Pluristem Therapeutics Inc. (PSTI) - 10-Q Summary
Business Context and Reporting Period
Company: Pluristem Therapeutics Inc. (Nevada corporation with Israeli subsidiary)
Reporting Period: Quarter ended September 30, 2010
Stage: Development Stage Company
Business Overview: The company is developing allogeneic cell therapy products derived from human placenta for treating degenerative, ischemic, and autoimmune disorders. The primary product in development is PLX-PAD for peripheral artery disease (PAD). The company has not generated any revenue since inception and relies on equity financing and government grants.
Key Financial Metrics (Three Months Ended Sept 30, 2010)
| Metric | Amount (USD in thousands) |
|---|---|
| Revenue | $0 |
| Net Loss | $(1,689) |
| Loss Per Share (Basic & Diluted) | $(0.08) |
| Cash and Cash Equivalents | $1,127 |
| Working Capital | $883 |
| Accumulated Deficit (Inception to Date) | $(41,794) |
| Cash Used in Operating Activities | $(688) |
| Cash Provided by Financing Activities | $228 |
Material Changes vs. Prior Period
- Net Loss: Increased slightly to $1.689 million from $1.617 million in the same period of 2009. Loss per share improved to $0.08 from $0.11 due to share dilution from new issuances.
- R&D Expenses: Net R&D expenses increased 15% to $998,000 (from $867,000) due to hiring 11 new employees to support clinical trials.
- G&A Expenses: Decreased slightly by 2% to $756,000 (from $770,000).
- Financial Income: Increased to $65,000 from $20,000, primarily due to exchange rate adjustments.
- Cash Position: Cash and cash equivalents decreased by $456,000 from the previous quarter end (June 30, 2010) to $1.127 million.
Outlook, Risks, and Management Commentary
- Clinical Progress: Phase I clinical trials for PLX-PAD in the US and Germany have met primary safety endpoints. Interim results suggest the product is safe, well-tolerated, and shows efficacy parameters, though regulatory approval for efficacy is pending future trials.
- Liquidity & Going Concern: Management states there is "substantial doubt" about the company's ability to continue as a going concern. The company expects to need additional working capital to fund operations.
- Capital Resources: Management believes current cash plus an approved grant from the Israeli Office of the Chief Scientist (OCS) and proceeds from a subsequent private offering (closed Oct 18, 2010, netting ~$5.0 million) will fund operations until the end of calendar year 2011.
- Future Funding: The company anticipates needing to raise additional funds through equity or grants. Future equity issuances will result in dilution to existing shareholders.
- Risks: No assurance of profitable operations; products likely not ready for sale for at least three years; reliance on successful clinical trials and regulatory approvals.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $5.0 million October 2010 proceeds combined with the OCS grant to cover the estimated $7.0 million operating cash expense for the next 12 months.
- Dilution Impact: Review the terms of the October 2010 private placement (4.375M shares + warrants) and assess the dilution impact on existing shareholders.
- Clinical Milestones: Monitor the completion of Phase I trials and the timeline for initiating Phase II trials to validate efficacy claims.
- Grant Dependency: Confirm the status and disbursement schedule of the Israeli Office of the Chief Scientist (OCS) grant, which offsets a significant portion of R&D costs.
- Going Concern Status: Review the auditor's report regarding the "substantial doubt" on the company's ability to continue as a going concern and any subsequent financing actions.