Pluristem Therapeutics Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2018 (the first quarter of fiscal 2019, not calendar 2018 Q1). Financial statements are unaudited and amounts are in U.S. dollars. The company develops placenta-based cell therapies; its common stock trades as PSTI on Nasdaq.
Financial performance and liquidity
| Metric | Quarter ended September 30, 2018 | Prior-year quarter |
|---|---|---|
| Revenue | $4,000 | None |
| Net loss | $8.786 million | $7.385 million |
| Operating loss | $8.970 million | $7.440 million |
| Net loss per share | $0.08 | $0.08 |
| Net cash used in operating activities | $8.510 million | $5.190 million |
- Revenue was from PLX cell sales for research use; it was not product commercialization revenue. Gross profit was $4,000, so gross margin is not meaningful at this scale.
- Research and development expense, net of grants and other participation, rose 45% to $6.764 million. Gross R&D expense was $7.765 million, offset by $1.001 million of participation. General and administrative expense fell 20% to $2.210 million.
- Financial income, net, was $184,000 versus $55,000, primarily reflecting currency-hedge fair-value changes and deposit interest.
- At September 30, cash and cash equivalents were $8.433 million and short-term bank deposits were $13.283 million, for a stated cash position of $21.716 million. Total current assets were $24.451 million, current liabilities $7.398 million, and working capital $17.053 million. Cash, cash equivalents and restricted cash totaled $9.210 million for cash-flow reporting purposes.
- Investing activities provided $7.624 million, primarily from withdrawing short-term deposits; financing activities provided $588,000, including $473,000 net ATM proceeds. These offset operating cash use; investing inflows should not be read as operating cash generation.
- Total liabilities were $9.364 million, including $7.398 million current liabilities and $1.966 million long-term liabilities. No conventional interest-bearing debt balance is identified in the provided filing text.
Changes, outlook, and risks
- Compared with the prior-year quarter, net loss increased $1.401 million, mainly due to higher R&D spending. Operating cash use increased $3.320 million. Weighted-average shares rose to 113.7 million from 97.3 million, while reported loss per share remained $0.08.
- Management said the $21.716 million cash position was expected to fund operations into the first quarter of fiscal 2020. It expects no product-sale revenue in the next 12 months and says additional liquidity will be required to support commercialization, R&D and clinical trials. Potential sources include equity issuance, licensing, and grants; management noted a cost-reduction plan if sufficient capital cannot be raised and warned that failure to obtain funding could severely impair the company’s viability.
- Clinical and business context: two multinational Phase III PLX-PAD trials were underway, for critical limb ischemia and recovery after hip-fracture surgery. The filing also describes PLX-R18 development for acute radiation syndrome and an FDA Orphan Drug Designation for a PLX therapy in graft failure/incomplete hematopoietic recovery. In October 2018, the FDA approved cost recovery for PLX-PAD in an expanded-access program for up to an initial 100 eligible CLI patients.
- Shares issued under the ATM during the quarter generated $473,000 net proceeds. After quarter-end, the company sold 1.13 million shares under the ATM at an average $1.21 per share. Further equity financing may dilute shareholders.
- Grant and royalty obligations are largely contingent on future sales. IIA grants totaled approximately $26.990 million, with $26.822 million of contingent royalties outstanding, excluding applicable interest. Other disclosed grants and arrangements also carry potential royalty or repayment obligations. Cash and deposits of $1.159 million were pledged to secure derivatives, a credit line and bank guarantees.
- The company reported no off-balance-sheet arrangements. It uses foreign-currency options to manage exposure to expenses primarily in Israeli shekels; their September 30 fair value was a $120,000 liability.
Important facts for investors to verify
- Whether available cash, deposits, grants, licensing prospects and financing capacity support the stated runway, given the recurring losses and operating cash burn.
- Clinical-trial progress, enrollment, timelines and outcomes for the Phase III PLX-PAD programs, and the regulatory and commercial path for other candidates.
- Future ATM or other share issuance, including the proceeds and dilution from the October 2018 sale.
- The terms, timing and potential impact of contingent grant royalties, repayment obligations, pledged deposits and other commitments.
- The filing’s reporting date and period: the statements cover the quarter ended September 30, 2018 (fiscal 2019 Q1), notwithstanding the request metadata’s “2018 Q1” label.