Pluristem Therapeutics Inc. (PSTI) - 10-Q Summary
Business Context and Reporting Period
Company: Pluristem Therapeutics Inc. (a development stage company)
Reporting Period: Quarter ended September 30, 2009
Business Overview: The Company is focused on the research and development of adherent stromal cells production technology and the commercialization of cell therapy products. It has not generated any revenues since inception. As of July 2009, the Company enrolled the first patient in a Phase I clinical trial for its PLX-PAD product in Germany and the US.
Key Financial Metrics
| Metric (in thousands) | Q3 2009 | Q3 2008 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(1,617) | $(2,242) |
| Loss Per Share (Basic/Diluted) | $(0.11) | $(0.29) |
| Cash and Cash Equivalents (End of Period) | $2,141 | $1,978 |
| Net Cash Used in Operating Activities | $(941) | $(1,805) |
| Net Cash Provided by Financing Activities | $794 | $2,507 |
| Total Assets | $4,208 | N/A |
| Accumulated Deficit (Inception to Date) | $(34,269) | N/A |
| Working Capital | $1,708 | N/A |
Note: All figures in U.S. Dollars in thousands unless otherwise noted.
Material Changes vs. Prior Period
- Net Loss Reduction: Net loss decreased by approximately 28% from $2.242 million in Q3 2008 to $1.617 million in Q3 2009.
- R&D Expenses: Net R&D expenses decreased by 31% to $867,000. This reduction is primarily due to the timing of a grant approval from the Israeli Office of the Chief Scientist (OCS), which provided $489,000 in participation during Q3 2009 (compared to $0 in Q3 2008).
- G&A Expenses: General and administrative expenses decreased by 18% to $770,000, driven by lower stock-based compensation and reduced investor relations costs.
- Financial Income: Shifted from a net expense of $46,000 in Q3 2008 to net income of $20,000 in Q3 2009, attributed to exchange rate hedging gains and the absence of losses from marketable securities sales seen in the prior year.
Outlook, Risks, and Management Commentary
- Liquidity and Going Concern: Management states there is "substantial doubt" about the Company's ability to continue as a going concern. The Company relies on equity issuances and government grants to fund operations. Management believes current cash plus an approved OCS grant ($2.3 million total, $668,000 received) will sustain operations until at least September 2010.
- Capital Requirements: The Company estimates operating cash expenses for the next 12 months to be approximately $6 million. It expects to raise additional working capital through equity financing, which may result in significant dilution to existing shareholders.
- Recent Financing:
- July 2009: Raised $794,000 via the exercise of investor options triggered by the enrollment of the first clinical trial patient.
- October 2009 (Subsequent Event): Raised approximately $3.027 million through the sale of 2.7 million shares and warrants to institutional investors.
- Risks: No assurance of profitable operations; products likely not ready for sale for at least three years; dependence on continued funding; potential dilution from future equity raises.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the $2.141 million cash balance plus the remaining OCS grant funds against the projected $6 million annual burn rate.
- Dilution Impact: Assess the impact of the October 2009 financing ($3.027 million) and potential future equity raises on existing shareholder ownership.
- Clinical Trial Progress: Monitor the enrollment and results of the Phase I PLX-PAD trials in Germany and the US, as these are critical milestones for future funding and valuation.
- Grant Dependency: Confirm the status and disbursement schedule of the Israeli Office of the Chief Scientist (OCS) grants, which significantly offset R&D expenses.
- Going Concern Status: Review the auditor's report regarding the "substantial doubt" on the Company's ability to continue as a going concern.