Pluristem Therapeutics Inc. — Form 10-K Summary
Period clarification: The supplied filing is Pluristem Therapeutics Inc.’s annual report for the fiscal year ended June 30, 2018, filed September 12, 2018. It is not a 2017 Q4 report, and the filing does not identify the registrant as “Pluri Inc.”
Business context and reporting period
Pluristem was a clinical-stage developer of placenta-derived cell therapies, with operations focused on research, development, clinical trials and manufacturing. Its lead programs were PLX-PAD for critical limb ischemia (CLI) and recovery after hip-fracture surgery, and PLX-R18 for acute radiation syndrome (ARS) and hematopoietic recovery. The company reported two ongoing multinational Phase III trials of PLX-PAD; no product was approved for commercial sale.
Financial performance and position
| Metric | FY2018 | FY2017 |
|---|---|---|
| Revenue | $0.05 million | None |
| Research and development, net of grants | $22.629 million | $21.092 million |
| General and administrative expense | $11.193 million | $6.927 million |
| Operating loss | $33.731 million | $28.019 million |
| Net loss | $26.126 million | $27.814 million |
| Net loss per share | $0.25 | $0.32 |
| Cash used in operating activities | $21.380 million | $21.611 million |
| Cash and cash equivalents at year-end | $8.821 million | $4.707 million |
FY2018 gross profit was $48,000 on $50,000 of research-use cell sales; a revenue-based margin is not representative of the company’s development-stage business. Cash, cash equivalents and short-term bank deposits totaled approximately $29.9 million at June 30, 2018. Current assets were $32.036 million and current liabilities $8.548 million, yielding working capital of $23.488 million. Total liabilities were $10.453 million; the filing does not provide a clear separate figure for interest-bearing debt. Accumulated deficit was $215.697 million.
Changes versus the prior year
- Revenue rose from zero to $50,000, entirely from research-use PLX cell sales; the filing reports no product-sales revenue expected in the following 12 months.
- Net R&D expense increased 7%, while G&A expense rose 63%, attributed principally to stock-based compensation, payroll and corporate activity costs.
- Net loss narrowed by $1.688 million, mainly because of higher financial income, not improved operating performance. Financial income included a $6.2 million gain on the sale of the remaining CHA investment; total financial income was $7.605 million.
- Financing cash flow included $19.921 million, primarily from equity issuance and warrant/option exercises. Shares outstanding increased from 96.9 million at June 30, 2017 to 113.6 million at June 30, 2018, diluting existing holders.
Outlook, risks and notable items
- Going concern and funding: Management estimated available liquidity would fund operations into the first quarter of FY2020 and said additional capital would be needed. The auditor’s report highlighted substantial doubt about the company’s ability to continue as a going concern. Financing, licensing and grants were identified as funding sources, with no assurance of success.
- Clinical and regulatory uncertainty: Phase III outcomes, trial enrollment and timing, manufacturing consistency, regulatory approval and reimbursement remain material uncertainties. Fast Track status and expanded access for PLX-PAD do not constitute marketing approval.
- Pipeline developments: The filing reported FDA clearance of the hip-fracture Phase III trial and an IND for PLX-R18 in ARS, as well as positive top-line Phase II intermittent-claudication results. These are development updates, not evidence of approved products or guaranteed trial success.
- Grants and partnerships: Horizon 2020 awards support portions of the CLI and hip-fracture programs. The proposed Sosei CVC Japan joint venture had not closed, and definitive terms remained under discussion.
- Other exposures: Risks include dependence on equity financing, potential shareholder dilution, IIA technology-transfer and royalty obligations, foreign-exchange exposure, reliance on suppliers and a single Israeli manufacturing site, and political/security conditions in Israel. The filing reported no legal proceedings or off-balance-sheet arrangements.
- Unusual/non-recurring items: The $6.2 million CHA investment gain materially supported reported financial income. Stock-based compensation was $6.548 million in FY2018.
Important facts for investors to verify
- Confirm current liquidity, cash burn and financing needs against the disclosed estimate of runway through Q1 FY2020; the period covered by that estimate has passed.
- Check subsequent clinical-trial results, enrollment, regulatory interactions and any approvals for the PLX-PAD and PLX-R18 programs.
- Verify whether the proposed Japan joint venture or other licensing arrangements were finalized, and review their economics and obligations.
- Assess the extent of dilution from subsequent equity sales, warrants, options and equity awards.
- Review the audited statements and notes for the composition of cash and deposits, grant availability, IIA obligations and investment-related gains or losses.