CollPlant Biotechnologies Q4 2023 Earnings Call Transcript

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April 4, 2024

There are 6 speakers on the call.

Operator

Greetings, and welcome to the Coal Plant Biotechnologies Investor Conference Call to discuss Financial Results for the Full Year and Fourth Quarter of 2023 and Corporate Updates. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Now, I'll turn the call over to Dori Kurowski of LifeSci Advisors.

Operator

Please go ahead.

Speaker 1

I would like to welcome everyone to Coal Plant Biotechnology's financial results conference call to discuss the results for the full year and 4th quarter ended December 31, 2023, and provide a 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 programs and associated updates and Eran Rotem, Deputy CEO and Chief Financial Officer, who will provide a summary of Coal Plant's financial results for the full year and Q4 ending December 31, 2023. Both will be available to answer questions at the end of the call. 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 Cold Plant's filings with the Securities and Exchange Commission.

Speaker 1

These filings can be found at www.sec.govoron Coal Plant's website at www coalplant.com. In addition, any forward looking statements made on this call represent Coal Plant's views only as of today, April 4, 2024, 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.coalplant.com.

Speaker 1

Now, let me turn the call over to Yigal Tal, Chief Executive Officer of Colplant Biotechnologies. Please go ahead, sir.

Speaker 2

Good morning, everyone, and thank you for joining us today on CorePlant's investor conference call to discuss our full year and Q4 2023 financial results and corporate development. As you know, the wars that began last October, very unfortunately continues. However, CorPlant's main development programs and production plan thankfully continued to be minimally affected as a result of the war. The morale of our employees these days continues to be admirable according to these circumstances, and I want to take this opportunity to say that I'm extremely thankful for our dynamic and resilient workforce. CorePlans' mission is to discover, develop and deliver collagen technology and regenerative medicine products to improve and prolong lives.

Speaker 2

We continue to carefully focus on our core programs and our supportive partners to advance this mission with the goal of creating products that enable the regeneration of tissues and organs. We are extremely pleased with the momentum we gained last year and have maintained through the beginning of this year to advance our innovative programs in the fields of regenerative anesthetic medicine. Allow me now to recap a summary of what we accomplished. On this slide is the dermal filler product candidate that we are partnering with Albion, specifically its Allergan division for development. Throughout 2023, we made significant progress with AbbVie to advance this candidate towards commercialization.

Speaker 2

In June of last year, we announced the achievement of an important milestone, other this collaboration, which triggered a $10,000,000 payment from AbbVie to Copland. Per Copland's agreement with AbbVie, Copland has the potential to receive additional milestones and option product payments as well as receive meaningful royalties on product sales. In their full year and Q4 conference call, AbbVie stated that they expect meaningful growth in the aesthetics market and that importantly, a ramping up is now anticipated after multiple quarters of decline in the U. S. Serum market.

Speaker 2

The dermal filler product candidate, which is our top focus, is now in the clinical phase of development and has the potential to create a paradigm shift in the dermal fillers market since in addition to tissue filling, it is expected to impart regenerative properties to the skin tissue. In addition to our partnered program with AbbVie, we have another version of a dermal filler under development. In the Q4 of 2023, we announced that the U. S. Patent was granted related to our photocurable thermal filler product candidate by being developed by CorePlant for the aesthetics market.

Speaker 2

This patent is related to the method of use of CorePlant's photocuring technology and serves as the basis of its photocurable dermal filler product candidate. We believe that the patent will strengthen our position in the aesthetics market for many years to come. Furthermore, we received a notice of allowance for a patent application which covers the use of this product candidate in Brazil, another important market in medical aesthetics valued at $741,000,000 with a compound annual growth rate of 10.7%. It should be noted that CorePlant has granted its partner AbbVie the right of first negotiation to obtain a worldwide exclusive license to this product candidate. Now I will discuss our other in house development programs that are our core focus.

Speaker 2

Our next leading program is our regenerated breast implants. These implants that are comprised of our proprietary non animal derived RH Collagen and other biomaterials are intended to promote tissue regeneration and a grade in synchronization with the development of natural breast tissue. In 2023, the global breast implants market size reached US2.6 billion dollars and the market is expected to reach US4 $100,000,000 by 2,032, exhibiting a compound annual growth rate of 3.7% during 2024 to 2,032. We have begun an additional large animal study with clinically relevant commercial size implants. These studies results are intended to be used for the design of a pivotal large animal study.

Speaker 2

This study follows the completion of our first large animal study, the results of which were announced in January 2023. This study demonstrated progressive stages of tissue regeneration after 3 months as highlighted by the formation of maturing connective tissue and neurovascular networks within the implant with importantly no adverse events reported. Since then during 2023, Copland also conducted additional large animal studies that were intended to further optimize the implant design and composition. In these studies, new tissue formation and no vascularization with no adverse tissue reactions were demonstrated confirming previous results. We look forward to reporting results from this animal studies in the Q4 of this year and the Q1 of 2025.

Speaker 2

We cannot stress enough the improvement that the regenerative breast implant could provide given the adverse events associated with currently available silicone implants. Use of the silicone implants carries an increased risk of developing breast implant associated anaplastic, large cell lymphoma, which is a type of a cancer. Every year in the U. S. Alone, hundreds of thousands of people experience adverse events that range from autoimmune symptoms to this most serious side effect.

Speaker 2

Our breast implants are expected to regenerate breast tissue without eliciting immune response and thus may provide a revolutionary alternative for aesthetic and reconstructive procedures. The additional safety and efficacy data that we will generate from the recently initiated large animal study is intended to be used to optimize the development of our regenerative breast implants and combined with data from all previous studies is expected to support future regulatory submissions and clinical studies. In April of last year, we announced a joint development and collaboration agreement with Stratasys to collaborate on the development of a printing solution to biofabricate human tissues and organs using Stratasys' P3 technology based bioprinter and coal plants RH collagen based bioinks. The first project under this agreement is to devise a process for industrial scale bioprinting of CorePlant's breast implants. Here is an example of a breast implant printed with our collaborators at Stratasys using ColPlant's RH Collagen based BioX.

Speaker 2

Now I want to draw your attention to a decision that we recently made related to our gut on a chip program. In the spirit of being good stewardess of our own capital and with our focus on the medical aesthetics arena and collaboration with AbbVie, we have decided to put our resources directed to this program on hold. I want to emphasize that this program is important to CorePlant and that it is still very much a focus of ours. However, we made this decision for now since we felt it wouldn't be responsible to continue after assessing the projected timeline to progress the tissue model. Anyway, once resources are secured at the appropriate time, we do plan to reinitiate this program.

Speaker 2

In 2023, we blustered our commitment to ESG, environmental, social and governance initiatives by appointing a dedicated expert to lead our efforts. Following the endorsement of our company's sustainability roadmap for the upcoming year, we embarked on a series of bold initiatives and at significantly reducing CorePlants' carbon footprint while harmonizing with our overarching sustainability objectives. Through meticulous analysis and prioritization of key topics, we have finalized the ESG strategy and goals, ensuring their integration into our corporate framework. In September of 2023, we proudly announced our participation in the United Nations Global Compact, a permanent initiative for sustainable and responsible corporate governance. By aligning ourselves with this esteemed platform, CorePlant reaffirms its unwavering dedication to bioprinting sustainable practices, further solidifying our mission to revolutionize regenerative anesthetics, medicine with sustainable alternatives.

Speaker 2

Furthermore, we are set to unveil our inaugural formalized ESG report for 2023 during the Q2 of this year. This report will showcase our bold commitments to environmental, social and governance facets, including ambitious targets in climate action and energy and efficiency, comprehensive workforce, health and safety initiatives and the integration of ESG considerations into our governance structure. These commitments underscore CorePlant's unwavering dedication to responsible and sustainable business practices promising long term value creation for our stakeholders. That concludes my initial remarks. 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, Yefir. Good morning, everyone. I will now review our financial results for the 3 months and the full year period ending December 31, 2023. GAAP revenues for Q4 2023 were $299,000 and included mainly income from sales of our RH Collagen products, an increase of $241,000 compared to the $58,000 in Q4 2022. GAAP revenues for the year ended December 31, 2023 were $11,000,000 and included mainly revenues from AbbVie, OilPlans Business Partner.

Speaker 3

Revenues increased by $10,700,000 compared to $299,000 in the same period last year. The increase is mainly related to the achievement of Milestone with respect to the AbbVie agreement, which triggered a $10,000,000 payment to CorePlants and in addition, an increase in income from sales of CorePlants RH Collagen products. As we previously said, according to Corpant's agreement with Fabry, Corpant is also eligible an additional $26,000,000 in milestone payments for the dermal filler product as well as royalty payments and fees for the manufacture and supply of the RH Collagen once the dermal filler product will be in the commercial phase. GAAP cost of revenues for the Q4 of 2023 was $773,000 compared to $62,000 in Q4 2022. Cost of revenues includes mainly the cost of the company's RH Collagen based products, royalties to the Israel Innovation Authority or the IIA for the company's sales and inventory write offs.

Speaker 3

GAAP cost of revenues for the full year ended December 30 3 was $2,000,000 compared to $400,000 in the full year ended December 31, 2022. The increase in the amount of approximately $1,600,000 is mainly comprised of $320,000 in royalty expenses to the IIA, mainly related to the milestone payment received from Alfvie. $711,000 relating to the sales of BioInks, Virginics Fluorogel and RH Collagen sales and approximately $500,000 related to the inventory write offs. GAAP operating expenses for Q4 2023 were $4,600,000 compared to $4,700,000 in Q4 2022. Operating expenses include G and A expenses and R and D expenses that are related to supporting the company's development efforts in different programs, including the regenerative breast implants and Guard on Achieve programs.

Speaker 3

The decrease of approximately 100 $1,000 is mainly related to G and A expense. On a non GAAP basis, operating expenses for Q3, Q4 2023 were $4,000,000 compared to $4,200,000 for Q4 2022. Non GAAP measures exclude certain non cash expenses. GAAP operating expenses for the full year period ended December 31, 2023, were $16,500,000 dollars compared to $17,000,000 for the year 2022. The decrease of approximately $500,000 includes $745,000 decrease in G and A, mainly comprised of $224,000 decrease in employee salaries expenses and $364,000 decrease in share based compensation expenses and $140,000 income from insurance indemnification, all of that deducted with an increase of $229,000 in R and D expenses.

Speaker 3

On a non GAAP basis, the operating expenses for the year 2023 were $14,500,000 compared to $15,200,000 in the year ended December 31, 2022. GAAP financial income net for the Q4 of 2023 totaled $379,000 compared to $275,000 in the Q4 of 2022. GAAP financial income net for the year ended December 31, 2023 was $493,000 compared to $172,000 in the year 2022. The increase is attributed to an increase in interest rates and interest received from the company's short term cash deposit. GAAP net loss for Q4 2023 was $4,700,000 or $0.41 basic loss per share.

Speaker 3

Compared to a net loss of $4,400,000 or $0.39 basic loss per share for Q4 2022. Non GAAP net loss for Q4 2023 was $3,900,000 or $0.35 loss per share, similar to the loss the company recognized in the Q4 of 2022. GAAP net loss for the year ended December 31, 2023 was $7,000,000 or $0.62 basic loss per share compared to a net loss of $16,700,000 or $1.53 basic loss per share for the year ended December 31, 2022. Non GAAP net loss for the year ended December 31, 2023 was $5,200,000 or $0.45 basic loss per share compared to $15,200,000 loss or $1.37 basic loss per share for the year ended December 31, 2022. In this period of continued weakness in the global capital markets, the work situation in Israel and uncertainties in general, we continue to carefully maintain Colpens' work plan, while keeping goals for the progress of the main programs.

Speaker 3

Cash and cash equivalents as of December 31, 2023, were $26,700,000 We believe this cash balance represent as of today, April 4, the company cash runway that will satisfy our operational requirements at least until the end of 2025, based on our currently contemplated operations and plans. Cash used in operating activities during the Q4 of 2023 was $2,300,000 compared to a cash used in operating activities of $3,300,000 during the Q4 of 2022. Cash used in operating activities during the year ended December 31, 2023, was $2,800,000 compared to $13,700,000 during the year ended December 31, 2022. There was no cash provided by financing activities during the Q4 of 2023 compared to $400,000 cash provided by financing activities during the Q4 of 2022. Cash provided by financing activities during the year ended December 31, 2023 was $1,100,000 compared to $1,900,000 during the year ended December 31, 2022.

Speaker 3

Cash provided by financing activities is mainly attributed to proceeds from the exercise of options and warrants into shares. This now concludes the financial summary. Operator, I believe that we can now open the call for questions.

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Swayampakula Ramakanth with H. C. Wainwright.

Speaker 4

Thank you. Good afternoon, Yajil and Yaron. Couple of quick questions. The first one being on the breast implant study in the large animals. For the timing of the data publication, you said late 4th I mean late this year, which is Q4 or early next year, Q1.

Speaker 2

So what needs

Speaker 4

to get done and why you're unsure about the timing?

Speaker 5

Yes, great. Thank you, RK for the question. We have a series of studies that is currently being held with the purpose to optimize different components of the implant, including the formulation, including the design, the fatigue eliminating fatigue points, things like that. So and of course, degradation kinetics, which is very, very important. So we design our studies accordingly.

Speaker 5

And we have a battery of studies in large animals as that is intended to provide us on the time axis all the information needed. So when we come to the Q2 of next year, we will be in a position to launch a GLP pivotal animal study, which its results will serve us for the purpose of the meetings with the FDA later on to determine the regulatory pathway for the product. So this is why we have here basically 2 time points, the Q4 of this year, where we will have the 1st group of information from some of the studies and then Q1, which will provide the rest of the information.

Speaker 4

Thank you. Thanks for that. And then regarding the collaboration with AbbVie, since the study is going into clinic, would you get a milestone payment now or would it be once you get once it is successful?

Speaker 3

Thanks, RK. So, yes, we as you know, we achieved the one milestone last year, which triggered a $10,000,000 payment. And what we can say about next payments, as we said before, that they are associated with certain developments and clinical trials and regulatory approvals, so and commercial milestones. So this is what we are allowed to say by our partners and at this stage we are unable to share more information about it.

Speaker 4

Okay. No issues at all. Thanks. Thanks for taking the question.

Speaker 2

Thank you, RK. Thank you.

Speaker 3

I think we have one more or a few more 2 more questions from the public, the other participants. So one question is quite similar to what you just said, what we can say about the collaboration, about the collaboration with AbbVie. So of course, yes, this is our most important collaboration is with AbbVie. We are as we all know, we are developing AbbVie is developing and we are part of it a dermal filler product that is a combination of AbbVie's technology with which is using also colplan's RH Collagen. And beside what we said so far, we are this is what we are allowed to say.

Speaker 3

We are not allowed we cannot share when is the other milestones are coming. And what we can say is that we are in the development. It's in a clinical phase, in a clinical studies and this is where we are at. Another question that we have is, do you think there is a potential for a new expansion to new markets like addressing Ozempic phase, which is the condition that causes a hollowed Phase and lower muscle tone from taking Ozempic?

Speaker 5

Yes, definitely there is a potential. We basically have 2 different platform technologies. The first one is injectables, including the photo curable filler, which enables to in addition to the skin lifting and the regeneration of new tissue also to do contouring of the skin. This product, which is administrated same as a regular dermal filler, later on there is a light source that illuminates from the outside and basically the product will cross link in situ under the skin. This product can definitely address indications like Ozempic Phase.

Speaker 5

We also see a big opportunity in 3 d bio printed facial implants like for example for the chin, the nose, the cheeks, which is basically leveraging all the technologies that we developed for the breast implants. So we have either the injectables in one hand with the photo curing option. As said on the other hand, we have the 3 d bioprinted breast soft tissue implants.

Speaker 3

Okay. The last question that we have is, so we are trying to get feel for how big the biofabrication market for human tissues and organ is. How do you think about this market opportunity?

Speaker 5

Yes. 3 d bioprinting of tissues and organs holds a huge market opportunity. If we look on the market, we can identify clearly 5 different segments. And I will tell these segments in the order of time to market, so in complexity. So the first one is in drug discovery and personalized medicine.

Speaker 5

The second one is scaffolds, the third one is tissues, the 4th one is endocrine glands and the 5th one is life saving organs. And if we look on each one of these segments, we can break it down to different indications. For example, talking about tissues, the breast implant that we are developing is under this category. We can also bring under this category hard valves, which are 3 d bioprinted. And if we just look on the market potential of these two indications, it's a multibillion dollar market opportunity to each one of them.

Speaker 5

We can take another example of scaffolds for spinal fusion, which can be bioprinted and scaffolds for spinal fusion, the market potential annually today in the U. S. Alone is about $1,000,000,000 market opportunity. So if we add some of them together, it's tens of 1,000,000,000 of dollar per annum in terms of potential. And CorePlant basically is having a strategy is that drug discovery and personalized medicine, scaffolds and tissues.

Speaker 5

We are aiming to develop product in these segments in house and endocrine glands, which may be for example, pancreas, thyroid gland, things like that. This is something that we will seek for a partner and same is for life saving organs. So the bottom line is that there is a huge market opportunity.

Speaker 3

Thank you. So this was the last question and that concludes our questions from the audience. We'll now turn the call back to Yochiel Tal, CorPlent's Chief Executive Officer for any closing remarks. Yefiel?

Speaker 5

Thank you, Aral. Our vision is to be the leaders in regenerative medicine, helping people live longer and better through our innovative collagen technology. Consequently, our goal is to create better alternatives and options for the future such as novel products for regenerative aesthetic medicine applications, an unlimited supply of spare parts for the human body, including life saving organs and drugs developed without the need for animal testing. In closing, I want to reiterate our upcoming goals for this year. For the remainder of 2024, we plan to focus on advancing the development of a paradigm shifting regenerative dermal and soft tissue filler program with AbbVie, expand our large animal studies with commercial sized breast implants to generate additional safety and efficacy data to support our future clinical studies and commercialization of this program.

Speaker 5

And continue to form collaborations with industry leaders for utilizing our RH Collagen and Bio Inc. Technologies and continued discussions related to our existing programs and products. Thank you everyone for your time this morning and for joining us for today's conference call. I will leave you with this closing slide featuring our very important and valued Coal Plant team members.

Operator

Thank you. That concludes today's conference call and you

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Key Takeaways

  • Direct partnership with AbbVie on a dermal filler product reached a key clinical milestone in June 2023, triggering a $10 million payment and positioning Colplant to earn further milestones and royalties as the program advances toward commercialization.
  • The U.S. patent grant for Colplant’s photocurable thermal dermal filler and a notice of allowance in Brazil strengthen the company’s IP portfolio in the fast-growing aesthetics market, potentially extending protection and market reach into a $741 million segment.
  • Ongoing large animal studies for regenerative breast implants composed of non-animal RH collagen have shown new tissue formation and no adverse events, with pivotal data expected in late 2024 and early 2025 to support future regulatory submissions.
  • Financial results for 2023 showed GAAP revenues of $11 million (versus $0.3 million in 2022) driven by the AbbVie milestone, a narrowed net loss to $7 million from $16.7 million in 2022, and a cash runway extending at least through end-2025.
  • The decision to put the gut-on-a-chip program on hold reflects capital-allocation discipline and a focus on core aesthetics and implant programs, though management plans to resume it once resources permit.
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Earnings Conference Call
CollPlant Biotechnologies Q4 2023
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