CollPlant Biotechnologies Q2 2023 Earnings Call Transcript

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August 24, 2023

There are 7 speakers on the call.

Operator

Welcome to the Coal Plant Biotechnologies Investor Conference Call to discuss Financial Results for the 2nd quarter of 2023 and corporate updates. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Dory Kurowski of LifeSci Advisors.

Operator

Please go ahead.

Speaker 1

I would like to welcome everyone to Coal Plant Biotechnologies Financial Results Conference Call for the Q2 ended June 30, 2023 and Corporate Business Update. With us on the call today from Coal Plant are, Yihil Tal, Chief Executive Officer, who will provide an overview of the company's program and forthcoming updates and Iran Rotem, Deputy CEO and Chief Financial Officer, who will provide a summary of Coal Plant's financial results for the Q2 ended June 30, 2023. Before we get started, I would like to remind everyone that statements made on this conference call may include forward looking statements. Actual events or results could differ materially from those expressed or implied by any forward looking statements as a result of various risks, uncertainties and other factors, including those set forth in the Risk Factors section of Coal Plant's filings with the Securities and Exchange Commission. These filings can be found at www.sec.gov or on Coal Plant's website atwww.coalplant.com.

Speaker 1

In addition, any forward looking statements made on this call represent Coal Plant's views only as of today, August 24, 2023, and should not be relied upon as representing the company's views as of any subsequent date. Coal Plant Management specifically disclaims any obligation to update or revise any of these forward looking statements. Finally, Coal Plant Management will refer to certain financial measures not reported in accordance with GAAP on this call. You can find reconciliations of these non GAAP financial measures to the GAAP financial measures in the earnings press release that Coal Plant published earlier today and which is available on Coal Plant's website at ir.coalplants.com. With that, let me turn the call over to Yihil Tal, Chief Executive Officer of Coal Plant Biotechnologies.

Speaker 1

Please go ahead, sir.

Speaker 2

Good morning, everyone. We are very pleased to have you join us today on Coal Plant Investor Conference Call to discuss our Q2 2023 financial results and corporate developments. CorePlants is developing collagen technology and regenerative medicine products to improve and prolong lives. We are committed to becoming the leaders in regenerative medicine and supporting more sustainable ecosystems that benefit all stakeholders, including patients, our shareholders and our employees, as well as providing innovation to the life science industry. And now on to our development programs.

Speaker 2

Our goal is to create advanced organ and tissue solutions through use of our novel proprietary non animal derived recombinant human collagen technology that we are applying to novel medical and aesthetic products. Our RH Collagen is an advancement both due to its regenerative properties and also because it is xenotissue free, which means it is not derived from animals. Instead, CorePlant products CorePlant produces this recombinant human collagen in genetically engineered tobacco plants. In the Q2, we announced the achievement of a very important company milestone related to the dermal and soft tissue filler product candidate in development with our partner AbbVie. This product is in the clinical phase and the achievement of the milestone triggered a $10,000,000 payment to ColPlant.

Speaker 2

Coal Plant has the potential to receive additional milestone payments as well as future royalties in accordance with its long term collaboration with AbbVie for its dermal filler. The dermal filler product candidate with AbbVie has a potential to create a paradigm shift in the fillers market since it would provide regenerative properties for new skin growth in addition to tissue filling. This program is our top focus and as planned, Aphi continues to advance the filler program. Our next leading program is our regenerative breast implants. One of our upcoming milestones will be initiating by year end a second large animal study to evaluate our regenerative breast implants.

Speaker 2

We have already established the trial infrastructure and look forward to providing an update as soon as we conclude the study. This study follows the completion of our first large animal study, the result of which were announced in January of this year. That preclinical study demonstrated progressive stages of tissue regeneration after 3 months as highlighted by the formation of maturing connective tissue and novascular networks within the implants with importantly no adverse events reported. All plants' breast implants that are comprised of its proprietary plant derived RH Collagen and other biomaterials are expected to regenerate breast tissue without eliciting immune response and thus may provide a revolutionary alternative for aesthetic and reconstructive procedures with the reconstructive feature of our recombinant human collagen being key for breast cancer patients during the post mastectomy period. In the Q2, we announced a joint development and commercialization collaborative agreement with Stratasys, the world leader in additive manufacturing and leader in 3 d printing technology.

Speaker 2

With Stratasys, we are collaborating on the development of of a printing solution to biofabricate human tissues and organs. Initially, our collaborative project will focus on the development of an industrial scale solution for CorePlant's regenerative breast implants. This collaboration between the two companies combines the Stratasys DLP 3 d printer with that is utilizing a unique programmable photopolymerization P3 technology together with CorePlant's state of the art RH Collagen based bio inks and 3 d bioprinting capabilities. Having an effective solution for scale up of our regenerative breast implants will be important to support related clinical trials and commercialization. By combining Stratasys and Coldplants technologies, the companies will be able to print scaffolds that accurately mimic the physical properties of human tissues and organs that are expected to have high resolution scalability and reproducibility.

Speaker 2

The combined proprietary technologies will allow for 3 d tissue and organ fabrication that also possesses differentiated regenerative properties. Under the agreement, both companies have also agreed to cross promote each other's bioprinting product bioprinted products. Here you can see an example of a breast implant that was printed with Stratasys DLP printer, utilizing its P3 technology in combination with ColPlant's collagen based bioinks. It is our objective that our bioinks become the gold standard for use in fabricating tissues and organs. Collaborations such as the one formed with Stratasys are therefore important to us to allow the opportunity to determine which of our different types of bioinks are best suited for use with different advanced technologies so that we may refine the production of different organs or tissues that we are fabricating in accordance with optimal properties.

Speaker 2

As we have mentioned previously, our strategy is to utilize different printing technologies, to serve different indications being sought and therefore we have collaborations with multiple parties. For example, we would need to have use of multiple materials or need to be able to print construct with very small features for products such as gut on a chip and lung on a chip tissue models. The bioprinting aspect of our business has applicability in multiple areas such as cardiology, ophthalmology and orthopedics. As such, CorePlant looks to produce a wide range of organs and tissues and remains engaged in partnering discussions with several industry leaders and academic institutions interested in the company's RH Collagen Technology and expertise in 3 d bioprinting to develop therapeutics and medical application. But back to our breast implant that are currently in development.

Speaker 2

Core plant implants are designed to regenerate breast tissue without eliciting immune response and therefore have the potential to become a revolutionary alternative for both aesthetic and reconstructive procedures, including post mastectomy for cancer patients. According to the U. S. Food and Drug Administration, approximately 350,000 Americans have reported adverse events involving breast implants between 2019. Reports range from autoimmune symptoms to breast implant associated anaplastic large cell lymphoma.

Speaker 2

The additional safety and efficacy data that we will generate from this upcoming large animal study will be used to optimize the development for the regenerative implant and are important to support future regulatory submissions and clinical studies. We look forward to reporting results from the study next year. Lastly, we will mention our GAP on Achieve program, which is in an area where we have the opportunity to disrupt the options that have traditionally existed in life sciences. All Plant is developing together with Tel Aviv University and Chiba Medical Center, a 3 d bioprinted model that is designed to emulate the tissue of the human intestine to assay drug response metabolism and other factors in humans. A device such as this would allow medical professionals to identify drug targets and personalized therapeutic responses that could lead to improved patient outcomes to provide a predictive personalized platform.

Speaker 2

Vision on a chip devices are typically comprised of chambers or channels that recapitulate the distinct compartments and structures of the targeted organ. Our system being developed enhances the physiological relevance of the human gut to provide a predictive personalized platform. CorePlant mimics the gut structure by 3 d printing the gut tissue geometry in high resolution using its unique RH collagen based BiRink formulation. The system then can be used to evaluate therapy response in patients suffering from ulcerative colitis. The multi array chip design is intended to support high throughput therapy screening.

Speaker 2

Recently, CorePlant team managed to successfully grow epithelial cells on the 3 d printed scaffolds. In various areas of personalized medicine, we expect that this approach could be groundbreaking improvement over the existing use of animal models for drug developments. This would be a sustainable means for drug development and patient diagnosis without the use of animals. And we remind you, this program is also very much in line with our ESG initiatives. Should the gut on the chip receive regulatory approval, the coal plant has exclusive rights to commercialize the product.

Speaker 2

We hope to provide an update on the next steps for this program by the end of the year. As mentioned, Cortland remains engaged in partnering discussions with several additional industry leaders interested in the CorePlant's technology and expertise in 3 d bioprinting for therapeutic and medical application. In line with being part of this mission to support a sustainable ecosystems, we wanted to highlight that we have made commitments to advance our ESG or environmental, social and governance initiatives. Our first step to do this, which is implemented in the Q2, was hiring a dedicated expert to lead our ESG effort. Our ESG manager is responsible for identifying CorePlant strength in the areas of ESG that are already in line with our mission.

Speaker 2

Importantly, she will lead with communicating these practices to business partners and to the public. Being able to communicate our initiatives was a mandate for us after we conducted a formal analysis of our current operations and identified what we are doing correctly or where we can further improve. We look forward to working on this initiative and being able to communicate our ESG efforts both as they relate to our company mission as well as they relate to our day to day operations and company values and culture. This concludes my initial remarks about our very promising programs. Now I will turn the call over to our Deputy CEO and Chief Financial Officer, Eran Rotem, to provide a recap of the financial results.

Speaker 2

Eran?

Speaker 3

Thank you, Efir. Good morning, everyone. I will now review our financial results for the 3 months period ending June 30, 2023. This quarter, we saw a significant increase in revenues versus last year. For the Q2 ended June 30, 2023, GAAP revenues were $10,200,000 compared to $66,000 in the Q2 ended June 30, 2022.

Speaker 3

Revenues increased by $10,100,000 is mainly related to the achievement of a milestone with respect to the AbbVie agreement, which triggered a $10,000,000 payment. Revenues from this quarter included also income from sales of Corplent's Bio Inc. And RH Collagen that are serving different companies and academic institutes in the development of 3 d bioprinting products and other products. As said previously, according to the agreement with AbbVie, core plant will is also eligible to receive up to an additional $26,000,000 in milestone payments for the dermal filler products as well as royalty payments and fees for the manufacture and supply of RH Collagen once the product will be in the commercial phase. GAAP cost of revenues for the Q2 ended June 30, 2023, was $615,000 compared to $43,000 in the Q2 of 2022.

Speaker 3

Cost of revenues includes mainly the cost of the company's RH Collagen based products and royalties to the Israel Innovation Authority, or IIA, for the company's sales. The gross profit in the Q2 of 2023 was positively affected by the achievement of the milestone with AbbVie and GAAP gross profit accumulated to $9,600,000 compared to gross profit of 23,000 dollars in the Q2 of 2022. GAAP operating expenses for the Q2 of 2023 were $3,900,000 a 7% decrease compared to $4,200,000 for the Q2 of 2020 2. Operating expenses include research and development or R and D expenses and sales, general and administrative or SG and A expenses. R and D expenses related to supporting the company's development efforts in different programs, including the regenerative breast implant and GAT on ACHE programs.

Speaker 3

R and D expenses for the Q2 of 20232022 remained unchanged at $2,600,000 The GAAP SG and A expenses for the Q2 of 2023 were $1,300,000 a 19% decrease compared to a $1,600,000 for the Q2 of 2022. The reduction is mainly attributable to salary related costs for the company's employees. On a non GAAP basis, the operating expenses for the Q2 of 2023 were $3,600,000 an 8% reduction compared to $3,900,000 for the Q2 of 2022. Non GAAP measures exclude certain non cash expenses. GAAP financial income net for the Q2 of 2023 totaled $85,000 compared to financial expenses net of $100,000 in the Q2 of 2022.

Speaker 3

The increase in financial income net in Q2 2023 is attributed mainly to interest received from the company's short term cash deposits and exchange rate differences. GAAP net income for the Q2 of 2023 was $5,800,000 or $0.51 basic income per share. Compared to a net loss in Q2 2022 of $4,300,000 or $0.39 basic loss per share. Non GAAP net income for the Q2 of 2020 was $6,000,000 or $0.53 basic income per share. Compared to the Q2 of 2022 that ended with a $4,000,000 loss or $0.36 basic loss per share.

Speaker 3

We have maintained a strong cash position and have carefully contained Corpen's operating expenses. Cash, cash equivalents and restricted cash as of June 30, 23, were $22,400,000 Note that this amount does not include the $10,000,000 milestone payment, which was received from AbbVie in July 2023. A reminder, we have no outstanding debt on our balance sheet. Cash used in operating activities during the Q2 of 2023 was $3,800,000 compared to $4,000,000 during the Q2 of 2022. Cash provided by financing activities during the Q2 of 2023 was $89,000 compared to no cash from financing activities in the Q2 of 2022.

Speaker 3

This now concludes the financial summary. Operator, I believe that we can now open the call for questions.

Operator

Thank you. At this time, we'll be conducting a question and answer Our first question comes from Shwapwanna Pukula Ramakanth with H. C. Wainwright. Please proceed with your question.

Speaker 4

Thank you. This is RK from H. C. Wainwright. Good morning, folks.

Speaker 4

A couple of quick questions from me. On the breast implant program, what's the regulatory pathway and what additional studies do you need to do before getting on to the regulatory pathway?

Speaker 2

The regulatory pathway hi, RK. Thank you for the question. The regulatory pathway the breast implant is going to be probably PMA pathway. And we're not sure yet who is going to be the jurisdiction authority, but it looks like it will be a combination of CBRH and CBER. Probably CBER will be the leading and then CBRS will be a consultancy role to the process.

Speaker 2

Regarding your second question on what other preclinical studies will be needed. So first of all, regarding the upcoming study, this upcoming study is a very important one because it is going to focus on and this is the first time on clinically relevant size implants. And this study is going to check, obviously, safety and efficacy. Also, it is going to be used for verifications of the quality of the tissues that is being regenerated is really a fat tissue as the host tissue. We are also going to practice the surgical protocol, the formulation will be selected, the final formulations and also the implant design will be optimized.

Speaker 2

And then this will be the basis for the other studies that will follow, which is going to be a pivotal study. And hopefully, this study will be the last for a clinical study.

Speaker 4

Thank you for that. So when do you think you can start the PMA process or can you start it as you're getting through your next animal study?

Speaker 2

It is at this point of time premature for us to come up with time for the PMA study because we need to interface the FDA and we should discuss with them the regulatory pathway and verify the requirements for the clinical study. So we are not there yet. We are trying to conclude this upcoming study first. So we will be in a much better position to know exactly what is going to be the implant in terms of formulation, have a complete surgical procedure in place and then we'll be in a position to start the discussions and get the inputs from the FDA about the duration of the study and the other requirements.

Speaker 4

Okay. Thanks for that. And then on the gut on a chip program, how do you plan to monetize this? Is this going to be a transaction for the platform itself? Or do you think you either you or you along with the collaborator can be providing this as a service to the drug developer market?

Speaker 2

Thank you for the question. It's a great question. The concept is the following. We will produce the scaffolds as it will mimic the gut issue And we will together with microfluidic chip and the matrices that we will develop, so we can do a multi channel kind of testing. We will provide all of this to our collaborator, which should be a CRO that will take the biopsies from the patient, collect the biopsies and seed the scaffolds and do the testing.

Speaker 2

So this is the concept. Okay. Thanks. Thanks for taking the questions. You're welcome.

Operator

Our next question comes from Steve Perry with Perko Industries. Please proceed with your question.

Speaker 5

Hey, first of all, thank you for taking me in. Great quarter you guys just came in with. My questions are around timing. Just wondering for the dermal filler market, when does the study actual study begin? And what's the timing and length of that study that it's going to take to commercialize that product?

Speaker 5

I think you have any idea or what's your thoughts on that?

Speaker 3

So, hi, thanks for the question. This is Eran Rotem. The product is being led by AbbVie and Allergan. This is the product of AbbVie. Coal plant is not dictating the timelines and is not allowed to disclose what is not allowed to be disclosed by AbbVie.

Speaker 3

I'm mentioning that because usually companies will disclose it. So what we talk to the public so far, this is what we are allowed and we are developing with Avidade products, which is in a clinical phase. We are developing that product. If you do the math and look at their publications, it's 4 years down the road. It means that we are developing it already 4 years.

Speaker 3

And it's in the clinical phase. Beyond that, we are not allowed to say today anything. We achieved the milestone. It came with a $10,000,000 check, which means that this program is moving forward. And we keep on saying the sentence which is this product is moving according to the plan.

Speaker 3

So I hope that is a satisfying answer for you.

Speaker 5

No, it is. And so quick question on size of the market as far as dermal fillers go. I've read some different numbers that the worldwide size of the dermal filler market is about 5 point $5,000,000,000 but I've also read that, that can go as high as $9,000,000,000 or $10,000,000,000 Where do you think the size of that market is?

Speaker 3

So we are familiar with the current number, which is $5,500,000,000 annual sales globally. And this is based on a public research that is out there. We are also familiar with a 10% annual growth. And I think part of the researchers are talking about what will happen in 4, 5 years from now and maybe that is where the $9,000,000,000 is coming. We are familiar with current global size of $5,500,000,000

Speaker 5

Got it. Okay.

Speaker 3

All right. Those are my questions. And by the way, yes, and definitely by the way, Allergan is the major a key company in that way that is selling that product. They are selling between $1,500,000,000 to sometimes they almost reach $2,000,000,000 annual sales of the Juvederm product. So if you so they are leading that market.

Speaker 5

So and I don't know if you can disclose this or not with in retrospect to Allergan and the JUVEDERM market. This product gets approved, does it become 100% accepted and used exclusively by Allergan replacing its current dermal filler? Or is it going to be in combination and offering both different products?

Speaker 3

Well, Alergan is in charge on the they have the market strategy. We are not allowed to talk about it and that's it.

Speaker 5

Okay. All right. Well, I appreciate your time guys. Thank you so much.

Speaker 2

Thank you.

Operator

Our next question comes from Ben Haynor with Alliance Global Partners. Please proceed with your question.

Speaker 6

Good morning, gentlemen. Thanks for taking the questions and congrats on the milestone payment from AbbVie.

Speaker 5

First off for me,

Speaker 6

I know with AbbVie there was upfront clinical regulatory commercial milestones associated with it. Are there more clinical milestones or is regulatory kind of the next one that we should be looking at?

Speaker 3

So that information was not disclosed. I can say that regarding the dermal filler product, we are expecting additional $26,000,000 in additional milestones, but we cannot refer to the what exactly are the milestones.

Speaker 6

Okay. So you can't share whether the next one might be of a certain type?

Speaker 5

Correct.

Speaker 6

Okay. Okay. That's fair enough. I understand. And then just secondly for me on the cross motion that you guys have been or have with Stratasys.

Speaker 6

Any initial returns so far? How has that been going? Expectations there? Just curious on the bio ink side of things and the relationship with Stratasys.

Speaker 2

Can you please repeat the question?

Speaker 6

Sure. I was just wondering on the cross promotion that you guys are doing with Stratasys, if there have been any, I guess, maybe not initial successes there, but how are those conversations going? Any expectations on what that could lead to down the road with Stratosys?

Speaker 2

Okay, I see. So with Stratosys, first of all, we are working with their printers that is called Origin 1, which is utilizing a very unique technology for photopolymerization. And we are working together with them in developing a printing process for the breast implant. At this point of time, we are already printing implants of 100 cc with their printer and we are optimizing the process. And of course, the intention is this is the first focus of us in this collaboration is to develop a scalable biofabrication solution for the breast implant, which later on can be extended to other tissues and organs, including an automated process.

Speaker 3

And regarding the part of the sales of the barring that you are referring to, this will come in a later stage once they will have the relevant printer in the market. There we will see the kind of sales that you are asking about.

Speaker 6

Okay. So that's still a little ways off?

Speaker 3

Right.

Speaker 5

Okay. Understood.

Speaker 6

Excellent. Well, thanks for taking the questions, gentlemen. And again, congrats on the AbbVie milestone.

Speaker 2

Thank you. Thank you, Glenn.

Operator

I believe that is the last question from our live audience participants. So I'll turn it back to Mr. Rotem for any questions that came in online.

Speaker 3

Sure. Thank you. So the first question that came online is regarding the cash balance of the company. And does it the $22,000,000 that we had in the bank as of June 30, does it include the $10,000,000 from Allergan's milestone achievement or doesn't it? So the $10,000,000 came in July after the balance sheet after the date of the balance sheet.

Speaker 3

So now the $22,000,000 is not including the $10,000,000 So at the end of July, the company had above $30,000,000 in cash, which also apply to the kind of cash that we have. And this is relating to another question that came regarding for how long the cash that we the company has will last. And so if we had last month more than $30,000,000 and as you know from if you are taking a look at the historical financial performance, for example, this year, the company was using for operation about $7,000,000 for 6 months. So you can understand the cash that the company has. We have money for more than at least 2 years.

Speaker 3

So this was one question. The second one was actually addressed by the other questions that were raised. So it is asking about when will the company have a commercial sales on products and can we give some more details regarding the schedule of the collaboration with Allergan. So for the second part, I believe we addressed it. We are disclosing whatever we can about the program with Alargan.

Speaker 3

This program is 4 years now and the milestone achievement is demonstrating the progress of the program. And regarding commercial sales, the company is selling its Bioink and Allerich Collagen for the development industry. This is an industry that is in development phase. And we cannot we never gave forecasts regarding the commercial sales, so we will not do it as well now. And that was the last question that we received by mail, by the system.

Speaker 3

So That concludes our questions from the audience. And so I now return it back to Michiel Tal, Corporate's Chief Executive Officer for any closing remarks. Cecile? Yes. Thank you, Eran.

Speaker 2

As I've stated, we at Cold Blood aspire to become the leaders in regenerative medicine, helping people live longer and better and creating improvements in science through our regenerative technology. Our goal is to create better alternatives and options for the future such as an unlimited supply of spare parts for the human body, including life saving organs, medical treatment tailored to the individual characteristics of each patient and drugs developed without the need for animal testing. Our vision is to enable a world with unlimited organ supply, regenerative tissue products and novel drugs and diagnostics that do not rely on animals. In closing, I want to reiterate our upcoming goals for the remainder of 2023 and through the first half of twenty twenty four. We plan to continue to advance development of the paradigm shifting regenerative dermal and soft tissue filler program with AbbVie initiate a study in large animals with commercial sized breast implants to generate additional safety and efficacy data in support of commercialization of this program, announce next steps for the development of the gut on the chip tissue model of drug discovery and personalized treatment of diseases beginning with ulcerative colitis, continue to expand our commercial portfolio of RH Coragen Based Bio inks and finally form new collaborations with industry leaders to co develop new medical therapies and applications using our regenerative recombinant human collagen technology.

Speaker 2

Thank you everyone for your time this morning and for joining us today for today's conference call.

Operator

This concludes today's conference call. You may disconnect your

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Key Takeaways

  • In Q2, AbbVie collaboration on a dermal and soft tissue filler program reached a key milestone, triggering a $10 M payment and potentially unlocking up to an additional $26 M in future milestones and royalties.
  • ColPlant plans to initiate by year-end a second large animal study of its regenerative breast implants, building on positive preclinical results that showed connective tissue formation and no adverse events.
  • The company entered a joint development agreement with Stratasys to create an industrial-scale 3D bioprinting solution combining P3 DLP technology and ColPlant’s RH Collagen bioinks for scalable production of human tissues and organs.
  • Through its gut-on-a-chip program, ColPlant is building a 3D bioprinted intestinal tissue model with academic partners to improve drug response assays, personalize therapies, and reduce reliance on animal testing.
  • Financially, Q2 revenues surged to $10.2 M (from $0.07 M a year ago) driven by the AbbVie milestone, resulting in GAAP net income of $5.8 M and a strong cash position of over $22 M (excluding the July $10 M payment), with no debt and over two years of runway.
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Earnings Conference Call
CollPlant Biotechnologies Q2 2023
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