Business context and reporting period
Pluristem Therapeutics develops placenta-derived PLX cell therapies and is conducting clinical development; it does not expect product-sales revenue within the next 12 months. The supplied filing is a Form 10-Q for the quarter ended March 31, 2015, covering the three and nine months then ended—not 2014 Q3 as stated in the request metadata. Figures below are U.S. dollars; financial-statement amounts are generally in thousands.
Management reported 24 active sites and 85 patients recruited in its Phase II intermittent claudication trial, targeting completion of recruitment in 2015. It also described planned work on other indications and possible accelerated regulatory pathways in Europe and Japan.
Financial results and liquidity
| Metric | Three months ended March 31, 2015 | Nine months ended March 31, 2015 |
|---|---|---|
| Revenue | $95,000 | $285,000 |
| Gross profit | $92,000 | $275,000 |
| Net R&D expense | $6.094 million | $15.010 million |
| General and administrative expense | $1.527 million | $4.718 million |
| Operating loss | $7.529 million | $19.453 million |
| Net loss | $7.226 million | $19.382 million |
| Basic and diluted loss per share | $0.10 | $0.28 |
All reported revenue came from the United Therapeutics license agreement. Gross margin was approximately 97% in both periods, but revenue was very small relative to operating expenses.
At March 31, 2015, cash and cash equivalents were $8.944 million, short-term deposits $10.900 million, marketable securities $21.246 million, and restricted cash and short-term deposits $895,000. Current assets were $43.690 million against current liabilities of $5.016 million, yielding working capital of $38.674 million. Stockholders’ equity was $45.555 million; accumulated deficit was $133.216 million. The balance sheet lists no conventional borrowings.
For the nine months, operating activities used $15.588 million; investing activities provided $18.674 million, mainly from deposit withdrawals and securities sales; financing activities provided $1.365 million. Cash and cash equivalents increased $4.451 million from June 30, 2014.
Changes versus prior comparable periods
- Nine-month revenue was unchanged at $285,000 year over year; quarterly revenue was unchanged at $95,000.
- Nine-month net loss narrowed to $19.382 million from $20.736 million; quarterly net loss narrowed to $7.226 million from $9.276 million. Loss per share improved to $0.28 from $0.33 for nine months and to $0.10 from $0.14 for the quarter.
- Nine-month net R&D expense edged down to $15.010 million from $15.078 million; quarterly net R&D expense declined to $6.094 million from $6.848 million. Management cited improved production planning, lower materials use, and favorable U.S. dollar/NIS exchange-rate effects, partly offset by lower OCS participation in the nine-month comparison.
- G&A expense decreased to $4.718 million from $6.335 million for nine months and to $1.527 million from $2.531 million for the quarter, mainly due to lower stock-based compensation and the timing of restricted-stock-unit grants.
- Operating cash use increased to $15.588 million from $13.765 million for the prior nine-month period. Financing cash inflow fell to $1.365 million from $12.020 million, when the company had ATM offering proceeds.
Outlook, risks and unusual items
- Management stated that it believed existing cash and liquidity resources would fund operations for at least 12 months, while also warning that cash needs would rise and additional funding might be needed. Potential sources include equity sales, licensing payments, grants, and sales of marketable securities.
- The company does not expect product-sales revenue in the next 12 months and said products may not be ready for sale for at least three years, if at all. It expects near- and medium-term licensing revenue to be unlikely to exceed operating costs.
- In March 2015, Pluristem sold part of its CHA Biotech investment for net proceeds of $5.717 million and recorded a $282,000 gain. The remaining CHA investment was valued at $5.543 million; changes in market value can affect other comprehensive income.
- OCS grants carry contingent royalties of 3%–4% on related product sales and other revenues until grants, plus applicable interest, are repaid. Grants obtained totaled approximately $18.131 million; the disclosed contingent royalty balance was $18.068 million, excluding LIBOR interest. Payment depends on revenue.
- The company extended its facility lease through December 2021 and leased additional laboratory and office space. The lessor agreed to a roughly $925,000 improvement contribution; a laboratory contractor agreement includes approximately $419,000 and 100,004 restricted shares, subject to milestones.
- Foreign-exchange exposure includes NIS-denominated payroll; hedging contracts covered approximately $3.340 million of future expenses and were scheduled to settle by October 2015. Clinical, regulatory, financing, and product-development outcomes remain uncertain. Management reported effective disclosure controls and no material change in internal control during the quarter.
Important facts for investors to verify
- Confirm the reporting-period mismatch: the filing is for the quarter ended March 31, 2015, although the request metadata says 2014 Q3.
- Review subsequent cash use, funding activity, and whether the stated 12-month liquidity assessment remains supportable.
- Check clinical-trial recruitment progress, results, regulatory-pathway decisions, and partner progress under the United Therapeutics and CHA agreements.
- Assess dilution and financing capacity: shares outstanding were 71,043,011 at March 31, 2015, and the filing describes a shelf registration of up to $200 million.
- Track the value and liquidity of marketable securities, including the remaining CHA shares, and the timing and obligations of the expanded facilities.