Pluristem Therapeutics Inc. — Form 10-Q
Reporting period: The filing is for the quarter ended March 31, 2021 (the third quarter of fiscal 2021), with nine-month results compared with the period ended March 31, 2020. This differs from the “2020 Q3” period in the request metadata. Financial amounts below are in U.S. dollars; statement amounts are in thousands unless otherwise noted.
Business context and financial results
Pluristem develops placenta-based cell therapy candidates and is focused on research, manufacturing and clinical trials. It reported no meaningful commercial revenue and continued to fund operations primarily through equity offerings and grants.
| Metric | Three months ended March 31 | Nine months ended March 31 |
|---|---|---|
| Revenue, 2021 | $0 | $0 |
| Revenue, 2020 | $0 | $23 |
| Net loss, 2021 | $14,254 | $35,297 |
| Net loss, 2020 | $7,507 | $21,016 |
| Basic and diluted loss per share, 2021 | $0.48 | $1.31 |
| Basic and diluted loss per share, 2020 | $0.42 | $1.28 |
For the nine months, net research and development expense was $21,581, up 37% year over year; general and administrative expense was $14,455, up 176%. For the quarter, those expenses were $7,666 and $6,559, respectively, increases of 34% and 290%. There was no gross margin to assess in 2021 because the company recorded no revenue.
Cash, liquidity and capitalization
- At March 31, 2021, cash and cash equivalents were $12,265; short-term bank deposits were $35,105; and restricted cash was $586. The company also reported $25,937 of long-term deposits and restricted bank deposits. Management described its overall cash position, including deposits, as approximately $73,893.
- Current assets were $49,820 and current liabilities $9,916, yielding working capital of $39,904. Shareholders’ equity was $68,136; accumulated deficit was $315,453.
- For the nine months, operating cash use was $21,313; investing cash use was $12,057; and financing provided $36,992. Cash, cash equivalents and restricted cash increased by $3,622 to $12,851.
- The company reported no drawn EIB loan. Its agreement provides for up to €50 million in milestone-dependent tranches; no proceeds had been received by the filing date. No other borrowing balance is identified in the supplied filing text.
- Shares outstanding rose from 25,492,713 at June 30, 2020 to 31,740,244 at March 31, 2021. Funding included approximately $28,077 net from a February 2021 registered direct offering and $8,509 net from ATM sales during the nine-month period.
Changes versus the prior comparable period
Nine-month net loss widened by $14,281, primarily as research and development and administrative expenses increased. R&D costs rose with COVID-19 ARDS trial subcontractors, production materials, payroll and share-based compensation, while grant participation declined after Horizon 2020 funding was used in the prior period. Administrative expense growth reflected higher share-based compensation, payroll and executive-related costs, directors’ and officers’ insurance, and EIB-related legal expenses. Financing cash inflows increased from $11,362 in the prior nine-month period to $36,992, mainly because of the 2021 offering and ATM share sales.
Outlook, risks and unusual items
- Management said existing resources and expected funding sources were sufficient to meet obligations for at least 12 months from issuance of the financial statements, but cautioned that adequate long-term funding is not assured. It did not expect significant product-sale revenue in the next 12 months and stated that cash needs may increase.
- Pluristem was enrolling patients in a multinational Phase III hip-fracture recovery study and two Phase II studies for COVID-19-associated ARDS. It also described other clinical programs and reported positive topline results in its first human PLX-R18 study in an April 29, 2021 announcement.
- Risks include continued operating losses and negative operating cash flow, clinical and regulatory uncertainty, dependence on additional funding and milestone achievement for EIB financing, and potential share dilution. Forward-looking statements are subject to substantial risks and uncertainties.
- Potential royalty obligations include approximately $27,574 of contingent IIA royalties, plus interest, payable from qualifying product sales; the filing also describes contingent royalties on certain grant-funded regional revenues and future EIB royalties if the loan is disbursed. The company stated it had no off-balance-sheet arrangements.
- Share-based compensation was $10,382 for the nine months, compared with $2,002 in the prior-year period. The company also recorded $739 of nine-month net financial income, mainly from exchange-rate effects on NIS-linked deposits.
Important facts for investors to verify
- Clinical-trial progress, enrollment, results and regulatory milestones for the Phase III and Phase II programs.
- Cash burn and deposit availability, including restrictions and the timing and conditions for any EIB tranche funding.
- Future capital needs, ATM usage and potential dilution, alongside the company’s no-significant-revenue expectation.
- Expense trends, especially share-based compensation and the factors behind sharply higher general and administrative costs.
- Terms and potential future impact of contingent royalty obligations, including IIA, regional grant and EIB arrangements.