ThermoGenesis Holdings, Inc. (THMO) on Q1 2021 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 31, 2021 As a reminder, all participants will be in a listen-only mode. There will opportunity to ask questions at the end of today’s presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your 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 13, 2021. 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.
Chris Xu: Thank you, Paula and thank you to everyone for joining the call this afternoon. We appreciate you taking the time this evening. And also apologize for my voice in the season -- allergy dust kick-in. So as you may know this year is the 35th anniversary of the company since they were founded in 1986. A recent study by McKinsey found that the average lifespan of a private companies are less than 10 years in the States. And that of the company listed in Standard & Poor's 500 today is under 20 years. Throughout our 35 years history, ThermoGenesis core competence has always been its ingenuity and its capability to create various sophisticated cell processing medical devices. Our brand is well-recognized by the cell banking industry. In fact, BioAarchive, our smart crowd storage system is used to warehouse close to 90% of all U.S. FDA approved drug use cord blood units. Today, the newly emerging immune cell banking industry, which allows individuals to store their healthy immune cells to be used for making potential cancer treatments, such as CAR-T therapies in the future is viewed in the same ways that cord blood banking was 30 years ago. Immune cell banking is technically challenged due to the traditional use of a labor intensive manual cell processing technology, and the dependency of the use of upgrading chemical reagent cycle to help isolate the immune cell from blood. ThermoGenesis demonstrated again, it's engineer ingenuity and introduce the PSP-1000 System in 2020, which is a FDA 510(k) Class 2 medical device design for isolating various cellular components from breath. This is the first-in-class system for the industry, which can process 200 ml breath in a fully closed GMP compliant medical device. It averages 30 minute for each sample process, reducing yet from the current four-hour processing time, which would drastically reduce the time and costs, and could make immune cell banking possible. In February of 2021, the company completed the development of another new device, the PXP-LAVARE System, which is an optional reformulation accessory for cell therapy designed for use along with the PXP-1000 System. The GMP compliant PXP-LAVARE allows for fast, automated, and reliable cell washing and cell reformulation, which are essential for all cell therapies, regardless whether it is a stem cell therapy or immune cell therapy.
Jeff Cauble: Thank you, Chris. Net revenues for the three months ended March 31, 2021 were $1.5 million, as compared to $3.2 million for the three months ended March 31, 2020. The decrease was driven by lower AXP disposable sales, primarily due to the COVID-19 pandemic, which as we previously discussed, has had an impact on our revenues. As more vaccines are administered, and the pandemic continues to subside in many countries, we anticipate revenues will begin to rebound in the second quarter of 2021. Hopefully, returning to pre pandemic levels by the end of 2021. Gross profit was 700,000 or 47% of net revenues for the three months ended March 31, 2021, compared to $1.5 million, or 47% of net revenues for the three months ended March 31, 2020. The decrease was driven by the lower AXP disposable sales, offset by an increase BioArchive device service revenue. Sales, general and administrative expenses for the three months ended March 31, 2021 were $2 million, compared to $2.1 million for the three months ended March 31, 2020, a slight decrease of $100,000. Decreases are driven by lower legal and travel expense in the current quarter. Research and development expenses were $400,000 for three months ended March 31, 2021, compared to $600,000 for three months ended March 31, 2020. The decrease is driven by lower personnel expenses in the quarter ended March 31, 2021. Interest expense for three months ended March 31, 2021 was $1.5 million, as compared to $3.5 million for three months ended March 31, 2020. The decreases were driven by lower amortization at discount related to the company's revolving credit agreement. For the quarter ended March 31, 2021, the company reported a comprehensive loss attributable to common stockholders of $2.4 million, or $0.21 per share, based on approximately $11.4 million weighted average shares outstanding. This compares to a comprehensive net loss of $4.6 million, or $1.11 per share, based on approximately $4.1 million weighted average shares outstanding for the quarter ended March 31, 2020. The company ended the quarter in a strong cash position with over $10 million on hand; an increase of $2.8 million from the end of last year, working capital at March 31, 2021 was $6.4 million.
Operator: Yes, thank you. We will now begin the question-and-answer session. And the first question comes from Sean Lee with H.C. Wainwright.
Sean Lee: Good afternoon guys and thanks for taking my question. My first one is on the existing blood banking business. So it's good to hear that you've started to see some recovery towards the end of the first quarter. So I was wondering if you can comment on whether that trend has continued into the second quarter and where do you see the most recovery, and where -- which areas maybe -- they're still seeing a lot of lackluster?
Jeff Cauble: Yeah. We have seen that trend continue going into the second quarter. And we do expect to see revenue start to come back close to the levels they were pre-pandemic. Ultimately, I think to get back to where we were in 2019, it'll be at least by the end of this year, before that happens.
Sean Lee: Great, thanks. And my second question is on the newly launched PXP systems. Could you comment on what differences are there between that and the X-SERIES products? And how is it more advantages and what advantages does it have over existing products on the market?
Chris Xu: Yeah. S the PXP series of products are more designed for clinical use, and it's originally designed for the point-of-care applications, then further expanded to other area. So the key difference is the PXP series product, U.S. FDA has to clear it, which means they are of higher regulation. They met higher regulation requirements. The X-Series are for general laboratory use, so it has various different applications, lots of them may be shared with the PXP Series, but the regulatory care is slightly lower due to the different potential usage.
Sean Lee: I see. Thanks. That's all I have.
Chris Xu: Thanks Sean.
Jeff Cauble: Thanks Sean.
Operator: Thank you. And this does conclude our question-and-answer session. So, I'd like to turn the floor to Dr. Xu for any closing comments.
Chris Xu: Thank you, operator. We look forward to updating you our progress during our second quarter 2021 call. And thank you to everyone who participated today and for your interest in ThermoGenesis Holdings. Thank you.
Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
