ThermoGenesis Holdings, Inc. (THMO) on Q1 2022 Results - Earnings Call Transcript
Operator: Good day, and welcome to the ThermoGenesis Holdings Conference Call and Webcast to review Financial and Operating Results for the First Quarter Ended March 31st, 2022. As a reminder, all participants will be in listen-only mode. There will be an opportunity to ask questions at the end of today's presentation. As a reminder, this conference call is being recorded. I would now like to turn the conference over to our host, Paula Schwartz of Rx Communications. Please go ahead.
Paula Schwartz: Thank you, operator. This conference call contains forward-looking statements within the meaning of the federal securities laws. The company's actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that might cause actual results to differ materially from those in the forward-looking statements is contained in the company's periodic reports filed with the Securities and Exchange Commission. The information presented today is time sensitive and is accurate only as of the date of this call, May 19, 2022. If any portion of this call is being rebroadcast, retransmitted or redistributed at a later date, ThermoGenesis will not be reviewing or updating this material. Participating on today's call are Dr. Chris Xu, Chief Executive Officer; and Jeff Cauble, Chief Financial Officer. I'd like to now turn the call over to Chris. Please go ahead, Chris.
Chris Xu: Thank you, Paula. And thank you to everyone for joining the call this afternoon. We appreciate you taking the time to listening. Throughout its 35-year history ThermoGenesis has proven its ability to pioneer the development and production of a long list of cutting edge automated technologies and products for the cell banking and cell therapy industry. With this year's approval of Legends and Janssen’s Carvic-T – CAR-T therapy for relapse and refractory multiple myeloma. The number of FDA approved autologous CAR-T drugs has grown to a total of six. As the demand for cell gene therapies continue to explode zero now in estimated 350 plus U.S. companies alone are working in the immune cell therapy arena and more than 1,000 pipeline assets are in clinical developments, targeting a variety of blood and solid tumors worldwide. As a result, the significant need for cGMP manufacturing of these extremely complex personalized and lifesaving therapies is as important as ever. As ThermoGenesis, we are moving closer to achieving one -- achieving our goal through leveraging our unique and proprietary automated and semi-automated cell processing technologies, including the CAR-TXpress platform to transition from a device only company to one focused on providing companies and academic institutions in the space with cell-based contract development and manufacturing service or CDMO services. To help bring these therapies through the clinic and patient and through the patients in need. As we announced during our year-end call in March, we signed a licensing and technology Access Agreement and these four cell manufacturing facility within with the intent to form a new TG Biosynthesis, which will operate as a world-class CDMO for cell and cell-based gene therapy manufacturing. As you may recall we have partnered with Boyalife Genomics, a China-based CDMO organization for the exclusive license in the U.S. to use Boyalife Genomics existing and future know-how and intellectual properties relating to the cell manufacturing and related processes, including certain cell manufacturing technologies for varieties of clinical grade and non-clinical grade cellular products. At the same time, we entered into a lease agreement for more than 35,000 square foot of space in Sacramento, California area close to our current headquarters. The space has been build-out to create a state-of-art current good manufacturing practice or cGMP compliant facility with 12 cGMP clean room suites. The TG Biosynthesis division were looked to address the growing need for CDMO services by providing high quality development and manufacturing capacities. Cell and tissue processing development, quality systems, regulatory compliance, and other cell manufacturing solutions for clients with therapeutic candidates in various stage of development. The industry fully expect to see a wave of additional FDA approvals going forward. With as many as 10 to 20 new therapies each year starting in 2025, and this will likely accelerate over time. Currently, each of the six approved CAR-T cell therapies are extremely expensive, limiting patient access to these life-saving therapies, given that they cost approximately 673,000 to 475,000 per dose, making them among the most expensive drugs in the market. The manufacturing cost alone for each dose of these CAR-T Therapeutics exceed 100,000. 79% of which can be attributed to labor and GMP facility cost. The demand for GMP manufacturing facility and resources will continue to rise. With the global success rate of 50% to 80% CAR-T therapy is in effective treatment, so has the potential to improve millions of people die. As I have outlined before the surge in clinical activity has not seen -- has not been matched by an increase in production capacity. Even though over 65% of all cell and gene therapies are manufactured in all sorts of facilities, only a fraction of these required capacity exists in the marketplace today. Creating a critical 10 to 18 months, sorry 12 to 18 months backlog in commercial manufacturing. This will only be exacerbated by accelerated approvals. For developers of cell gene therapies translating a drug from bench to bedside has been limited by these manufacturing bottlenecks, which can be large, can be the largest challenges in achieving commercial success. Even during the research stage cell manipulations manual are technically complicated and are demonstrated only at laboratory scale for proof-of-concept and clinical study. Developers will need to switch from manual process, if they intend to overcome their manufacturing challenges. As a reminder, the heterogeneous nature of the cell therapy products has introduced the manufacturing complexities and regulatory concerns, as well as scale up complexities that are not present within traditional pharmaceutical manufacturing. Smaller biotech companies cannot afford the sizable cost of manufacturing scale-up requires. Even for some large companies establishing a manufacturing facility for cell therapy requires specific expertise and significant capital that can delay clinical trials. These facts often resulting significant number of cell therapy based companies seeking CDMOs for their cell manufacturing needs. With a strong intellectual property, cutting-edge technology and expertise and when built out state-of-art manufacturing capabilities, our TG Biosynthesis division expects to capitalize on these inefficiencies in the industry to become a world-class CDMO cell manufacture service provider. Specifically, we will leverage our new in -- new to in-license the technology from Boyalife Genomics with our existing technologies, including our high efficiency semi-automated CAR-TXpress platform, capable of reducing processing time significantly and improving cell recovery and potential rate cut 60% to 70% of the manufacturing cost to create a significant quality and pricing advantage. Providing CDMO service is a natural extension of the capabilities that we -- and we look forward to marketing these services to clients in order to accelerate the development cycle of the cell gene therapies, while reducing timeline and overhead cost. As we have stated, we anticipate to launch our CDMO service to customer towards the end of 2022. We look forward to reporting more ounces exciting transformation in the coming months. And with that let me turn the cord over to Jeff to share the key financial results for this first quarter. Jeff?
Jeff Cauble: Thank you, Chris. Net revenues increased to $2.7 million for the quarter ended March 31st, 2022, up 76% for the first quarter of last year. The increase was driven by AXP disposable sales, which increased by approximately $1.5 million, but over 600 more cases sold in the current quarter. Gross profit was 940,000 or 35% of net revenues for the quarter ended March 31st, 2022, as compared to 700,000 in the same quarter last year with the additional gross profit driven by the increased AXP disposable sales. Selling, general and administrative expenses were $1.7 million for the quarter ended March 31st, 2022, as compared to $2 million for the first quarter of last year. The decrease was primarily due to lower stock compensation expense in the current quarter. Research and development expenses were 500,000 for the quarter ended March 31st, 2022, as compared to 400,000 for the first quarter of last year. For the quarter ended March 31st, 2022, the company reported a basic and diluted net loss attributable to common stockholders of $1.9 million or $0.16 per share based on approximately 12.3 million shares outstanding. Compares to a basic and diluted net loss attributable to common stockholders of $2.4 million or $0.21 per share based on approximately 11.4 million shares outstanding for the quarter ended March 31st, 2021. As of March 31st, 2022, the company had cash and cash equivalents totaling $3.7 million, compared with $7.3 million at December 31st, 2021. This concludes our prepared remarks. Now we'd like to open the call to your questions. Operator?
Operator: We will now begin the question-and-answer session. Showing no questions. This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Chris Xu: Thank you, operator. We look forward to updating you on our progress during our second quarter 2022 call, and thank you to everyone who participated today and for your interest in ThermoGenesis Holdings.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
