PluriStem Therapeutics Inc. — Form 10-Q Summary
Reporting period: Quarter ended December 31, 2015, the second quarter of PluriStem’s fiscal 2016 (despite the request metadata identifying 2015 Q2). Financial statements are unaudited; amounts below are in U.S. dollars, generally thousands unless noted.
Business context and key financial results
PluriStem develops off-the-shelf placenta-derived cell therapies for ischemic and inflammatory conditions. It remains a development-stage company with no product sales reported.
| Metric | Three months ended Dec. 31, 2015 | Six months ended Dec. 31, 2015 | Comparable 2014 period |
|---|---|---|---|
| Revenue | $2,752 | $2,847 | $95 quarter; $190 six months |
| Gross profit | $2,655 | $2,747 | $91 quarter; $183 six months |
| Operating loss | $(4,228) | $(9,751) | $(6,301) quarter; $(11,924) six months |
| Net loss | $(3,962) | $(9,838) | $(6,245) quarter; $(12,156) six months |
| Basic and diluted loss per share | $(0.05) | $(0.12) | $(0.09) quarter; $(0.17) six months |
The reported revenue was entirely from the United Therapeutics agreement. After United terminated the agreement effective December 8, 2015, PluriStem recognized the remaining upfront payment as revenue because it had no further obligations. The resulting gross margin is therefore not indicative of product economics.
For the six months, net R&D expense was $9,465, up 6% year over year, mainly reflecting lower Office of the Chief Scientist (OCS) participation; G&A expense was $3,033, down 5%. The quarter’s net loss narrowed versus the prior year, principally because of the United-related revenue recognition.
Cash, liquidity and capital
- At December 31, 2015, cash and cash equivalents were $4,948; short-term bank deposits were $16,517; marketable securities were $21,636; and restricted cash and short-term deposits were $550.
- Current assets were $44,782 and current liabilities $4,612, resulting in working capital of $40,170. Stockholders’ equity was $49,349; accumulated deficit was $148,349.
- Cash and equivalents fell from $22,626 at June 30, 2015. Six-month operating cash use was $7,389, investing cash use was $11,095, and financing provided $806. Investing outflows included deposits, securities and property/equipment purchases; they do not represent operating burn alone.
- No borrowings or conventional debt balance are reported in the supplied balance sheet. The filing identifies contingent OCS royalty obligations rather than scheduled debt repayments.
Management said existing cash was sufficient for at least 12 months, while also warning that cash needs would increase and additional funding might be needed. PluriStem expected no product-sale revenue in the next 12 months and anticipated that near- and medium-term licensing revenue would likely not cover operating costs.
Material developments, outlook and risks
- United agreement termination: PluriStem regained PAH rights, clinical data and regulatory submissions and planned to assess the program and possible partners. The termination generated the quarter’s principal revenue item.
- Clinical and regulatory plans: Management planned to initiate PLX-PAD critical limb ischemia studies during calendar 2016, targeting initial approval in 2018; complete enrollment in its 150-patient intermittent claudication Phase II trial in the first half of 2016; and begin a U.S. Phase I PLX-R18 trial in the first half of 2016. These are forward-looking plans, not assured outcomes.
- The FDA granted PLX-PAD Orphan Drug Designation for severe preeclampsia. PluriStem was also pursuing PLX-R18 development for incomplete hematopoietic recovery and acute radiation syndrome, including work toward a potential pivotal study under the Animal Rule pathway.
- Funding sources include existing liquid assets, securities sales, equity issuance, licensing and grants. OCS grants totaled approximately $21,183 through December 31, 2015; royalties of 3%–4% on qualifying sales are payable until grants plus applicable interest are repaid. The reported contingent royalty balance was approximately $21,017, excluding LIBOR interest.
- Risks include continued operating losses, reliance on external funding and grants, clinical and regulatory uncertainty, and possible failure to meet Nasdaq’s $1.00 minimum bid-price requirement, which could lead to delisting. The filing also reports no off-balance-sheet arrangements.
Investor facts to verify
- How much of the $2.752 million quarterly revenue reflects the one-time recognition following United’s termination, and what recurring licensing revenue remains?
- Whether management’s stated 12-month cash runway remains supportable given operating cash use, planned clinical spending and the composition and liquidity of deposits and securities.
- Progress against the stated clinical enrollment, trial-start and regulatory timelines, including any changes to partner or funding plans for PAH.
- Potential dilution or capital needs under the shelf registration and any subsequent financing; the filing reports 79,736,404 shares outstanding at December 31, 2015 and 79,933,902 at February 2, 2016.
- Exposure to OCS royalty obligations, grant availability and Nasdaq listing compliance.