Pluri Inc. (Pluristem Therapeutics Inc.) — Form 10-Q Summary
Reporting period: The filing covers the three months ended September 30, 2019, the first quarter of Pluristem’s fiscal 2020 (not calendar 2019 Q1). Figures below are U.S. dollars; financial statement amounts are in thousands unless stated otherwise. Statements are unaudited.
Business context
Pluristem develops placenta-derived cell therapy candidates for ischemic, inflammatory and hematologic conditions. Its principal programs include PLX-PAD for critical limb ischemia (CLI) and recovery after hip-fracture surgery, and PLX-R18 for acute radiation syndrome and incomplete hematopoietic recovery after transplant. The company reported no significant product revenue and remains reliant on financing, grants and potential licensing or partnerships.
Key financial metrics
| Metric | Quarter ended Sep. 30, 2019 | Comparable 2018 period |
|---|---|---|
| Revenue | $0 | $4 |
| Net R&D expense | $5.382 million | $6.764 million |
| General and administrative expense | $1.813 million | $2.210 million |
| Operating loss | $7.195 million | $8.970 million |
| Net loss | $7.139 million | $8.786 million |
| Basic and diluted loss per share | $0.46 | $0.77 |
| Cash used in operating activities | $7.241 million | $8.510 million |
Gross margin is not meaningful given zero revenue in the current quarter. Research and G&A expense reductions were the main drivers of the lower net loss; weighted-average shares increased to 15.4 million from 11.4 million. The filing reports no conventional borrowings; it records operating lease liabilities of $2.225 million, including $964,000 current and $1.261 million long-term.
At September 30, 2019, cash and cash equivalents were $3.715 million, short-term bank deposits $14.838 million, and restricted cash and deposits were also held. Management reported total cash, deposits and restricted bank deposits of approximately $19.523 million. Current assets were $21.471 million versus current liabilities of $7.843 million, yielding working capital of $13.628 million. Total assets were $27.573 million and stockholders’ equity $17.527 million; accumulated deficit was $258.143 million.
Investing activities provided $4.748 million, primarily from short-term deposit withdrawals, while financing activities provided $1.981 million from stock sales. Cash, cash equivalents and restricted cash decreased by $512,000 during the quarter, ending at $4.674 million.
Material changes and notable items
- Net R&D expense fell 19%, attributed mainly to lower materials, subcontractor, payroll and stock-based compensation costs, partly offset by lower Horizon 2020 grant participation. G&A expense fell 18%, including lower stock compensation and payroll; management cited 25% reductions in the CEO’s annual salary and the Executive Chairman’s annual compensation.
- Net financial income declined to $56,000 from $184,000, reflecting lease-related expense, foreign-exchange effects and higher interest income on deposits. The company adopted the new lease standard on July 1, 2019, recognizing right-of-use assets and lease liabilities; adoption did not materially affect net loss or cash flows.
- The company sold 439,900 shares under its sales agreement during the quarter for net proceeds of $1.981 million. From October 1 through November 7, it sold a further 185,000 shares at an average $3.56 per share.
- A 1-for-10 reverse stock split became effective July 25, 2019; share and per-share figures were retrospectively adjusted.
Outlook, risks and contingencies
Management said it does not expect significant product-sales revenue in the next 12 months and expects near-term cash needs to rise. It estimated that resources available at September 30, 2019 would support operations into the beginning of fiscal Q1 2021. The company said it must secure additional capital, licensing or collaboration income, or grants to support operations and development; it warned that failure to obtain adequate funding could severely affect its viability. A cost-reduction plan is contemplated if sufficient capital cannot be raised. These runway and financing statements are management estimates, not assurances.
Management expected CLI Phase III follow-up completion in Europe in the first half of 2020 and the United States in the first half of 2021, and hip-fracture study efficacy follow-up in the second half of 2020, with results expected shortly afterward. Timing and outcomes remain subject to clinical and regulatory uncertainty. Pluristem also described PLX-R18 development and a proposal to BARDA for funding an additional non-human-primate study.
Contingencies include royalty obligations contingent on future sales: approximately $27.398 million related to IIA grants, plus smaller Smart Money grant obligations. The filing states that IIA royalties are generally payable from qualifying product sales; no payment is required absent sales. The company had $959,000 of cash and deposits pledged to secure derivatives, a credit line and bank guarantees. Chart Industries had not begun commercial sales of the licensed thawing device, so royalties had not commenced. The company reported no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether financing, grant receipts, licensing or collaboration proceeds can sustain operations beyond management’s estimated runway, and the terms and dilution of any equity issuance.
- Actual enrollment, follow-up, regulatory milestones and results for the PLX-PAD Phase III trials, including whether projected timelines were achieved.
- Whether the reported cash and deposits are available for operations, considering restricted and pledged amounts and the company’s continuing cash burn.
- Potential royalty and other contingent obligations, including the conditions that would trigger payment.
- Whether subsequent share sales and other financing materially changed cash resources and shares outstanding after the reporting date.