant has made and may make with the SEC in the future. The forward-looking statements contained in this press release are made as of the date of this press release and reflect CollPlant's current views with respect to future events, and CollPlant does not undertake and specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                                                                             
            
              COLLPLANT HOLDINGS LTD.




                                                                      
     CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION


                                                                                         
            (UNAUDITED)




                                                                                                 Convenience


                                                                                                 translation


                                                                                                   into USD



                                                                                                 September 30                           September 30                 December 31


                                                                                                         2018                                    2018                         2017



                                                                                                      USD                                      
          
          NIS


                                                                                                 in thousands                             
            
        in thousands





                                   
            
              Assets



     
              Current assets:



     Cash and cash equivalents

                                                                                                        2,603                                   9,442                       17,817



     Accounts receivables:



     Trade receivables                                                                                                 268                                                   971          354



     Other                                                                                                             518                                                 1,881        3,543



     Inventory                                                                                                         813                                                 2,948          700



                                                                                                                      4,202                                                15,242       22,414




     
              Non-current assets:



     Restricted deposit                                                                                                145                                                   526          503



     Long-term receivables                                                                                              17                                                    63           92



     Property and equipment, net                                                                                     1,465                                                 5,314        3,582



     Intangible assets, net                                                                                            363                                                 1,318        1,454



                                                                                                                      1,990                                                 7,221        5,631




     
              TOTAL ASSETS                                                                                         6,192                                                22,463       28,045





                           
            
              Liabilities and equity



     
              Current liabilities -



     Accounts payable:



     Loan                                                                                                               22                                                    84



     Trade payables                                                                                                    475                                                 1,723        2,922



     Accrued liabilities and other                                                                                     580                                                 2,104        1,996



                                                                                                                      1,077                                                 3,911        4,918




     
              Non-current liabilities



     Debentures at fair value                                                                                                                                                        12,639



     Warrants at fair value                                                                                          1,057                                                 3,832



     Derivatives                                                                                                        15                                                    54          141



     Royalties to the Israel Innovation Authority                                                                      307                                                 1,114        1,203



     Loan                                                                                                               29                                                   105



     Long-term payables                                                                                                                                                                  61



                                                                                                                      1,408                                                 5,105       14,044




     
              Total liabilities                                                                                    2,485                                                 9,016       18,962






     
              Equity:



     Ordinary shares                                                                                                 1,574                                                 5,710        4,998



     Additional paid in capital and warrants                                                                        50,837                                               184,386      178,467



     Prepaid warrant                                                                                                 3,435                                                12,460



     Accumulated deficit                                                                                          (52,139)                                            (189,109)   (174,382)




     
              TOTAL EQUITY                                                                                         3,707                                                13,447        9,083




     
              TOTAL LIABILITIES AND EQUITY                                                                         6,192                                                22,463       28,045


                                                                                            
              
                COLLPLANT HOLDINGS LTD.




                                                                                   
          CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS


                                                                                                         
              (UNAUDITED)




                                                     
        
            Convenience


                                                              translation into USD



                                                     
        
            Nine months       
            
                Three months


                                                       
        
             ended             
            
                ended                                       Nine months ended   Three months ended


                                                    
        
            September 30       
            
                September 30                                      September 30        September 30



                                                                              2018                                   2018                                                2017                  2018        2017        2018



                                                                USD in thousands       
            
                NIS in thousands






           Revenue                                                            619                                    224                                                 716                 2,245         263         813



           Cost of Revenue                                                    165                                     76                                                                      598                    274




           
                Gross Profit                                          454                                    148                                                 716                 1,647         263         539






           
                Operating costs and
      expenses:



           Research and development                                         2,816                                    941                                              11,087                10,215       2,747       3,413
      expenses, net:



           General, administrative and                                      2,550                                    748                                               4,190                 9,251       1,260       2,712
      marketing expenses




           
                Total operating costs and                           5,366                                  1,689                                              15,277                19,466       4,007       6,125
      expenses:




           
                Operating loss                                      4,912                                  1,541                                              14,561                17,819       3,744       5,586




           
                Financial income                                      115                                    204                                                                      418



           
                Other financial expenses                               73                                                                                       407                   264         187       (739)
      (income)




           
                Financial (income)                                   (42)                                 (204)                                                407                 (154)        187       (739)
      expenses, net




           
                Comprehensive loss                                  4,870                                  1,337                                              14,968                17,665       3,931       4,847




           
                Basic and diluted loss per                           0.02                                   0.01                                                0.12                  0.08        0.03        0.02
      ordinary share
      (NIS/USD)




           
                Weighted average                              214,551,093                            229,649,737                                         129,182,765           214,551,093 138,336,328 229,649,737
      ordinary shares
      outstanding


                                                                                       
              
                COLLPLANT HOLDINGS LTD.




                                                                                     
       CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS


                                                                                                    
              (UNAUDITED)




                                                                                                                                               
         
                Convenience


                                                                                                                                               
         
                translation


                                                                                                                                                 
         
                into USD



                                                                                                                                                         Nine months ended September 30



                                                                                                                                                                                   2018          2017       2018



                                                                                                                                                   
          
                USD                   NIS


                                                                                                                                               
         
                in thousands          in thousands






              
                Cash flows used in operating activities:



              Comprehensive loss for the period                                                                                                                                (4,870)     (14,968)  (17,665)



              Adjustments for:



              Depreciation and amortization                                                                                                                                        283           842      1,027



              Share-based compensation to employees and consultants                                                                                                                810         1,508      2,938



              Changes in fair market value of services received through the                                                                                                        422                   1,530
    Alpha Agreement



              Changes in fair value of financial instruments                                                                                                                        55                     198



              Exchange differences on cash and cash equivalents                                                                                                                   (87)           49      (317)



              Exchange differences on restricted cash                                                                                                                              (6)           45       (23)



                                                                                                                                                                                (3,393)     (12,524)  (12,312)




              Changes in operating asset and liability items:



              Decrease (increase) in trade receivables                                                                                                                           (170)           12      (617)



              Increase in inventory                                                                                                                                              (620)         (63)   (2,248)



              Decrease in other receivables (including long- term receivables)                                                                                                      43         2,255        161



              Decrease in trade payables (including long-term payables)                                                                                                          (295)      (2,911)   (1,071)



              Decrease in accrued liabilities and other payables                                                                                                                    30           360        108



              Increase (decrease) in royalties to the IIA                                                                                                                         (25)          117       (89)



                                                                                                                                                                                (1,037)        (230)   (3,756)




              Net cash used in operating activities                                                                                                                            (4,430)     (12,754)  (16,068)




              
                Cash flows from investing activities:



              Purchase of property and equipment                                                                                                                                 (723)         (56)   (2,623)




              Net cash used in investing activities                                                                                                                              (723)         (56)   (2,623)




              
                Cash flows from financing activities:



              Proceeds from issue of shares and warrants, net of issue expenses                                                                                                  2,757        13,846      9,999



              Exercise of warrants into shares                                                                                                                                                3,618



              Loan received                                                                                                                                                         58                     210



              Loan returned                                                                                                                                                        (6)                   (21)



              Equipment purchased in unusual credit terms                                                                                                                         (52)        (190)     (189)




              Net cash provided by financing activities                                                                                                                          2,757        17,274      9,999




              
                Increase (Decrease) in cash and cash equivalents                                                                                                    (2,396)        4,464    (8,692)



              
                Cash and cash equivalents at the beginning of the period                                                                                              4,912         3,797     17,817



              
                Exchange differences on cash and cash equivalents                                                                                                        87          (49)       317




              
                Cash and cash equivalents at the end of the period                                                                                                    2,603         8,212      9,442




              
                Non-cash investing activities:



              Conversion of Debentures to pre-paid warrant                                                                                                                       3,504                  12,708




              Conversion of pre-paid warrant to shares                                                                                                                              68                     248


                                                                                   
            
                CollPlant Holdings Ltd.


                                                                               
     
            Reconciliation of GAAP to Non-GAAP Financial Measures


                                                                                        
             
                (Unaudited)




                                                   
        
            Convenience


                                                            translation into USD



                                                   
        
            Nine months          
            
                Three months


                                                     
        
             ended               
             
                ended                            Nine months ended   Three months ended


                                                  
        
            September 30          
            
                September 30                           September 30        September 30



                                                                            2018                                       2018                                    2017                  2018   2017     2018



                                                              USD in thousands      
            
                NIS in thousands






           
                GAAP gross profit                                   454                                        148                                     716                 1,647    263      539






           
                GAAP operating costs and                          5,366                                      1,689                                  15,277                19,466  4,007    6,125
      expenses:



           Fair market value attributed to                                  422                                                                                                  1,530
      services received through
      the Alpha Agreement



           Share-based compensation to                                      810                                        220                                   1,508                 2,938    452      797
      employees, directors and
      consultants




           
                Non-GAAP operating costs                          4,134                                      1,469                                  13,769                14,998  3,555    5,328
      and expenses:




           
                GAAP operating loss                               4,912                                      1,541                                  14,561    
              17, 819 3,744    5,586



           
                Non-GAAP operating loss                           3,680                                      1,321                                  13,053                13,351  3,292    4,789




           
                GAAP Comprehensive loss                           4,870                                      1,337                                  14,968                17,665  3,931    4,847




           Fair market value attributed to                                  422                                                                                                  1,530
      services received through
      the Alpha Agreement



           Changes in fair value of                                          54                                      (227)                                                         198          (824)
      financial instruments



           Share-based compensation to                                      810                                        220                                   1,508                 2,938    452      797
      employees, directors and
      consultants




           
                Non-GAAP Comprehensive                            3,584                                      1,344                                  13,460                12,999  3,479    4,874
      loss




           
                GAAP Basic and diluted                             0.02                                       0.01                                    0.12                  0.08   0.03     0.02
      loss per ordinary share
      (NIS/USD)




           
                Non-GAAP Basic and                                 0.02                                       0.01                                    0.10                  0.06   0.03     0.02
      diluted loss per ordinary
      share (NIS/USD)


Contact at CollPlant:

Eran Rotem
Chief Financial Officer
Tel: +972-73-2325600/612
Email: Eran@collplant.com

View original content:http://www.prnewswire.com/news-releases/collplant-reports-third-quarter-2018-financial-results-and-provides-business-update-300757591.html

SOURCE CollPlant