Pluri Inc. (formerly Pluristem Therapeutics Inc.) — Form 10-Q Summary
Reporting period: The filing covers the quarter ended December 31, 2021, the second quarter of the company’s fiscal year ending June 30, 2022. Financial statements are unaudited; amounts below are in U.S. dollars unless noted.
Business context
Pluri is a biotechnology company developing placenta-based cell therapies and operating a cell-expansion and manufacturing platform. It reported no revenue in the quarter or six-month period. Its development programs include a Phase III study of PLX-PAD for muscle recovery after hip-fracture surgery and clinical programs in COVID-19-related ARDS and hematologic conditions.
Financial performance and position
| Metric | Three months ended Dec. 31, 2021 | Six months ended Dec. 31, 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Net R&D expense | $6.507 million | $12.860 million |
| General and administrative expense | $4.288 million | $9.376 million |
| Operating loss | $10.795 million | $22.236 million |
| Net loss | $10.940 million | $22.372 million |
| Basic and diluted loss per share | $0.34 | $0.70 |
| Net cash used in operating activities | Not separately reported | $18.652 million |
Gross margin is not applicable because the company had no revenue. Compared with the prior-year periods, quarterly net loss narrowed from $12.554 million to $10.940 million, while six-month net loss increased from $21.043 million to $22.372 million. Net R&D expense declined 18% for the quarter and 8% for the six months; G&A expense declined 16% for the quarter but increased 19% for the six months. The company attributed R&D reductions principally to lower clinical-trial subcontractor costs, partly offset by payroll and currency effects. Six-month G&A growth mainly reflected share-based compensation, payroll, headcount and currency effects.
At December 31, 2021, cash and cash equivalents were $18.715 million, short-term bank deposits were $39.468 million, and long-term deposits and restricted bank deposits were $10.965 million. The company described its combined cash and bank-deposit position as approximately $68.848 million. Working capital was $50.558 million; total assets were $81.184 million and shareholders’ equity was $39.840 million. The balance sheet included a $23.158 million long-term EIB loan liability and $8.280 million of operating lease liabilities. Cash, cash equivalents and restricted cash totaled $19.222 million at period-end.
Operating activities used $18.652 million of cash in the six months, versus $13.984 million a year earlier. Investing activities provided $7.075 million, primarily from withdrawals of long-term deposits, while financing activities provided no cash. Cash, cash equivalents and restricted cash decreased by $12.616 million during the period.
Material developments, outlook and risks
- Clinical programs: Enrollment of 240 patients in the Phase III hip-fracture study was completed; the company expected topline results in the third calendar quarter of 2022. Its COVID-19 ARDS studies did not meet the primary endpoint of statistically significant improvement in ventilator-free days through day 28. The company reported no observed difference in safety profile between PLX-PAD and placebo.
- Funding and liquidity: The company received the first €20 million tranche under its EIB facility in June 2021, recorded at approximately $24.449 million received. Principal and interest are due June 1, 2026; the loan balance was $23.158 million at December 31. Additional tranches, up to the facility’s €50 million total, depend on milestones. Management stated current resources and its operating plan should fund obligations for at least 12 months from issuance of the statements, while noting there is no assurance of adequate longer-term funding.
- Outlook: Pluri does not expect significant product-sales revenue in the next 12 months and said licensing revenue in the short and medium term is unlikely to exceed operating costs. It may seek grants, collaboration or licensing arrangements, equity financing, and additional EIB funding subject to milestones.
- Cybersecurity loss: In November 2021, an impersonation of a vendor led to a fraudulent payment and an approximately $616,000 loss. The company said the incident had not affected its ability to meet obligations and that its investigation found no information or data was stolen or damaged. It updated payment and IT procedures and engaged cybersecurity support; insurance may not cover all losses.
- Subsequent event: On January 5, 2022, Pluri and Tnuva established a cultured-meat venture. Tnuva agreed to invest $7.5 million for 15.79% of the new company, with an option to invest up to another $7.5 million. Pluri is to license technology for the field in exchange for mid-single-digit royalties.
- Other obligations and costs: IIA grants carry contingent royalties generally equal to 3% of qualifying product and service sales until repayment; the reported contingent amount was $27.574 million, excluding interest. In December 2021, the company extended its facility lease through December 2026, with an option through December 2031; monthly payments are approximately $94,000.
Most important facts for investors to verify
- Timing and results of the Phase III hip-fracture trial and any follow-up decisions after the COVID-19 ARDS studies missed their primary endpoint.
- Cash burn, deposit availability and whether additional EIB tranches or other funding can be secured; the stated 12-month liquidity view is not a guarantee of longer-term funding.
- Terms, closing status and funding of the Tnuva venture, including the additional investment option and royalty arrangements.
- Final financial and insurance effects of the $616,000 cyber-fraud loss and the effectiveness of remedial controls.
- Potential future royalty obligations under IIA and other grant programs, and the repayment terms and revenue royalties associated with the EIB financing.