BioLife Solutions, Inc. — Q1 2015 Form 10-Q
Reporting period: Three months ended March 31, 2015. Unaudited consolidated results include the company and its majority-owned biologistex subsidiary. BioLife develops and sells biopreservation products and is developing a temperature-controlled shipping and information service through its biologistex joint venture.
Financial performance
| Metric | Q1 2015 | Q1 2014 |
|---|---|---|
| Total revenue | $1.501 million | $2.065 million |
| Core product sales | $1.477 million | $1.132 million |
| Gross profit / margin | $883,000 / 59% | $903,000 / 44% |
| Operating expenses | $2.043 million | $1.272 million |
| Operating loss | $1.161 million | $369,000 |
| Net loss attributable to BioLife | $1.031 million; $0.09 per share | $559,000; $0.10 per share |
| Net cash used in operations | $1.308 million | $894,000 |
Total revenue fell 27%, as contract-manufacturing revenue dropped from $933,000 to $24,000; core product sales rose 30%, driven partly by higher unit volume and regenerative-medicine sales. Gross margin improved because the quarter’s revenue mix consisted almost entirely of higher-margin proprietary products. Operating expenses increased 61%, including higher personnel and corporate costs and spending related to biologistex.
Cash, liquidity, and obligations
- At March 31, cash and cash equivalents were $2.972 million and short-term investments were $5.606 million, totaling $8.578 million, versus $9.938 million at December 31, 2014.
- Cash increased by $433,000 during the quarter: operating activities used $1.308 million, investing activities provided $1.716 million, and financing activities provided $25,000. Investing cash inflow primarily reflected sales and maturities of short-term investments.
- The balance sheet reports no notes payable; the prior note facility had been terminated after conversion of outstanding notes and interest to equity in March 2014. The filing reports total liabilities of $2.312 million, principally current liabilities and deferred rent.
- Management expected year-end cash, cash equivalents, and short-term investments of approximately $4 million, considered liquidity sufficient for the foreseeable future, and did not expect to raise operating capital in 2015 or 2016.
- Biologistex had a $2.4 million commitment to purchase SAVSU smart containers. BioLife also agreed to pay SAVSU $1 million subject to performance requirements; $0.4 million had been recorded by quarter-end.
Outlook, risks, and notable items
- Management forecast 20%–30% growth in core product revenue for 2015 and a full-year gross margin of 55%–60%. It expected to begin reporting biologistex cold-chain service revenue in Q3 2015 following anticipated commercialization early in the second half.
- The company began GMP manufacturing low-molecular-weight dextran solutions for cell thawing and capitalized $335,000 of biologistex software development costs; software amortization is expected to begin once commercially deployed.
- Management said revenue may fluctuate with customer clinical-trial enrollment. Sales remain concentrated in a limited number of customers and markets; one customer represented 11% of Q1 2015 product revenue. The former significant contract-manufacturing customer’s contract ended in May 2014, and BioLife did not expect further revenue from that customer.
- BioLife had 7.43 million warrants outstanding at a weighted-average exercise price of $4.49, in addition to stock options; these securities were excluded from diluted loss per share as anti-dilutive. The filing also disclosed a proposed option grant of approximately 1.2 million shares, subject to the stated plan-approval condition.
- Ordinary-course litigation was described as not material. The company reported effective disclosure controls and no material changes in internal control over financial reporting.
Key facts for investors to verify
- Whether projected core-sales growth and the 55%–60% gross-margin outlook are achieved, given the sharp decline in contract-manufacturing revenue.
- The timing, commercialization progress, costs, and cash requirements of biologistex, including the smart-container commitment and SAVSU payments.
- Cash burn and liquidity relative to management’s approximately $4 million year-end estimate and its no-fundraising expectation for 2015–2016.
- Customer concentration and the effect of clinical-trial progress and enrollment on future orders.
- Potential dilution from outstanding warrants, options, and the proposed option grant.