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Classified in: Health, Science and technology, Business, Covid-19 virus
Subjects: ERN, CCA

ThermoGenesis Holdings Announces Financial Results for the Second Quarter Ended June 30, 2020 and Provides Corporate Update


RANCHO CORDOVA, Calif., Aug. 14, 2020 /PRNewswire/ -- ThermoGenesis Holdings, Inc. (Nasdaq: THMO), a market leader in automated cell processing tools and services in the cell and gene therapy field, today announced financial and operating results for the second quarter ended June 30, 2020 and provided a corporate strategic update.

Second Quarter and Subsequent Achievements:

"During the last few months, we adapted our strategy to develop and market a range of solutions to fight the global pandemic," stated Chris Xu, Ph.D., Chief Executive Officer of ThermoGenesis. "Notably, we contracted with a new manufacturer for a SARS-CoV-2 (COVID-19) IgM/IgG Antibody Test Kit which has already obtained EUA designation from the FDA and look forward to begin marketing next week. We plan to further differentiate this kit with the addition of a lateral flow immunoassay cartridge testing kit reader, now in the final stages of development, which is designed to improve the speed and accuracy of the COVID-19 antibody assay. Our research team has already filed a number of key patent applications around the reader, which  allows for big data analysis, which we believe will be essential information as we continue to re-open our society and our economy."

Dr. Xu continued, "Also of note, was the commercial launch of our proprietary X-SERIES cell processing platform by our global distributor, Corning Life Sciences, under the ThermoGenesis and Corning® dual brand. We remain committed to expanding our robust product line of automated cellular processing tools and services to become a market leader for cell banking and cell therapies, which will sustain our growth beyond this COVID-19 pandemic."

Jeff Cauble, Chief Financial Officer of ThermoGenesis, added, "The second quarter marked one of our best quarters for CAR-TXpresstm sales, up $400,000 from the prior period. This is an encouraging indication of the strength of Corning's distribution and their ability to expand the market penetration for this product line. While this improvement was offset by a reduction in revenues for our other product lines as a result of the COVID-19 pandemic, we expect sales to return to prior levels as the health emergency subsides."

Financial Results for the Quarter Ended June 30, 2020

Net revenues. Net revenues for the three months ended June 30, 2020 were $2.2 million compared to $4.3 million for the three months ended June 30, 2019, a decrease of $2.1 million or 48%. The decrease was driven by AXP disposable sales, which declined from 1,403 cases sold in the quarter ended June 30, 2019 to 372 cases sold in the quarter ended June 30, 2020.  The COVID-19 pandemic has had a significant impact on the cord blood industry, with fewer cord blood units being stored globally after the start of the pandemic. Additionally, with many countries and states on lockdown, some customers opted to consume their existing safety stock in lieu of placing new orders during the current quarter. The Company currently expects AXP disposable sales to increase back to their prior levels after the pandemic is over. Also contributing to the decrease was BioArchive® device sales, as one device was sold in the quarter ended June 30, 2019 as opposed to no devices sold in the current quarter. Offsetting these decreases was an increase of $0.5 million in CAR-TXpresstm sales due to the distributor for this product line, Corning Incorporated, adding CAR-TXpress to its suite of products and beginning sales to their customers in the quarter ended June 30, 2020. Other revenue also increased by $267,000, driven by approximately $200,000 for COVID-19 testing kits.

Gross profit. Gross profit (loss) was $(2.6) million or (117)% of net revenues for the three months ended June 30, 2020 compared to $2.0 million or 45% of net revenues for the three months ended June 30, 2019, a decrease of $4.6 million. The loss was driven by an inventory reserve of approximately $3.6 million for the remaining on hand inventory of COVID-19 testing kits from ImmuneCyte recognized during the quarter ended June 30, 2020. Additionally, the quarter ended June 30, 2020 had 1,031 fewer cases of AXP disposables sold as compared to the same period in 2019. This resulted in approximately $1.0 million less in gross profit from AXP disposables. There was also a reduction in gross profit of approximately $75,000 due to no BioArchive devices being sold in the quarter ended June 30, 2020. The reduction in gross profit was offset by an increase in gross profit of approximately $225,000 due to increased CAR-TXpress sales in the quarter ended June 30, 2020 as compared to the same period in 2019.

Sales and marketing expenses. For the three months ended June 30, 2020 sales and marketing expenses were $442,000 compared to $384,000 for the three months ended June 30, 2019, an increase of $58,000 or 15%. The increase was driven by expenses related to the Company's short-term incentive program.

Research and development expenses. Research and development expenses were $578,000 for the three months ended June 30, 2020 compared to $611,000 for the three months ended June 30, 2019, a decrease of $33,000 or 5%. The decrease was driven by development expenses for the Company's BACS technology of approximately $100,000 which were incurred in the three months ended June 30, 2019. Those expenses were offset by increases of approximately $35,000 in development costs related to the COVID-19 cartridge reader and approximately $30,000 in expenses for the Company's short-term incentive program which were incurred in the three months ended June 30, 2020.

General and administrative expenses. General and administrative expenses for the three months ended June 30, 2020 were $1.5 million, compared to $1.2 million for the three months ended June 30, 2019, an increase of $0.3 million or 26%. The increase is due to approximately $200,000 more for stock compensation expense in the quarter ended June 30, 2020, related to stock options granted to the Board and Company Executives during the current quarter; and approximately $100,000 in accrued expenses related to the Company's short-term incentive program.

Interest expense. Interest expense for the three months ended June 30, 2020 was $1.3 million, as compared $1.2 million for the three months ended June 30, 2019, an increase of $103,000. The increase was driven by additional interest expense and amortization of the debt discount related to the Revolving Credit Agreement with Boyalife Asset Holding II, Inc.

Net loss. For the quarter ended June 30, 2020, the Company reported a comprehensive loss attributable to common stockholders of $6.4 million, or $(1.02) per share, based on 6,315,566 weighted average basic and diluted common shares outstanding. This compares to a comprehensive net loss of $1.3 million, or $(0.47) per share, based on 2,784,776 weighted average basic and diluted common shares outstanding for the quarter ended June 30, 2019.

Adjusted EBITDA.  In addition to the results reported under US GAAP, the Company also uses a non-GAAP measure to evaluate operating performance and to facilitate the comparison of its historical results and trends. The Company uses the metric to determine operational cash flow. Adjusted EBITDA loss for the quarter ended June 30, 2020 was $4.7 million, as compared to an Adjusted EBITDA of $53,000 for the quarter ended June 30, 2019, a decrease of $4.7 million. The adjusted EBITDA decrease was primarily due to the $4.6 million decrease in gross profit in the quarter ended June 30, 2020 as compared to the same quarter in 2019, as well as approximately $175,000 more in expenses related to the Company's short-term incentive program. A reconciliation of adjusted EBITDA loss to net loss is set forth below.

At June 30, 2020, the Company had cash and cash equivalents totaling $7.0 million, compared with $3.2 million at December 31, 2019. Working capital improved to $8.0 million at June 30, 2020 as compared to $3.2 million at December 31, 2019.

Conference Call and Webcast Information
ThermoGenesis will host a conference call today at 1:30 p.m. PT/4:30 p.m. ET. To participate in the conference call, please dial 1-844-889-4331 (domestic), 1-412-380-7406 (international) or 1-866-605-3852 (Canada). To access a live webcast of the call, please visit: https://thermogenesis.com/investors/news-and-events/events-webcasts.

A webcast replay will be available on ThermoGenesis' website for three months by visiting the Investor page of the Company's website at www.thermogenesis.com.

About ThermoGenesis Holdings, Inc.
ThermoGenesis Holdings, Inc. develops, commercializes, and markets a range of automated technologies for CAR-T and other cell-based therapies. The Company currently markets a full suite of solutions for automated clinical biobanking, point-of-care applications, and automation for immuno-oncology, including its semi-automated, functionally-closed CAR-TXpresstm platform, which streamlines the manufacturing process for the emerging CAR-T immunotherapy market. For more information about ThermoGenesis, please visit: www.thermogenesis.com.

Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained herein.  When used in this press release, the words "anticipate," "believe," "estimate," "expect" and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements.  Actual results, performance or achievements could differ materially from the results expressed in or implied by these forward-looking statements. Readers should be aware of important factors that, in some cases, have affected, and in the future could affect, actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company.  These factors include without limitation, the ability to obtain capital and other financing in the amounts and at the times needed to launch new products, market acceptance of new products, the nature and timing of regulatory approvals for both new products and existing products for which the Company proposes new claims, realization of forecasted revenues, expenses and income, initiatives by competitors, price pressures, failure to meet FDA regulated requirements governing the Company's products and operations (including the potential for product recalls associated with such regulations), risks associated with initiating manufacturing for new products, failure to meet Foreign Corrupt Practice Act regulations, legal proceedings, uncertainty associated with the COVID-19 pandemic, and other risk factors listed from time to time in our reports with the Securities and Exchange Commission ("SEC"), including, in particular, those set forth in ThermoGenesis Holdings' Form 10-K for the year ended December 31, 2019. 

Company Contact:
Wendy Samford
916-858-5191
ir@thermogenesis.com

Investor Contact:
Paula Schwartz, Rx Communications
917-322-2216
pschwartz@rxir.com

Financials

 

ThermoGenesis Holdings, Inc.

Condensed Consolidated Balance Sheets




June 30,

2020


December 31,

2019



(Unaudited)



ASSETS





Current assets:





   Cash and cash equivalents


$6,984,000


$3,157,000

   Restricted cash


--


1,000,000

   Accounts receivable, net


1,654,000


1,278,000

   Inventories, net


5,189,000


3,824,000

   Prepaid expenses and other current assets


837,000


602,000






            Total current assets


14,664,000


9,861,000






Equipment and leasehold improvements, net


1,657,000


2,028,000

Right-of-use operating lease assets, net


797,000


859,000

Goodwill


781,000


781,000

Intangible assets, net


1,406,000


1,467,000

Other assets


48,000


218,000






            Total assets


$19,353,000


$15,214,000






LIABILITIES AND EQUITY





Current liabilities:





   Accounts payable


$3,236,000


$1,447,000

   Other current liabilities


3,369,000


5,238,000






            Total current liabilities


6,605,000


6,685,000






Long-term liabilities


7,418,000


7,613,000






ThermoGenesis Holdings, Inc. stockholders' equity


5,014,000


386,000






Noncontrolling interests


316,000


530,000






            Total liabilities and equity


$19,353,000


$15,214,000

 

ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30


2020


2019


2020


2019

Net revenues

$2,242,000


$4,305,000


$5,442,000


$7,268,000









Cost of revenues

4,874,000


2,354,000


6,582,000


4,057,000









    Gross profit (loss)

(2,632,000)


1,951,000


(1,140,000)


3,211,000









Expenses:








   Sales and marketing

442,000


384,000


886,000


725,000









   Research and development

578,000


611,000


1,187,000


1,175,000









   General and administration

1,536,000


1,218,000


3,184,000


2,478,000









       Total operating expenses

2,556,000


2,213,000


5,257,000


4,378,000









Loss from operations

(5,188,000)


(262,000)


(6,397,000)


(1,167,000)









Interest expense

(1,314,000)


(1,211,000)


(4,845,000)


(2,343,000)

Other income (expenses)

(8,000)


(2,000)


2,000


(11,000)

Loss on equity method investments

--


--


(13,000)


--









Total other expense

(1,322,000)


(1,213,000)


(4,856,000)


(2,354,000)









Net loss

(6,510,000)


(1,475,000)


(11,253,000)


(3,521,000)









Loss attributable to noncontrolling interests

(73,000)


(178,000)


(214,000)


(354,000)









Net loss attributable to common stockholders

$(6,437,000)


$(1,297,000)


$(11,039,000)


$(3,167,000)


 

ThermoGenesis Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Six Months Ended

June 30,


2020


2019

Cash flows from operating activities:




          Net cash used in operating activities

$(8,953,000)


$(2,911,000)





Cash flows from investing activities:




      Capital expenditures

(23,000)


(142,000)

Cash flows from financing activities:




     Proceeds from convertible promissory note-related party

4,287,000


1,513,000

     Payments on finance lease obligations

(22,000)


(15,000)

     Proceeds from issuance of common stock, net of expenses

5,214,000


756,000

     Proceeds from the exercise of options, warrants and pre-funded warrants

1,683,000


23,000

     Proceeds from long-term debt

--


800,000

     Proceeds from note payable

646,000


--





        Net cash provided by financing activities

11,808,000


3,077,000





Effects of foreign currency rate changes on cash and cash equivalents

(5,000)


--

Net increase (decrease) in cash, cash equivalents and restricted cash

2,827,000


24,000





Cash, cash equivalents and restricted cash at beginning of period

4,157,000


3,400,000

Cash, cash equivalents and restricted cash at end of period

$6,984,000


$3,424,000


 

ThermoGenesis Holdings, Inc.

Reconciliation of Adjusted EBITDA to Net Loss

(Unaudited)




Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019

Net loss


$(6,510,000)


$(1,475,000)


$(11,253,000)


$(3,521,000)










Deduct:









   Interest expense


(1,314,000)


(1,211,000)


(4,845,000)


(2,343,000)

   Other income (expense)


(8,000)


(2,000)


2,000


(11,000)

   Loss on equity method investments


--


--


(13,000)


--










Loss from operations


$(5,188,000)


$(262,000)


$(6,397,000)


$(1,167,000)










Add:









   Depreciation and amortization


193,000


190,000


392,000


402,000

   Stock-based compensation expense


314,000


125,000


381,000


206,000

Adjusted EBITDA


$(4,681,000)


$53,000


$(5,624,000)


$(559,000)

The Company defines adjusted EBITDA as income (or loss) from operations less, depreciation, amortization, stock compensation and impairment of intangible assets.

SOURCE ThermoGenesis Holdings, Inc.


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