Exhibit 99.1
PolarityTE Reports Fiscal Year 2019 Financial Results
SALT LAKE CITY, March 12, 2020 – PolarityTE, Inc. (Nasdaq: PTE), a biotechnology company developing and commercializing regenerative tissue products and biomaterials, today reported results for calendar fourth quarter and year ended December 31, 2019. PolarityTE will host a conference call and webcast with Q&A today, Thursday, March 12, 2020 at 8:00 a.m. Eastern Time. Please see details below.
Year Ended December 31, 2019
| ● | 154% YOY Increase in Total Revenue; $5.652M for YE:2019 vs $2.223M for YE:2018 | |
| ● | 166% YOY increase in SkinTE Revenue; $2.353M for YE:2019 vs $0.886M for YE:2018 | |
| ● | 95% increase in paid cases from 1H:19 to 2H:19; 170 in 2H:19 vs 87 in 1H:19 | |
| ● | 94% increase in SkinTE revenue from 1H:19 to 2H:19; $1.55M in 2H:19 vs $0.801M in 1H:19 |
Q4:2019 Results
| ● | 10% QOQ increase in paid cases; 89 in Q4:19 vs 81 in Q3:19 | |
| ● | 15% QOQ decrease in SkinTE revenues; $0.714M in Q4:19 vs $0.839M in Q3:19 | |
| ● | 26% QOQ increase in repeat paid users; 29 in Q4:19 vs 23 in Q3:19 | |
| ● | 4% QOQ decrease in new paid users; 23 in Q4:19 vs 24 in Q3:19 |
Financial Results for the Year Ended December 31, 2019
Total revenue for the three months ended December 31, 2019 was $1.466 million of which $714 thousand was from sales of SkinTE and $753 thousand was associated with PolarityTE’s contract research operations. This compares to total revenue for the three months ended September 30, 2019 of $1.395 million, of which $839 thousand was from sales of SkinTE and $556 thousand was associated with PolarityTE’s contract research operations.
Research and development expenses for the three months ended December 31, 2019 were $3.33 million versus $2.96 million for the three months ended September 30, 2019. Research and development expenses for the three months ended December 31, 2019 included a $243 thousand expense for stock-based compensation, which is a noncash expense, versus a $164 thousand credit for the three months ended September 30, 2019.
General and administrative expenses for the three months ended December 31, 2019, were $14.9 million versus $16.0 million for the three months ended September 30, 2019. As we stated in November 2019, general and administrative expenses for the three months ended September 30, 2019 were negatively affected by the accrual of payments to the former CEO pursuant to a settlement agreement reached in August 2019. General and administrative expenses for the three months ended December 31, 2019 included $6.9 million of stock-based compensation versus $4.8 million for the three months ended September 30, 2019.
Sales and marketing expenses for the three months ended December 31, 2019 were $4.1 million versus $5.0 million for the three months ended September 30, 2019. We finished 2019 with 25 sales representatives.
Net loss for the three months ended December 31, 2019 was $21.1 million compared to a net loss of $23.0 million for the three months ended September 30, 2019.
Cash and Liquidity as of December 31, 2019
As of December 31, 2019, our cash, cash equivalents and short-term investments balance was $29.2 million, compared to cash and cash equivalents and short-term investments of $61.8 million at December 31, 2018.
Cash used in operating activities for the three-month period ended December 31, 2019 was $16.0 million or $5.3 million per month. This is greater than the $11.9 million for the three months ended September 30, 2019. This is attributable to accruals in the third quarter that were paid in the fourth quarter, including $1.7 million of cash paid to the former CEO under the settlement arrangement reached in August 2019.
On February 14, 2020 the Company completed an underwritten offering of our common stock and warrants to purchase shares of our common stock. The net proceeds to the Company from the offering are estimated to be approximately $22.7 million after estimated offering expenses payable by us.
Based on product development and commercialization plans, the Company believes existing cash, cash equivalents and short-term investments, with planned operating cost reductions, will be adequate to meet capital needs for at least the next 12 months.
Conference Call and Webcast Details
The conference call can be accessed by calling 1-800-239-9838 (U.S. and Canada) or +44 (0)330 336 9105 (International) with confirmation code 5420396 and referencing “PolarityTE Fiscal Year 2019 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®
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 method is 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®.
About SkinTE™
SkinTE is a human cellular and tissue-based product derived from a patient’s own skin intended for the repair, reconstruction, and replacement of skin tissue. SkinTE has been proven to regrow skin over exposed bone, muscle, joint and tendon and has been used to treat a variety of skin defects, including burns, wounds, traumatic injuries, surgical reconstruction, scars, and failed skin grafts or conventional treatments for wounds and burns.
SkinTE is intended to be used by physicians or other appropriate healthcare providers for homologous uses of skin tissues/integument. Patients who have suffered from an event, disease, process or acquired deficit that results in the functional loss or void of skin/integument systems can receive SkinTE as an adjunct and/or in place of split-thickness skin grafting, full-thickness grafting, temporizing skin coverage and/or skin substitute products. SkinTE is for autologous use only. Aseptic technique during harvest and deployment of SkinTE is mandatory. SkinTE is marketed as an HCT/P regulated by the FDA solely under Section 361 of the Public Health Service Act and 21 CFR 1271.
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 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). 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, WHERE SELF REGENERATES SELF, WELCOME TO THE SHIFT, and SKINTE are trademarks or registered trademarks of PolarityTE, Inc.
CONTACTS
Investors:
Rich Haerle
VP, Investor Relations
PolarityTE, Inc.
ir@PolarityTE.com
(385) 315-0697
Media:
Angela Ziegler
VP, Marketing and Public Relations
AngelaZiegler@polarityte.com
(385) 239-0363
POLARITYTE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| December 31, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 10,218 | $ | 55,673 | ||||
| Short-term investments | 19,022 | 6,162 | ||||||
| Accounts receivable, net | 1,731 | 712 | ||||||
| Inventory | 252 | 336 | ||||||
| Prepaid expenses and other current assets | 1,264 | 1,432 | ||||||
| Total current assets | 32,487 | 64,315 | ||||||
| Property and equipment, net | 14,911 | 13,736 | ||||||
| Operating lease right-of-use assets | 4,590 | – | ||||||
| Intangible assets, net | 731 | 924 | ||||||
| Goodwill | 278 | 278 | ||||||
| Other assets | 602 | 913 | ||||||
| TOTAL ASSETS | $ | 53,599 | $ | 80,166 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 7,095 | $ | 6,508 | ||||
| Other current liabilities | 2,338 | 316 | ||||||
| Current portion of long-term note payable | 528 | 529 | ||||||
| Deferred revenue | 98 | 170 | ||||||
| Total current liabilities | 10,059 | 7,523 | ||||||
| Long-term note payable, net | – | 479 | ||||||
| Operating lease liabilities | 2,994 | – | ||||||
| Other long-term liabilities | 1,630 | 131 | ||||||
| Total liabilities | 14,683 | 8,133 | ||||||
| Commitments and Contingencies (Note 17) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock – 25,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2019 and 2018 | – | – | ||||||
| Common stock - $.001 par value; 250,000,000 shares authorized; 27,374,653 and 21,447,088 shares issued and outstanding at December 31, 2019 and 2018 | 27 | 21 | ||||||
| Additional paid-in capital | 474,174 | 414,840 | ||||||
| Accumulated other comprehensive income | 72 | 36 | ||||||
| Accumulated deficit | (435,357 | ) | (342,864 | ) | ||||
| Total stockholders’ equity | 38,916 | 72,033 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 53,599 | $ | 80,166 | ||||
POLARITYTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
| For the Year Ended | For the Two Months Ended | For the Year Ended | ||||||||||
| December 31, 2019 | December 31, 2018 | October 31, 2018 | ||||||||||
| Net revenues | ||||||||||||
| Products | $ | 2,353 | $ | 210 | $ | 689 | ||||||
| Services | 3,299 | 463 | 874 | |||||||||
| Total net revenues | 5,652 | 673 | 1,563 | |||||||||
| Cost of sales | ||||||||||||
| Products | 1,365 | 194 | 500 | |||||||||
| Services | 1,114 | 187 | 502 | |||||||||
| Total costs of sales | 2,479 | 381 | 1,002 | |||||||||
| Gross profit | 3,173 | 292 | 561 | |||||||||
| Operating costs and expenses | ||||||||||||
| Research and development | 16,397 | 3,458 | 19,376 | |||||||||
| General and administrative | 63,189 | 12,639 | 48,252 | |||||||||
| Sales and marketing | 16,980 | 2,725 | 2,365 | |||||||||
| Total operating costs and expenses | 96,566 | 18,822 | 69,993 | |||||||||
| Operating loss | (93,393 | ) | (18,530 | ) | (69,432 | ) | ||||||
| Other income (expense) | ||||||||||||
| Interest income, net | 151 | 80 | 395 | |||||||||
| Other income, net | 749 | 32 | – | |||||||||
| Change in fair value of derivatives | – | – | 3,814 | |||||||||
| Loss on extinguishment of warrant liability | – | – | (520 | ) | ||||||||
| Loss before income taxes | (92,493 | ) | (18,418 | ) | (65,743 | ) | ||||||
| Benefit for income taxes | – | – | 302 | |||||||||
| Net loss | (92,493 | ) | (18,418 | ) | (65,441 | ) | ||||||
| Deemed dividend – accretion of discount on Series F preferred stock | – | – | (1,290 | ) | ||||||||
| Deemed dividend – exchange of Series F preferred stock | – | – | (7,057 | ) | ||||||||
| Cumulative dividends on Series F preferred stock | – | – | (373 | ) | ||||||||
| Net loss attributable to common stockholders | $ | (92,493 | ) | $ | (18,418 | ) | $ | (74,161 | ) | |||
| Net loss per share, basic and diluted: | ||||||||||||
| Net loss | (3.70 | ) | (0.86 | ) | (4.29 | ) | ||||||
| Deemed dividend – accretion of discount on Series F preferred stock | – | – | (0.09 | ) | ||||||||
| Deemed dividend – exchange of Series F preferred stock | – | – | (0.46 | ) | ||||||||
| Cumulative dividends on Series F preferred stock | – | – | (0.02 | ) | ||||||||
| Net loss per share attributable to common stockholders | $ | (3.70 | ) | $ | (0.86 | ) | $ | (4.86 | ) | |||
| Weighted average shares outstanding, basic and diluted | 24,966,355 | 21,343,446 | 15,259,731 | |||||||||
POLARITYTE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| For the Year Ended | For the Two Months Ended | For the Year Ended | ||||||||||
| December 31, 2019 | December 31, 2018 | October 31, 2018 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss | $ | (92,493 | ) | $ | (18,418 | ) | $ | (65,441 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Stock based compensation expense | 31,402 | 8,946 | 38,821 | |||||||||
| Change in fair value of derivatives | – | – | (3,814 | ) | ||||||||
| Depreciation and amortization | 2,992 | 330 | 1,394 | |||||||||
| Loss on extinguishment of warrant liability | – | – | 520 | |||||||||
| Amortization of intangible assets | 193 | 33 | 100 | |||||||||
| Amortization of debt discount | 49 | 10 | 35 | |||||||||
| Change in fair value of contingent consideration | (36 | ) | 57 | 20 | ||||||||
| Loss on disposal of property and equipment | 914 | – | – | |||||||||
| Other non-cash adjustments | 20 | 86 | – | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (1,019 | ) | 228 | (940 | ) | |||||||
| Inventory | 84 | (98 | ) | (238 | ) | |||||||
| Prepaid expenses and other current assets | 193 | (279 | ) | (911 | ) | |||||||
| Operating lease right-of-use assets | 1,651 | – | – | |||||||||
| Other assets | (249 | ) | (535 | ) | (378 | ) | ||||||
| Accounts payable and accrued expenses | 1,269 | 1,621 | 2,136 | |||||||||
| Other current liabilities | 32 | – | – | |||||||||
| Deferred revenue | (72 | ) | 20 | 150 | ||||||||
| Operating lease liabilities | (1,578 | ) | – | – | ||||||||
| Net cash used in operating activities | (56,648 | ) | (7,999 | ) | (28,546 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchase of property and equipment | (2,773 | ) | (834 | ) | (9,221 | ) | ||||||
| Purchase of available-for-sale securities | (40,072 | ) | (10,200 | ) | – | |||||||
| Proceeds from maturities of available-for-sale securities | 23,327 | 4,003 | – | |||||||||
| Proceeds from sale of available-for-sale securities | 3,901 | – | – | |||||||||
| Acquisition of IBEX | – | – | (2,258 | ) | ||||||||
| Net cash used in continuing investing activities | (15,617 | ) | (7,031 | ) | (11,479 | ) | ||||||
| Net cash provided by discontinued investing activities | – | 10 | 60 | |||||||||
| Net cash used in investing activities | (15,617 | ) | (7,021 | ) | (11,419 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Net proceeds from the sale of common stock | 28,073 | – | 92,676 | |||||||||
| Proceeds from stock options exercised | 529 | – | 687 | |||||||||
| Proceeds from ESPP purchase | 99 | – | – | |||||||||
| Cash paid for tax withholdings related to net share settlement | (679 | ) | – | – | ||||||||
| Payment of contingent consideration liability | (225 | ) | – | (30 | ) | |||||||
| Principal payments on financing leases | (453 | ) | (11 | ) | (74 | ) | ||||||
| Principal payments on term note payable and financing arrangements | (534 | ) | (257 | ) | – | |||||||
| Net cash provided by/(used in) financing activities | 26,810 | (268 | ) | 93,259 | ||||||||
| Net (decrease)/increase in cash and cash equivalents | (45,455 | ) | (15,288 | ) | 53,294 | |||||||
| Cash and cash equivalents - beginning of period | 55,673 | 70,961 | 17,667 | |||||||||
| Cash and cash equivalents - end of period | $ | 10,218 | $ | 55,673 | $ | 70,961 | ||||||