Business context and reporting period
PluriStem Therapeutics Inc. (now identified in the request as Pluri Inc.) filed this unaudited Form 10-Q for the quarter ended March 31, 2020, its fiscal third quarter—not 2019 Q3 as stated in the request metadata. The filing reports results in U.S. dollars, generally in thousands. Pluristem develops placenta-derived cell therapy candidates and had minimal research-use product sales; it reported no commercial product revenue.
Financial performance and liquidity
| Metric | Three months ended March 31 | Nine months ended March 31 |
|---|---|---|
| Revenue | $0 in 2020 and 2019 | $23 in 2020; $54 in 2019 |
| Net R&D expense | $5,717 in 2020; $7,827 in 2019 | $15,739 in 2020; $20,847 in 2019 |
| General and administrative expense | $1,682 in 2020; $2,473 in 2019 | $5,245 in 2020; $6,806 in 2019 |
| Operating loss | $7,399 in 2020; $10,300 in 2019 | $20,962 in 2020; $27,601 in 2019 |
| Net loss | $7,507 in 2020; $10,078 in 2019 | $21,016 in 2020; $27,547 in 2019 |
| Basic and diluted loss per share | $0.42 in 2020; $0.86 in 2019 | $1.28 in 2020; $2.38 in 2019 |
Gross profit was $0 for the March 2020 quarter and $22 for the nine-month period; commercial margins are not meaningful given negligible research-use revenue. Management attributed lower losses primarily to cost reductions and lower R&D and G&A expenses.
- Cash and liquidity at March 31, 2020: cash and cash equivalents were $6,762; short-term deposits were $8,037; restricted cash and short-term deposits were $686; and long-term deposits and restricted deposits were $396. The company described its combined cash, deposits and restricted funds as approximately $15,881.
- Working capital: current assets of $17,819 less current liabilities of $7,200 produced a $10,619 surplus. Stockholders’ equity was $14,169 and accumulated deficit was $272,020.
- Cash flow, nine months: operating activities used $20,047, investing activities provided $11,334 (mainly withdrawal of short-term deposits), and financing activities provided $11,362, primarily from stock issuance. Cash, cash equivalents and restricted cash totaled $7,835 at period-end.
- Debt and obligations: the balance sheet shows no conventional borrowing at March 31. Operating lease liabilities totaled $1,783, including $982 current and $801 long-term. Separately, IIA grant royalties are contingent on product sales; the disclosed outstanding IIA grant balance was $27,515, excluding LIBOR interest.
Material changes versus the prior comparable period
For the nine months, revenue fell from $54 to $23, while net loss narrowed from $27,547 to $21,016. Net R&D expense declined 25% and G&A declined 23%, reflecting reduced materials use, payroll, stock-based compensation and certain clinical-site and rent costs. The reductions were partly offset by lower grant participation. Cash used in operations improved from $22,780 to $20,047. Shares outstanding rose from 15,082,852 at June 30, 2019 to 18,673,173 at March 31, 2020, reflecting equity issuance and other share activity.
Guidance, outlook, risks and unusual items
- Management said available funds and its operating plan were expected to cover obligations for at least 12 months from the financial statement date, but also said the company did not expect significant product-sale revenue in the next 12 months and might need additional funding. It anticipated that near- and medium-term licensing revenue would likely be below operating costs.
- COVID-19 slowed enrollment in both Phase III PLX-PAD trials: more than 80% enrolled in the critical limb ischemia trial and more than 60% in the hip-fracture recovery trial. The expected interim critical-limb-ischemia top-line readout was delayed to early Q4 2020. The filing cautions that pandemic-related disruptions could affect trials, operations, financing, suppliers and regulatory review.
- After the quarter, the FDA cleared an IND for a Phase II PLX-cell study in severe COVID-19 cases complicated by ARDS. The company also reported compassionate-use treatment activity; efficacy was not established in this filing.
- On April 30, 2020, the company entered into a conditional European Investment Bank financing agreement for up to €50 million in three tranches, including a first tranche of €20 million. Disbursements depend on milestones; the loan bears 3%–4% interest and includes potential royalties on future revenue. No funds had been received by May 7.
- Subsequent equity financing materially increased resources and potential dilution: from April 1 through May 7, the company sold 4,348,869 shares for $29,862 gross under its sales agreement; warrant exercises issued 286,311 shares for approximately $2,004 net; and a May 5 registered offering of 1,587,302 shares generated approximately $15,000 net. These events occurred after the balance-sheet date.
- Management cited recurring losses and negative operating cash flow since inception. The filing also discloses substantial grant-related contingent royalties, clinical and regulatory uncertainty, and potential pandemic effects. Disclosure controls were reported effective; management reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the reporting period: this is the quarter ended March 31, 2020, not 2019 Q3.
- Reconcile the company’s stated $15,881 liquidity figure with balance-sheet cash, deposits and restricted balances, and assess the cash-burn rate and stated 12-month runway.
- Verify the conditions, availability and repayment terms of the EIB tranches; the financing was milestone-dependent and had not been drawn as of May 7.
- Review the post-quarter share issuances, offering proceeds and updated share count to assess dilution and the effect on liquidity.
- Track COVID-19 impacts on trial enrollment and readouts, and distinguish compassionate-use observations from controlled clinical evidence.
- Assess future revenue prospects and the contingent royalty obligations tied to IIA and other grant programs.