CollPlant Biotechnologies Ltd. — FY2020 Form 20-F
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a standalone fourth-quarter filing; the supplied filing text does not provide a clear set of Q4-only financial results. Financial figures below are in U.S. dollars unless stated otherwise.
Business context
CollPlant develops regenerative and aesthetic medicine products using recombinant human type I collagen (rhCollagen) produced with its proprietary plant-based technology. Its activities include 3D-bioprinting BioInk, medical-aesthetics candidates, and European sales of VergenixSTR for tendinopathy and VergenixFG for wound care. The company reported that it was not conducting clinical trials at the time described in the filing.
Key financial metrics
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $6.137 million | $2.318 million |
| Cost of revenue | $3.002 million | $1.879 million |
| Gross profit / gross margin | $3.135 million / 51.1% | $0.439 million / 18.9% |
| Research and development expense, net | $4.065 million | $4.414 million |
| General, administrative and marketing expense | $4.669 million | $3.656 million |
| Operating loss | $5.599 million | $7.631 million |
| Net loss | $5.774 million | $11.164 million |
| Basic and diluted loss per ordinary share | $0.84 | $2.23 |
| Net cash used in operating activities | $4.451 million | $5.703 million |
| Capital expenditures | $0.437 million | $1.491 million |
Revenue included $3.600 million from licensing, $2.108 million from goods, and $0.429 million from services. One customer accounted for $4.929 million, about 80% of annual revenue. The United States and Canada generated $5.768 million, about 94% of revenue.
At year-end, cash and cash equivalents were $3.333 million; cash, cash equivalents and restricted deposits totaled $3.526 million. Current assets were $5.676 million and current liabilities $3.388 million. Total liabilities were $6.364 million, including $3.388 million of operating lease liabilities; the balance sheet reported no current loan at year-end. The accumulated deficit was $73.034 million and shareholders’ equity was $4.477 million. Undiscounted operating lease payments totaled $4.361 million.
Material changes versus the prior year
- Revenue increased by $3.819 million, principally reflecting $3.6 million recognized following exercise of an LB kidney option, and approximately $0.2 million higher VergenixFG sales.
- Gross profit rose by $2.696 million and gross margin improved from 18.9% to 51.1%. Cost of revenue increased by $1.123 million, including higher IIA royalty expense and rhCollagen manufacturing costs.
- Operating loss narrowed by $2.032 million. Net loss improved by $5.390 million, also reflecting the substantial reduction in net financial expense: $0.175 million in 2020 versus $3.533 million in 2019, when remeasurement of financial instruments was a major expense.
- Cash used in operations declined by $1.252 million. Year-end cash and cash equivalents fell by $0.458 million from 2019, while financing activities provided $4.465 million in 2020, mainly from equity issuance.
- General, administrative and marketing expense increased by $1.013 million, including higher share-based compensation, salaries and directors’ insurance costs.
Outlook, developments and risks
- Funding after year-end: In February 2021, the company completed a registered direct offering of 2 million ADSs at $17.50 each, for $35 million gross proceeds. The filing estimates approximately $32 million net proceeds after commissions and expenses. It also received a $14 million upfront payment from AbbVie. Management stated these funds were expected to support operations and capital expenditures for at least 12 months, subject to assumptions that could prove incorrect.
- AbbVie collaboration: The February 2021 agreement covers development and commercialization of dermal and soft-tissue fillers. For exclusive products, CollPlant may receive up to $50 million, including the $14 million upfront payment and up to $36 million in milestones, plus product royalties and supply fees. Two option products could bring up to an additional $53 million, subject to definitive agreements and milestones, plus royalties and supply fees. AbbVie has broad termination rights, including termination on 60 days’ notice for any or no reason.
- LB agreement ended: LB exercised an option relating to kidneys in 2020, generating $3.6 million of recognized revenue. CollPlant received LB’s termination notice in February 2021; termination was effective March 26, 2021. Investors should assess the effect of losing this collaboration and related potential revenues.
- Development and manufacturing: The company expects continuing losses and substantial R&D spending. It cited scale-up, regulatory approval, clinical outcomes, market acceptance, reimbursement, intellectual-property protection and reliance on partners as material uncertainties. Production depends on tobacco plants and limited Israeli manufacturing capacity; the company stated current capacity was sufficient for development and sales through 2024.
- Other risks and contingencies: Risks include COVID-19 impacts, foreign-exchange exposure, political and security conditions in Israel, IIA restrictions on transferring funded know-how or manufacturing abroad, and potential dilution from future financing and equity awards. The company reported no material pending legal proceedings; a 2020 VAT assessment was settled for $116,000 and paid.
- Audit and controls: The 2020 financial statements received an unqualified U.S. GAAP audit opinion. Management concluded disclosure controls and internal control over financial reporting were effective at year-end; the auditor did not attest to internal controls because of the emerging-growth-company exemption. The prior auditor’s 2019 report included a going-concern explanatory paragraph.
Important facts for investors to verify
- Reconcile the reported revenue increase and customer concentration, especially the $3.6 million LB-related licensing revenue and the share of revenue from the largest customer.
- Confirm post-offering cash, net proceeds, subsequent warrant exercises and the company’s current cash runway against its planned R&D and manufacturing spending.
- Review the complete AbbVie agreement for milestone conditions, royalty terms, option-product agreements, supply pricing, exclusivity scope and termination provisions.
- Assess the business and financial impact of LB’s termination, including any continuing obligations, royalties or other amounts due.
- Track clinical and regulatory progress, manufacturing scale-up, distributor replacement for VergenixSTR, and the company’s dependence on a single-country production base.
- Review potential dilution from outstanding options and warrants and confirm the treatment of IIA royalties and restrictions in future collaborations or manufacturing arrangements.