Business Wire | Aug 6, 2020 07:00AM EDT

PolarityTE Reports Second Quarter 2020 Results

Aug. 06, 2020

SALT LAKE CITY--(BUSINESS WIRE)--Aug. 06, 2020--PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company developing regenerative tissue products and biomaterials, today reported financial results for the second calendar quarter of 2020. PolarityTE will host a conference call and webcast today, August 6, 2020 at 8:00 a.m. ET.

Highlights

* Total revenues were $2.27 million in Q2:20 compared to $1.33 million in Q2:19 * SkinTE revenues were $0.94 million in Q2:20 compared to $0.50 million in Q2:19 * Paid Cases were 88 in Q2:20 compared to 46 in Q2:19

Financial Results for the Three Months Ended June 30, 2020

Total revenue for the three months ended June 30, 2020 was $2.27 million, of which $0.94 million was from sales of SkinTE and $1.32 million from PolarityTE's contract service operations, which includes $0.71 million from COVID-19 testing services that the Company started providing at the end of May 2020.

Research and development expenses for the three months ended June 30, 2020 were approximately $3.16 million versus $4.76 million for the three months ended June 30, 2019. Research and development expenses for the three months ended June 30, 2020 included an expense of $0.40 million from stock-based compensation which is a non-cash charge, versus $1.48 million for the three months ended June 30, 2019.

General and administrative expenses for the three months ended June 30, 2020 were $5.21 million versus $15.06 million for the three months ended June 30, 2019. General and administrative expenses for the three months ended June 30, 2020 included $0.14 million of stock-based compensation which is a non-cash charge, versus $6.89 million for the three months ended June 30, 2019.

Sales and marketing expenses for the three months ended June 30, 2020 were $2.02 million versus $3.98 million for the three months ended June 30, 2019.

Net loss for the three months ended June 30, 2020 was $12.68 million compared with a net loss of $22.79 million for the three months ended June 30, 2019.

Cash and Liquidity as of June 30, 2020

As of June 30, 2020, our cash, cash equivalents and short-term investments balance was approximately $30.50 million, compared to cash and cash equivalents and short-term investments of $29.24 million at December 31, 2019.

Cash used in operating activities for the three-month period ended June 30, 2020 was approximately $11.56 million, or approximately $3.85 million per month on average, 10% lower than the $4.27 million monthly average in the three months ended June 30, 2019 and 17% lower than the $4.62 million monthly average in the three months ended March 31, 2020.

The Company believes capital resources will be sufficient to fund its current business plan including related operating expenses and capital expenditure requirements into the second quarter of 2021.

Conference Call and Webcast Details

The conference call can be accessed by calling 1-888-599-8688 (U.S. and Canada) or +44 (0)330 336 9104 (International), with confirmation code 679989 and referencing "PolarityTE Second Quarter 2020 Earnings Call." A webcast of the conference call can be accessed by using the link below.

Earnings Call Webcast - CLICK HERE

A replay of the earnings conference call will be available for 30 days, beginning approximately one hour after the conclusion of the call and can be found by visiting PolarityTE's website at https://www.polarityte.com/news-media/events or by clicking on the link above.

About PolarityTE(r)

PolarityTE is focused on transforming the lives of patients by discovering, designing and developing a range of regenerative tissue products and biomaterials for the fields of medicine, biomedical engineering and material sciences. Rather than manufacturing with synthetic and foreign materials within artificially engineered environments, PolarityTE manufactures products from the patient's own tissue and uses the patient's own body to support the regenerative process. From a small piece of healthy autologous tissue, the company creates an easily deployable, dynamic and self-propagating product designed to regenerate the target tissues. PolarityTE's innovative methods are intended to promote and accelerate growth of the patient's tissues to undergo a form of effective regenerative healing. Learn more at www.PolarityTE.com - Welcome to the Shift(r).

Forward Looking Statements

Certain statements contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They are generally identified by words such as "believes," "may," "expects," "anticipates," "intend," "plan," "will," "would," "should" and similar expressions. Readers should not place undue reliance on such forward-looking statements, which are based upon the Company's beliefs and assumptions as of the date of this release. The Company's actual results could differ materially due to the impact of the COVID-19 pandemic and FDA regulatory matters, which cannot be predicted, and the risk factors and other items described in more detail in the "Risk Factors" section of the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the SEC (copies of which may be obtained at www.sec.gov). Subsequent events and developments may cause these forward-looking statements to change. The Company specifically disclaims any obligation or intention to update or revise these forward-looking statements as a result of changed events or circumstances that occur after the date of this release, except as required by applicable law. Our actual results could differ materially due to risk factors and other items described in more detail in the "Risk Factors" section of the Company's Annual Reports and other filings with the SEC (copies of which may be obtained at www.sec.gov).

POLARITYTE, the POLARITYTE logo, SKINTE, WHERE SELF REGENERATES SELF and WELCOME TO THE SHIFT are trademarks or registered trademarks of PolarityTE, Inc.

POLARITYTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share amounts)



June 30, December 31, 2020 2019

ASSETS

Current assets

Cash and cash equivalents $ 30,504 $ 10,218

Short-term investments - 19,022

Accounts receivable, net 2,115 1,731

Inventory 281 252

Prepaid expenses and other current assets 2,453 1,264

Total current assets 35,353 32,487

Property and equipment, net 12,729 14,911

Operating lease right-of-use assets 3,559 4,590

Intangible assets, net 636 731

Goodwill 278 278

Other assets 599 602

TOTAL ASSETS $ 53,154 $ 53,599



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued expenses $ 5,050 $ 7,095

Other current liabilities 2,644 2,338

Current portion of long-term notes payable 1,436 528

Deferred revenue 97 98

Total current liabilities 9,227 10,059

Common stock warrant liability 8,736 -

Operating lease liabilities 2,192 2,994

Other long-term liabilities 1,022 1,630

Long-term notes payable 2,410 -

Total liabilities 23,587 14,683



STOCKHOLDERS' EQUITY

Preferred stock - 25,000,000 shares authorized, 0shares issued and outstanding at June 30, 2020 - - and December 31, 2019

Common stock - $.001 par value; 250,000,000shares authorized; 38,496,910 and 27,374,653 38 27 shares issued and outstanding at June 30, 2020and December 31, 2019, respectively

Additional paid-in capital 490,603 474,174

Accumulated other comprehensive income - 72

Accumulated deficit (461,074 ) (435,357 )

Total stockholders' equity 29,567 38,916

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,154 $ 53,599



POLARITYTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share amounts)



For the Three Months Ended For the Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Net revenues

Products $ 944 $ 504 $ 1,372 $ 801

Services 1,322 822 1,827 1,990

Total net 2,266 1,326 3,199 2,791 revenues

Cost of sales

Products 275 342 615 615

Services 607 254 783 757

Total cost of 882 596 1,398 1,372 sales

Gross profit 1,384 730 1,801 1,419

Operatingcosts and expenses

Research and 3,164 4,764 6,537 10,116 development

General and 5,211 15,060 15,816 32,255 administrative

Sales and 2,024 3,981 5,718 7,934 marketing

Restructuringand other 2,084 - 2,536 - charges

Totaloperating 12,483 23,805 30,607 50,305 costs andexpenses

Operating loss (11,099 ) (23,075 ) (28,806 ) (48,886 )

Other income (expenses)

Change in fairvalue ofcommon stock (1,591 ) - 2,941 - warrantliability

Interest(expense) (65 ) 29 (77 ) 99 income, net

Other income, 78 254 225 422 net

Net loss $ (12,677 ) $ (22,792 ) $ (25,717 ) $ (48,365 )

Net loss pershare, basic $ (0.33 ) $ (0.92 ) $ (0.72 ) $ (2.09 )and diluted

Weightedaverage sharesoutstanding, 38,428,289 24,768,453 35,724,141 23,190,343 basic anddiluted



POLARITYTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)



For the Six Months Ended June 30,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ (25,717 ) $ (48,365 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation expense 3,784 18,907

Depreciation and amortization 1,549 1,446

Amortization of intangible assets 95 99

Amortization of debt discount 13 28

Change in fair value of common stock warrant (2,941 ) - liability

Change in fair value of contingent consideration - (48 )

Loss on abandonment of property and equipment 1,529

Other non-cash adjustments (21 ) 30

Changes in operating assets and liabilities:

Accounts receivable (384 ) (624 )

Inventory (29 ) (26 )

Prepaid expenses and other current assets (1,189 ) (486 )

Operating lease right-of-use assets 899 791

Other assets 3 25

Accounts payable and accrued expenses (2,109 ) (17 )

Other current liabilities 9 367

Deferred revenue (1 ) (126 )

Operating lease liabilities (903 ) (670 )

Other long-term liabilities - (120 )

Net cash used in operating activities (25,413 ) (28,789 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (1,170 ) (2,110 )

Purchase of available-for-sale securities (14,144 ) (15,445 )

Proceeds from maturities of available-for-sale 16,945 9,278 securities

Proceeds from sale of available-for-sale securities 16,171 -

Net cash provided by (used in) investing activities 17,802 (8,277 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from the sale of common stock and 24,276 27,948 warrants

Proceeds from stock options exercised 31 529

Proceeds from ESPP purchase 40 35

Cash paid for tax withholdings related to net share (6 ) (636 )settlement

Payment of contingent consideration liability - (109 )

Principal payments on financing leases (243 ) (225 )

Proceeds from term note payable and financing 4,629 - arrangements

Principal payments on term note payable and financing (830 ) (262 )arrangements

Net cash provided by financing activities 27,897 27,280

Net increase (decrease) in cash and cash equivalents 20,286 (9,786 )

Cash and cash equivalents - beginning of period 10,218 55,673

Cash and cash equivalents - end of period $ 30,504 $ 45,887

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CONTACT: Investors: Rich Haerle VP, Investor Relations PolarityTE, Inc. ir@PolarityTE.com (385) 315-0697