Pluri Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2022 (Pluri’s fiscal first quarter of fiscal 2023), compared with the three months ended September 30, 2021. The unaudited financial statements are in U.S. dollars; amounts below are in millions unless otherwise noted. The filing’s “2022 Q1” metadata should not be confused with calendar-year Q1.
Business context
Pluri is a biotechnology company developing a 3D cell-expansion platform and cell-based products for regenerative medicine and food technology. It also reported a September 2022 collaboration with a European active pharmaceutical ingredient manufacturer to explore producing a biologic ingredient using its platform. On July 26, 2022, the company changed its name from Pluristem Therapeutics Inc. and changed its Nasdaq ticker from PSTI to PLUR.
Financial results and liquidity
| Metric | Quarter ended Sep. 30, 2022 | Quarter ended Sep. 30, 2021 |
|---|---|---|
| Revenue | $0.087 | None |
| R&D expense, net | $4.270 | $6.353 |
| General and administrative expense | $2.740 | $5.088 |
| Operating loss | $6.923 | $11.441 |
| Net loss | $6.269 | $11.432 |
| Net loss per share, basic and diluted | $0.19 | $0.36 |
| Net cash used in operating activities | $7.609 | $8.789 |
| Cash and cash equivalents at period end | $8.744 | $14.611 |
Revenue in 2022 was primarily related to the biologics collaboration. The filing does not provide a clear gross margin or operating margin measure; Pluri remained loss-making. Other financial income was $0.848 million, mainly reflecting foreign-exchange effects related to the EIB loan, partly offset by hedging and other currency losses. Interest expense was $0.194 million.
At September 30, 2022, cash, short-term bank deposits, and restricted cash and deposits totaled $49.302 million, including $39.271 million of short-term bank deposits. Working capital was $44.705 million; current assets were $49.723 million and current liabilities were $5.018 million. Total assets were $59.754 million, total liabilities were $32.853 million, and total equity was $26.901 million. The accumulated deficit was $377.384 million.
The EIB loan liability was $20.722 million, including accrued interest, and was classified as long-term. The first tranche’s €20 million principal is due June 1, 2026 and bears 4% annual interest. The company said it did not expect additional EIB funding. Operating cash outflow was partly offset by $6.393 million of investing cash inflow, primarily withdrawal of short-term deposits; there was no financing cash flow during the quarter.
Changes versus the prior comparable period
- Revenue increased from zero to $87,000, although Pluri said it did not expect significant product-sale revenue in the next twelve months.
- Net loss narrowed by about 45%, from $11.432 million to $6.269 million. Management attributed the improvement mainly to lower R&D and G&A costs following cost reductions and a change in business strategy.
- Net R&D expense fell 33%. Management cited completed studies, the end of enrollment in the hip-fracture study, lower materials purchases, and reduced staffing; R&D headcount declined by 26 year over year, to 110.
- G&A expense fell 46%, mainly because of lower share-based compensation and employee termination-related changes.
- Operating cash use improved to $7.609 million from $8.789 million. Cash, cash equivalents and restricted cash at period end were $10.031 million, compared with $15.218 million a year earlier; this cash-flow measure excludes the $39.271 million of short-term deposits.
Outlook, risks and notable items
- Management stated that current resources and the operating plan were expected to fund obligations for at least twelve months from issuance of the financial statements. It also warned that additional funding may be needed for longer-term development and commercialization, with no assurance of obtaining adequate resources.
- Pluri does not expect significant product-sale revenue over the next twelve months. It expects possible licensing revenue, but said near- and medium-term licensing revenue is unlikely to exceed operating costs. It is pursuing collaborations, grants, equity sales and other funding sources.
- The company is completing a multinational Phase III study of PLX-PAD for muscle recovery after hip-fracture surgery. Clinical results, regulatory approval, future grants and commercial opportunities remain uncertain.
- Potential IIA royalty obligations were $27.574 million at September 30, 2022, excluding applicable interest; payments are contingent on sales of products or services derived from funded technology. The EIB also has rights to royalties on future revenues from fiscal 2024 through fiscal 2030.
- Plurinuva, the cultured-meat venture with Tnuva, received a $7.5 million investment for a 15.79% interest. The First Warrant exercise period was extended to November 22, 2022. A warrant modification generated a $0.385 million fair-value adjustment.
- On October 12, 2022, Nasdaq notified Pluri that its share price had been below the $1 minimum bid-price requirement for 30 consecutive trading days. The compliance period was scheduled to end April 10, 2023; the company said it might consider a reverse stock split. Delisting could adversely affect share liquidity and access to capital.
- The company reported recurring operating losses and negative operating cash flows since inception. Its ATM program capacity was reduced to up to $11.8 million, and it sold no shares under the program during the quarter.
Important facts for investors to verify
- Cash runway assumptions, spending plans, and any subsequent financing or changes in the stated twelve-month liquidity outlook.
- Progress, results and timing of the Phase III hip-fracture study, and the scope and economics of the biologics collaboration.
- Whether Tnuva exercised its warrant by the extended November 22, 2022 deadline and any resulting funding or ownership changes.
- Nasdaq bid-price compliance status and any action taken to maintain the listing.
- Potential future royalties and repayment terms under the IIA grants and EIB financing agreement.