Pluri Inc. (Pluristem Therapeutics Inc.) — Form 10-Q
Reporting period: Three months ended September 30, 2020, the first quarter of fiscal 2021. The filing’s financial statements are unaudited and amounts below are in U.S. dollars unless noted.
Business context
Pluri develops placenta-based cell therapy candidates for ischemic, inflammatory and hematologic conditions. It reported no product revenue. Its programs included two Phase III studies and Phase II studies of PLX cells for severe COVID-19-associated ARDS; management expected to complete enrollment in the U.S. COVID-19 Phase II study in the first quarter of calendar 2021. The company also had compassionate-use and expanded-access activity for COVID-19 ARDS.
Financial results and liquidity
| Metric | Quarter ended Sep. 30, 2020 | Quarter ended Sep. 30, 2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Net R&D expense | $5.938 million | $5.382 million |
| General and administrative expense | $2.799 million | $1.813 million |
| Operating loss | $8.737 million | $7.195 million |
| Financial income, net | $248,000 | $56,000 |
| Net loss | $8.489 million | $7.139 million |
| Basic and diluted loss per share | $0.33 | $0.46 |
| Operating cash used | $6.141 million | $7.241 million |
With no revenue, operating or gross margins are not meaningful. R&D expense, net, rose 10%; G&A rose 54%. Management attributed higher R&D costs to COVID-19 trial subcontractors, materials and payroll, and lower EU grant participation. Higher G&A reflected executive-chairman agreement adjustment fees, stock-based compensation and legal costs associated with the German subsidiary and EIB financing.
At September 30, 2020, cash and cash equivalents were $6.625 million; short-term bank deposits, $33.813 million; restricted cash, $555,000; and long-term deposits and restricted bank deposits, $12.134 million. These categories totaled $53.127 million. Working capital was $34.346 million; total assets were $58.950 million and stockholders’ equity was $48.948 million. The company reported $1.437 million of operating lease liabilities in total ($1.052 million current and $385,000 long-term); no funded borrowing balance was reported. Cash, cash equivalents and restricted cash declined $1.642 million during the quarter. Investing activities provided $4.199 million, primarily from deposit withdrawals; financing activities provided $300,000 from warrant exercises.
Changes, outlook and risks
- Net loss increased $1.350 million year over year, mainly due to higher R&D and G&A expense. Loss per share narrowed despite the higher net loss, while weighted-average shares increased to 25.5 million from 15.4 million.
- The company had an EIB finance contract for up to €50 million in three milestone-dependent tranches. No tranche had been received by September 30, 2020. The contract includes deferred/fixed interest terms and potential royalties of 0.2%–2.3% of consolidated revenue for fiscal years 2024–2030, based on amounts disbursed.
- Management said existing resources were expected to fund operations for at least 12 months from issuance of the statements. It did not expect significant product-sale revenue in the next 12 months and cautioned that additional funding may be needed for longer-term development and commercialization. Funding sources cited include cash, grants, collaborations, equity sales and any EIB proceeds for which milestones are met.
- The company had an effective $250 million shelf registration and a $75 million Jefferies sales agreement; no sales under the new sales agreement had occurred by September 30, 2020. Equity issuance could dilute shareholders. The EIB loan remained conditional and unavailable absent milestone achievement.
- Material risks include recurring operating losses and negative operating cash flow, dependence on external financing and grants, clinical-trial and regulatory uncertainty, and the absence of established product revenue. IIA grants carry contingent royalties generally at 3% of sales of grant-supported products until repayment; the reported contingent IIA royalty balance was $27.574 million, excluding interest. Other grant and collaboration-related royalty obligations are also described.
Investor facts to verify
- Whether the company achieved EIB milestones and received any loan tranches after the reporting date.
- Progress, enrollment and results for the COVID-19 studies and the two Phase III programs, including subsequent regulatory developments.
- Cash and deposit availability, operating cash burn and management’s stated 12-month liquidity outlook.
- Subsequent equity issuance, share-count changes and potential dilution under the shelf and sales agreement.
- Any product commercialization, revenue, or royalty developments, including obligations tied to grants and the EIB contract.