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
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SOURCE CollPlant