Applied DNA Sciences Inc. (NASDAQ: APDN) ("Applied DNA" or the "Company") a leader in Polymerase Chain Reaction (PCR)-based DNA manufacturing that enables in vitro diagnostics, pre-clinical nucleic acid-based therapeutic drug candidates, supply chain security, anti-counterfeiting and anti-theft technology, today announced consolidated financial results for the fiscal second quarter and the six months ended March 31, 2020.
"Continued execution on our strategic priorities in our second fiscal quarter resulted in an expansion of our linear DNA story to include COVID-19 vaccine candidate and diagnostic kit programs and the addition of new development customers. These new development customers, several of which are leaders in the field of gene and redirected-cell therapies, demonstrate broadening interest and adoption of our proprietary linear DNA approach to preclinical biotherapeutics and diagnostics development and further validate linear DNA as a viable alternative for plasmid DNA," stated Dr. James A. Hayward, president and CEO of Applied DNA.
"Most of our activities during the quarter were devoted to our COVID-19 development programs that serve to also elevate the profile of our PCR-based LinearDNAtm platform to the biopharma industry as a powerful, large-scale tool for the rapid manufacture of DNA-based therapeutics," continued Dr. Hayward. "The global focus on the pandemic and the speed with which vaccine candidates are being developed are laying bare the limitations of modern vaccine development that are almost-exclusively reliant on plasmid-based technologies that are often slow and require much more downstream processing. Because our linear DNA approach does not require bacterial fermentation and has the added advantage of essentially no risk of contamination by genes for antibiotic resistance and other genetic contaminants, we believe our platform is well suited for such DNA-based therapeutics as engineered T cells, gene therapies, RNAi, and vaccines, such as for COVID-19 or future emerging infectious diseases. One new development customer, a global Top-20 pharmaceutical manufacturer, is evaluating the full scope of our platform to potentially serve as a foundational tool for their future genetic therapy pipeline. As the industry comes to terms with the limitations of plasmid-based technologies in terms of production speed and risk, we believe this will set the stage for a paradigm shift towards the rapid manufacturing of linear DNA vaccines with our LinearDNA platform as the accelerator."
Concluded Dr. Hayward, "Looking ahead, we remain focused on driving interest and building demand for our linear DNA approach across certain highly-regulated markets, such as drug development, that we believe offer a path to higher and more recurring revenue. Takis Biotech ("Takis") has initiated preclinical animal trials of our LinearDNA version of their vaccine candidates that we believe will demonstrate similar, robust immune responses to their plasmid-based constructs, but with the added advantage of speed and scalability to manufacture for global use. Concurrently, we are preparing for the possibility for Takis to progress to human trials this fall by readying our facility for compliance with the FDA's cGMP regulations that govern the quality of biologics for human use. We have also developed our Lineatm COVID-19 high-throughput and high-sensitivity SARS-CoV-2 detection kit to enable mass-testing that can be a crucial tool in the toolbox of health systems and governments in the fight to further ?flatten the curve'. Having received Emergency Use Authorization from the FDA today, we are now focused on the commercialization of our kit to assist frontline workers leading the charge against the pandemic. Pharmaceutical molecular tagging is another target market and one where the FDA has granted us entry into its Emerging Technology Program that gives us a path to drive the industry's adoption of our authentication technologies and mitigate participation of counterfeit and adulterated drugs in the legitimate pharmaceutical supply chain. We will continue to build our business development pipeline and execute on our strategy to advance and prove the capabilities of linear DNA to drug developers and the broader pharmaceutical industry."
Fiscal Second Quarter 2020 Financial Results:
Six Months Ended March 31, 2020 Financial Results:
Select Quarterly Operational Highlights:
Applied DNA progressed its COVID-19 development program that spans both vaccine development and clinical diagnostic kit development:
The Company's LinearDNAtm platform for preclinical biotherapeutic (gene and redirected-cell therapies) and diagnostic applications development continued to shift towards broader adoption:
The Company's DNA tagging business for supply chain security continued to build awareness and adoption:
Fiscal Second Quarter 2020 Conference Call Information
The Company will hold a conference call and webcast to discuss its fiscal second quarter-end 2020 results on Thursday, May 14, 2020 at 4:30 PM ET. To participate on the conference call, please follow the instructions below. While every attempt will be made to answer investors' questions on the Q&A portion of the call, due to the large number of expected participants, not all questions may be answered.
To Participate:
Live webcast: https://services.choruscall.com/links/apdn200507.html
Replay (available 1 hour following the conclusion of the live call through May 21, 2020):
For those unable to attend the live call, a copy of management's PowerPoint presentation will be available for review under the ?Events and Presentations' section of the company's Investor Relations web site: https://adnas.com/molecular-based-security/investors/
Information about Non-GAAP Financial Measures
As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America. To supplement our condensed consolidated financial statements prepared and presented in accordance with GAAP, this earnings release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company's historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information presented in accordance with GAAP. We use this non-GAAP financial measure for internal financial and operational decision making purposes and as a means to evaluate period-to-period comparisons of the performance and results of operations of our core business. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our business by excluding non-cash expenses that may not be indicative of our recurring operating results. We believe this non-GAAP financial measure is useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.
"EBITDA"- is defined as earnings (loss) before interest expense, income tax expense and depreciation and amortization expense.
"Adjusted EBITDA"- is defined as EBITDA adjusted to exclude (i) stock-based compensation and (ii) other non-cash expenses.
About Applied DNA Sciences
Applied DNA is a provider of molecular technologies that enable supply chain security, anti-counterfeiting and anti-theft technology, product genotyping, and pre-clinical nucleic acid-based therapeutic drug candidates.
Visit adnas.com for more information. Follow us on Twitter and LinkedIn. Join our mailing list.
The Company's common stock is listed on NASDAQ under ticker symbol ?APDN', and its publicly-traded warrants are listed on OTC under ticker symbol ?APPDW'.
Forward-Looking Statements
The statements made by Applied DNA in this press release may be "forward-looking" in nature within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe Applied DNA's future plans, projections, strategies and expectations, and are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the control of Applied DNA. Actual results could differ materially from those projected due to the possibility of a failure to make timely payment on its outstanding secured convertible notes and resulting enforcement by noteholders of remedies on collateral which includes substantially all of Applied DNA's assets, its history of net losses, limited financial resources, limited market acceptance, the uncertainties inherent in research and development, future clinical data and analysis, including whether any of Applied DNA's or its partners therapeutic or diagnostic candidates will advance further in the preclinical research or clinical trial process, including receiving clearance from the U.S. Food and Drug Administration or equivalent foreign regulatory agencies to conduct clinical trials and whether and when, if at all, they will receive final approval from the U.S. FDA or equivalent foreign regulatory agencies, the fact that there has never been a commercial drug product utilizing PCR-produced DNA technology approved for therapeutic use, the unknown outcome of any applications or requests to U.S. FDA or equivalent foreign regulatory agencies, the unknown limited duration of any Emergency Use Authorization (EUA) approval from U.S. FDA, disruptions in the supply of raw materials and supplies, and various other factors detailed from time to time in Applied DNA's SEC reports and filings, including our Annual Report on Form 10-K filed on December 12, 2019 and our subsequent quarterly reports on Form 10-Q filed on February 6, 2020 and May 14, 2020, and other reports we file with the SEC, which are available at www.sec.gov. Applied DNA undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless otherwise required by law.
APPLIED DNA SCIENCES, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2020 AND September 30, 2019 |
|||||||
March 31, 2020 | September 30, 2019 | ||||||
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ |
8,662,889 |
|
$ |
558,988 |
|
|
Accounts receivable, net of allowance of $4,500 at March 31, 2020 and September 30, 2019, respectively |
|
549,123 |
|
|
839,951 |
|
|
Inventories |
|
88,941 |
|
|
142,629 |
|
|
Prepaid expenses and other current assets |
|
678,120 |
|
|
604,740 |
|
|
Total current assets |
|
9,979,073 |
|
|
2,146,308 |
|
|
Property and equipment, net |
|
265,400 |
|
|
226,221 |
|
|
Other assets: | |||||||
Deferred offering costs |
|
- |
|
|
109,698 |
|
|
Deposits |
|
76,085 |
|
|
62,351 |
|
|
Goodwill |
|
285,386 |
|
|
285,386 |
|
|
Intangible assets, net |
|
720,953 |
|
|
734,771 |
|
|
Total Assets | $ |
11,326,897 |
|
$ |
3,564,735 |
|
|
LIABILITIES AND EQUITY (DEFICIT) | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities (including related party of $40,000 at March 31, 2020) | $ |
1,178,358 |
|
$ |
1,616,997 |
|
|
Deferred revenue |
|
671,526 |
|
|
628,993 |
|
|
Total current liabilities |
|
1,849,884 |
|
|
2,245,990 |
|
|
Long term accrued liabilities |
|
722,564 |
|
|
621,970 |
|
|
Secured convertible notes payable, related party. net of debt issuance costs |
|
1,485,673 |
|
|
1,442,497 |
|
|
Secured convertible notes payable, recorded at fair value |
|
- |
|
|
102,777 |
|
|
Total liabilities |
|
4,058,121 |
|
|
4,413,234 |
|
|
Commitments and contingencies | |||||||
Applied DNA Sciences, Inc. Stockholders' Equity (Deficit) : | |||||||
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- shares issued and outstanding as of March 31, 2020 and September 30, 2019, respectively |
|
- |
|
|
- |
|
|
Series A Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- issued and outstanding as of March 31, 2020 and September 30, 2019, respectively |
|
- |
|
|
- |
|
|
Series B Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; -0- issued and outstanding as of March 31, 2020 and September 30, 2019, respectively |
|
- |
|
|
- |
|
|
Common stock, par value $0.001 per share; 500,000,000 shares authorized; 4,059,943 and 1,207,993 shares issued and outstanding as of March 31, 2 020 and September 30, 2019, respectively |
|
4,060 |
|
|
1,208 |
|
|
Additional paid in capital |
|
269,693,833 |
|
|
255,962,922 |
|
|
Accumulated deficit |
|
(262,423,267 |
) |
|
(256,805,589 |
) |
|
Applied DNA Sciences, Inc. stockholders' equity (deficit): |
|
7,274,626 |
|
|
(841,459 |
) |
|
Noncontrolling interest |
|
(5,850 |
) |
|
(7,040 |
) |
|
Total equity (deficit) |
|
7,268,776 |
|
|
(848,499 |
) |
|
Total liabilities and equity (deficit) | $ |
11,326,897 |
|
$ |
3,564,735 |
|
|
APPLIED DNA SCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND SIX MONTHS ENDED MARCH 31, 2020 AND 2019 (unaudited) |
|||||||||||||||
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|||||||||||||
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
Revenues: | |||||||||||||||
Product | $ |
197,801 |
|
$ |
119,036 |
|
$ |
435,671 |
|
$ |
440,747 |
|
|||
Service |
|
354,672 |
|
|
659,432 |
|
|
750,321 |
|
$ |
1,222,044 |
|
|||
Total revenues |
|
552,473 |
|
|
778,468 |
|
|
1,185,992 |
|
|
1,662,791 |
|
|||
Cost of revenues |
|
179,582 |
|
|
133,141 |
|
|
411,613 |
|
|
286,626 |
|
|||
Operating expenses: | |||||||||||||||
Selling, general and administrative |
|
2,285,544 |
|
|
2,528,914 |
|
|
4,658,957 |
|
|
5,611,295 |
|
|||
Research and development |
|
703,018 |
|
|
651,377 |
|
|
1,267,444 |
|
|
1,360,941 |
|
|||
Depreciation and amortization |
|
66,537 |
|
|
97,673 |
|
|
141,604 |
|
|
232,724 |
|
|||
Total operating expenses |
|
3,055,099 |
|
|
3,277,964 |
|
|
6,068,005 |
|
|
7,204,960 |
|
|||
LOSS FROM OPERATIONS |
|
(2,682,208 |
) |
|
(2,632,637 |
) |
|
(5,293,626 |
) |
|
(5,828,795 |
) |
|||
Other (expense) income: | |||||||||||||||
Interest (expense) income, net (including related parties interest of $25,840 and $49,310 for the three and six months ended March 31, 2019, respectively) |
|
(29,096 |
) |
|
(37,417 |
) |
|
(58,187 |
) |
|
(69,028 |
) |
|||
Other expense, net |
|
(239,601 |
) |
|
(16,703 |
) |
|
(261,833 |
) |
|
(23,254 |
) |
|||
Loss before provision for income taxes |
|
(2,950,905 |
) |
|
(2,686,757 |
) |
|
(5,613,646 |
) |
|
(5,921,077 |
) |
|||
Provision for income taxes |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|||
NET LOSS |
|
(2,950,905 |
) |
|
(2,686,757 |
) |
|
(5,613,646 |
) |
|
(5,921,077 |
) |
|||
Less: Net (income) loss attributable to noncontrolling interest |
|
(1,220 |
) |
|
- |
|
|
(1,190 |
) |
|
- |
|
|||
NET LOSS attributable to Applied DNA Sciences, Inc. |
|
(2,952,125 |
) |
|
(2,686,757 |
) |
|
(5,614,836 |
) |
|
(5,921,077 |
) |
|||
Deemed dividend related to warrant modifications |
|
- |
|
|
- |
|
|
2,842 |
|
|
- |
|
|||
NET LOSS applicable to common stockholders |
|
(2,952,125 |
) |
|
(2,686,757 |
) |
|
(5,617,678 |
) |
|
(5,921,077 |
) |
|||
Net loss per share applicable to common stockholders-basic and diluted | $ |
(0.79 |
) |
$ |
(3.22 |
) |
$ |
(1.76 |
) |
$ |
(6.51 |
) |
|||
Weighted average shares outstanding-basic and diluted |
|
3,758,512 |
|
|
834,990 |
|
|
3,196,616 |
|
|
909,623 |
|
APPLIED DNA SCIENCES, INC. CALCULATION AND RECONCILIATION OF ADJUSTED EBITDA (unaudited) |
|||||||||||
Three Month Period Ended | |||||||||||
March 31, | |||||||||||
|
2020 |
|
|
2019 |
|
% ? |
|||||
Net Loss | $ |
(2,950,905 |
) |
$ |
(2,686,757 |
) |
|||||
Interest expense (income), net |
|
29,096 |
|
|
37,417 |
|
|||||
Depreciation and amortization |
|
66,537 |
|
|
97,673 |
|
|||||
Stock based compensation expense (income) |
|
226,668 |
|
|
267,094 |
|
|||||
Bad debt expense |
|
- |
|
|
- |
|
|||||
Total non-cash items |
|
322,301 |
|
|
402,184 |
|
|||||
Consolidated Adjusted EBITDA (loss) | $ |
(2,628,604 |
) |
$ |
(2,284,573 |
) |
15 |
% |
|||
Six Month Period Ended | |||||||||||
March 31, | |||||||||||
|
2020 |
|
|
2019 |
|
% ? |
|||||
Net Loss | $ |
(5,613,646 |
) |
$ |
(5,921,077 |
) |
|||||
Interest expense (income), net |
|
58,187 |
|
|
69,028 |
|
|||||
Depreciation and amortization |
|
141,604 |
|
|
232,724 |
|
|||||
Stock based compensation expense |
|
432,758 |
|
|
757,338 |
|
|||||
Bad debt expense |
|
- |
|
|
(8,633 |
) |
|||||
Total non-cash items |
|
632,549 |
|
|
1,050,457 |
|
|||||
Consolidated Adjusted EBITDA (loss) | $ |
(4,981,097 |
) |
$ |
(4,870,620 |
) |
2 |
% |
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