CollPlant Biotechnologies Q2 2024 Earnings Call Transcript

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August 20, 2024

There are 6 speakers on the call.

Operator

Welcome to

Speaker 1

the Coal Plant Biotechnologies Investor Conference Call to discuss Financial Results for the Q2 of 2024 and Corporate Update. At this time, all participants are in a listen only mode. Question and answer session will follow the formal presentation. Please note this conference is being recorded. Now, I'll turn the call over to Dan Ferry of LifeSci Advisors.

Speaker 1

Please go ahead, sir.

Speaker 2

I would like to welcome everyone to Coal Plant Biotechnology's financial results conference call to discuss the results for the Q2 ended June 30, 2024, where management will also provide a corporate business update. With us on the call today from Coal Plant are Yajil 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, will provide a summary of Coal Plant's financial results for the Q2 ending June 30, 2024. 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 and 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.

Speaker 2

These filings can be found at www.sec.gov or on 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, August 20, 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 Colpant published earlier today and which is available on Colpant's website at ir ir.colplant.com.

Speaker 2

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

Speaker 3

Good morning, everyone, and thank you for joining us today on CorePlant's investor conference call to discuss our Q2 2024 financial results and corporate developments as we continue our mission to be a leader in the field of regenerative medicine. As you may have seen, we have recently made great progress with our state of the art novel breast implant program. Following the positive data from the preclinical studies that we announced earlier this year, we are happy to share our achievements to produce commercial size implants composed of our proprietary RH Collagen based bioinks printed with Stratasys Origin 1 3 d bioprinter. Furthermore, we are now testing 200 cc volume implants in preclinical studies. We have great excitement about the possibilities associated with our regenerative breast implant product candidate since it has the potential to overcome the challenges of existing breast implants made of silicone or autologous fat tissue.

Speaker 3

We remind you of the opportunity to address the global breast implant market, which is estimated at approximately $3,000,000,000 with breast reconstruction and augmentation procedures representing the 2nd most common plastic surgery procedures performed worldwide today. This market is projected to grow by another 3,500,000,000 dollars by 2,033 and become a $6,500,000,000 market. Currently, this is a market that has been underserved in terms of safety and performance. In terms of safety, current materials can cause immunogenicity for patients and even form a cancer known as breast implant associated anaplastic loud cell lymphoma. The availability of regenerative breast implant could be a revolutionary alternative for aesthetic and reconstructive procedures given the immunogenic related adverse events associated with currently available implants.

Speaker 3

In terms of performance, we believe that patients could potentially benefit from a regenerative breast implant that will be replaced over time with newly grown human breast tissue that is integrated with the host tissue rather than having a synthetic substitute, which may elicit immune response. The preclinical study that we are conducting with the commercial size implant follows the study we initiated in December of last year, and it is intended to test the ability of the implants to grow natural breast tissue and simultaneously completely degrade over time. We remain encouraged about the prospect of these implants based on the results that we saw with the January 2023 study report, which showed evidence of well developed connective tissue containing blood vessels or neovascularization inside the implant. Progressing tissue in growth within the implant was also noted confirming tissue regeneration. Lastly, no adverse tissue reactions within the implantation site were present.

Speaker 3

We look forward to reporting results from the current animal studies in the Q4 of this year and the Q1 of 2025. Now shifting to our other lead program, the dermal and soft tissue filler that we co developed with our partner AbbVie. Here we continue our important development efforts related to our collaboration with AbbVie on the dermal filler product, which is in the clinical phase. Last year, in the Q2, we achieved a milestone triggering a $10,000,000 payment that was made from AbbVie to us. And of note, per our agreement with AbbVie, additional potential payments related to specified milestones are still applicable plus meaningful product royalties on the candidate should it become an approved product.

Speaker 3

Though the dermal filler market experienced a recent slowdown in growth, we have learned that it has recently bounced back. This is also evidenced by recent merger and acquisition activity in this space. As it regains a foothold, innovation will be key to sustain growth in this large market that hasn't seen any significant advancement in the past decade. The dermal filler product candidate that we are collaborating with Avion has its own potential to create a paradigm shift in the aesthetics market since in addition to tissue filling, it is expected to impart regenerative properties to the skin tissue. In addition to our partner program with AbbVie, we have another version of a dermal filler in our pipeline under development, our photocurable dermal filler.

Speaker 3

We have been granted patents in multiple territories pertaining to our photo curing technology, specifically in the U. S, Europe, Brazil, Australia and Israel. Furthermore, the application was recently allowed in China and will issue shortly. Under the agreement with AbbVie, Corporal has granted AbbVie the right of first negotiation to obtain a worldwide exclusive license to the photocurable dermal filler product candidate. Shifting to our progress in corporate development recently, we're proud to have released our very first environmental, social and governance or sustainability report.

Speaker 3

This was done after carefully establishing a corporate sustainability strategy with clear targets in key areas that we believe are crucial to our stakeholders. The report reflects Coal Plant's commitment to fostering environmental sustainability and enhancing human health as well as advancing social and corporate governance objectives. I would like to emphasize that our overall strategy is driven by our vision to lead in regenerative medicine and improve global health with our innovative collagen technology. This first report includes tangible steps we are taking towards enabling a sustainable future and the goals can be seen here in the next slide. Here, our areas of focus are represented by key pillars that span from climate action and energy efficiency to health and safety and sustainable sourcing.

Speaker 3

Examples of actions that the company plans to take include enhancing its plant based production, reducing emissions and delivering safe and reliable medical solutions. We believe these key areas, all the highest impact related to fostering environmental sustainability and enhancing human health as well as furthering social and corporate governance objectives that contribute to the company overall advancement. CorePlant's unwavering dedication to responsible and sustainable business practices who currently focuses on 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 3

Eran?

Operator

Thank you, Yefiel. Good morning, everyone. I will now review our financial results for the 3 6 months periods ending June 30, 2024. GAAP revenues for the Q2 ended June 30, 2024 were $249,000 compared to $10,200,000 for the Q2 ended June 30, 2023. In 2023, we achieved a milestone with respect to the ARPU agreement, which triggered a $10,000,000 payment in 2023.

Operator

And this is the main reason for the decrease we see in revenues between these quarters. Revenues in Q2 2024 are mainly from sales to AbbVie, our business partner, for the development of the dermal filler product. GAAP cost of revenues for the Q2 ended June 30, 2024 was $536,000 compared to $615,000 in the Q2 ended June 30, 2023. GAAP gross loss for Q2 2024 was $287,000 compared to gross profit of $9,600,000 in Q2 2023. GAAP operating expenses for Q2, 2024 were $4,100,000 compared to $3,900,000 in Q2, 2023.

Operator

The increase of approximately $200,000 is mainly related to employee salaries expenses and to share based compensation expenses resulting from the extension of certain employee stock expiry periods. On a non GAAP basis, operating expenses for Q2 2024 and for Q2 2023 were similar, dollars 3,600,000 Non GAAP measures exclude certain non cash expenses. GAAP financial income, net for Q2 2024 totaled $196,000 compared to $85,000 in Q2 2023. The increase in financial income is due to interest received from the company's short term cash deposits and exchange rate differences. GAAP net loss for the Q2 ended June 30, 2024 was $4,200,000 or $0.37 basic loss per share, compared to a net income of $5,800,000 or $0.51 basic income per share for the Q2 ended June 30, 2023.

Operator

The difference between the quarters for the financial performance comes from Copeland's achievement in 2023 upon reaching a milestone in the dermal filler development plan. Achieving the milestone, as you already know, led to a payment of $10,000,000 from RB2 CorPlant in 2023, and this is the reason for the aforementioned virus. Non GAAP net loss for Q2 2024 was $3,800,000 or $0.33 loss per share compared to a net income of $6,000,000 or $0.53 basic income per share for Q2 2023. Cash and cash equivalents as of June 30, 2024 were $18,900,000 The cash balance represents as of August 2024, the company cash runway that are expected to satisfy the company's operation requirements at least until the end of 2025 based on current contemplated operations and plan. Cash used in operating activities during the 6 months period ended June 30, 2024 and during the 6 months ended June 30, 2023 was $7,200,000 Cash used in investing activities during the 6 months ended June 30, 2024 was $341,000 compared to $541,000 during the 6 months ended June 30, 2023 and related finally to the purchases of property and equipment.

Operator

Cash provided by financing activities during the 6 months ended June 30, 2024 was $9,000 compared to 892 $1,000 during the 6 months ended June 30, 2023. The period last year included proceeds from the exercise of the last warrants that the company granted to investors in previous years. This now concludes the financial summary. Operator, I believe that we can now open the call for questions.

Speaker 1

Thank you. We will now be conducting a question and answer session. Our first questions come from the line of Sean Lee with H. C. Wainwright.

Speaker 1

Please proceed with your questions.

Speaker 4

Hi, good morning, guys. This is Sean standing in for RK, and thanks for taking my questions. My first one is on the latest breast implant study. So I was wondering since I know dermal fillers are sometimes also used for breast augmentations. What are the key differences between this latest breast implant compared to what you're working on with AbbVie?

Speaker 4

And what are you looking to find out in the preclinical study? Yes.

Speaker 3

Here thank you, Sean, for your question. This is Yihir Eldar speaking. There is a big difference between the injectable fillers and the breast implants that we are making. The breast implants that we are making are basically comprised of 3 d bioprinted scaffold, which is comprised of collagen and other biomaterials. And this scaffold will basically, after implantation, will recruit cells from the surrounding tissue.

Speaker 3

And basically over time it will degrade and be replaced with a naturally grown tissue, fat tissue. While the injectable fillers are intended for different purposes, there are injectable fillers that are made from fat only. This is one of the treatments for breast augmentation. And they usually don't last for a long time. They are losing volume and require repeatable injections.

Speaker 3

And there are the dermal fillers that are made usually from neuronic acid, which are intended for skin lifting and basically also require repeatable injections over time. So these are the key differences between the fillers.

Speaker 4

Great. Thanks. That makes it more clear. What are the key findings you're looking for in the current preclinical study then?

Speaker 3

Okay. So here, I guess that your question is referring to the breast implant, right?

Speaker 4

Yes.

Speaker 3

So on the breast implant, I would divide because we have multiple studies on large animals. And the intention of the studies is basically to optimize the formulations, the design of the implant and check of course the performance, safety and efficacy of the implant. For example, the ability to regenerate fat tissue, the degradation kinetics of the implant over time. So we have reported on studies that we conducted in January 2020 3 and then December 2023. And the studies showed evidence of a well developed connective tissue, including blood vessels or neurovascularization in the implant, progressing tissue in growth within the implant, which is confirming tissue regeneration.

Speaker 3

We did not see any adverse tissue reactions in the implantation side. This is very important finding. And the studies basically enabled us, the studies we did so far to fine tune the surgical protocol and optimize basically the scaffold fabrication in a way that it will also mimic natural breast tissue, for example, in terms of filling. We basically report additional data from the December 2023 study by year end 2024 and then Q1 of 2025. From the new results that will be reported, we expect to learn more about the formation of a neofat tissue, which is called also adipogenesis as well as about the implant degradation kinetics.

Speaker 3

And lastly, I would say that we reported about the launch of another study that we started this week with 200 cc size implant, which is basically a commercial size implant, which was printed with the StrataSeas printer. And then, of course, this study has different endpoints that go for 18 months, which means like 6, 3, 12 18 months. And hopefully, this study will be the ones that will enable us to move forward to a human pilot study.

Speaker 4

Great. Thanks for that. My last question is on the AbbVie collaboration. So I was wondering what are the next steps to that? And we expect any additional milestones over the next couple of quarters?

Operator

Thanks. Thank you, Sean. This is Eran. So with AbbVie, as everybody knows, we are working on the dermal filler product. It is now in a clinical phase, running a few clinical studies and this is the phase of the product.

Operator

We did not disclose and we are not allowed to disclose the timelines either for the study or for the next milestone. I will just maybe mention that regarding that product alone, we are expecting to get by commercialization in a few milestone, a total of $26,000,000 And on top of that, of course, once this product will become commercial, we will see meaningful royalty rate and of course a return for the collagen that we will sell out of it.

Speaker 4

Okay. I understand. Thanks again for taking my questions.

Operator

Thank you.

Speaker 1

Thank you. Our next question has come from the line of Jason Kolbert with E. F. Hutton. Please proceed with your questions.

Speaker 5

Good morning, guys. Congratulations. A lot of exciting progress. I'd like to understand a little bit better beyond the collagen scaffold, what other growth factors are part of the scaffold itself? And is the idea that the scaffold integrates into the tissue essentially dissolves and goes away, but leaves kind of the formed natural tissue in its place?

Speaker 5

If you could kind of describe that process and help us understand the longevity of the process, meaning the scaffold is a means to an end, but not the end? Thanks.

Speaker 3

Yes. Thank you, Jason, for the question. This is Yihir speaking. We are not using growth factors. Growth factors eventually will be a regulatory nightmare, and we are avoiding the use of growth factors for this reason.

Speaker 3

What we do is a scaffold which is comprised of our collagen and other biomaterials. And the collagen itself has cell binding domains which will basically attract cells that will infiltrate from the surrounding tissue, which is in most cases going to be a fat tissue. And basically these cells will infiltrate into the implant and while they will proliferate and basically form a new fat tissue, at the same time there is a implant degradation. The degradation of the implant is done by 3 mechanisms of action. One of them is enzymatic degradation, the second one is hydrolysis and the third one is oxidation.

Speaker 3

So we are controlling these three mechanisms in a way that the implant, that the scaffold will serve its purpose in terms of load bearing until the newly grown tissue will basically take the responsibility on the load bearing and then the scaffold will degrade. The degradation time is between 6 to 12 months. This is enough time for the newly grown tissue to basically to take over the load bearing capacity of the scaffold. So this is the process in general. There might be in the future cases that we will need to assist the scaffold with the addition of autologous fat, which will be injected in addition to the administration of the scaffold.

Speaker 5

It's amazing. And I agree with you that growth factors at this early stage is kind of a nightmare. Going and it's amazing to me that within a year the scaffold is gone and the tissue integrates, how predictive are the animal models you're using in man? It strikes me that they would be very predictive. How confident are you of that?

Speaker 3

There are basically animal models and I cannot elaborate in great details about the models because it took us a while. We tried different large animal models And it took us a while and a lot of effort to develop the surgical protocol in a way that we today can say that the animal model is going to be quite predictive of the growth of the new tissue in human. In addition to that, we also developed a new discipline in the company, which is a breakthrough discipline. This is called modeling and simulation or computational biomechanics. And here we are using finite elements algorithms that we developed, which are enabling us to mimic the scaffold behavior in the human body after implantation under different loading conditions and also to assess the degradation kinetics of the implant.

Speaker 3

So basically, this is going to be also part of the submission package to the FDA, in addition to the preclinical study. So it's like complementary package, which is basically going to provide a good rationale to the FDA about the implant longevity, about the implant reliability, how we avoid fatigue points, for example, under different loading conditions in the body. And I think that altogether the preclinical package and the modeling and simulation should satisfy the FDA requirements in terms of the draft guidance.

Speaker 5

And going forward, are you talking to the major implant makers who must recognize that a paradigm shift is in front of them? And you must be thinking about the next level of BD deal with this product?

Speaker 3

Yes. Basically, this is a technology platform that can later on be expanded to other areas, for example, facial implants. To your question, yes, we are basically talking to major players in this arena, but we are not yet obligated to anybody. We want to take the product as far as possible to the market.

Speaker 5

I think as far as possible for definitive proof of concept to get the best business deal?

Speaker 3

Yes. You are correct.

Speaker 5

Thank you, guys. Appreciate it. Thanks for the update.

Speaker 3

Thank you.

Speaker 1

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

Operator

Thank you, operator. So we have no additional questions from the audience. So I will move forward and say that this is concluding the questions. And I will now turn the call back to Yihir Tal, OpenShift's Chief Executive Officer for any closing remarks. Yihir?

Speaker 3

Yes. Thank you, everyone. So Orlan's mission is to discover, develop and deliver collagen technology and regenerative medicine products to improve and prolong lives. We continue to carefully focus on our core programs and our supportive partners who advance this mission with the goal of creating products that enable the regeneration of tissues and organs. Our vision is to be the leaders in regenerative medicine, helping people live longer and better through our innovative collagen technology.

Speaker 3

In closing, I want to reiterate our upcoming goals for this year. For the remainder of 2024 and into the beginning of 2025, we plan to focus on advancing the development of the dermal filler program with AVI, generate additional safety and efficacy data related to our regenerative breast implants in support of future clinical studies and commercialization of this product candidate, continue to form collaborations with industry leaders for utilizing our RH Collagen and BioInk Technologies, and continue discussions related to potential collaborations on our existing programs and products. Thank you everyone for your time this morning and for joining us for today's conference call. We want to take to thank our very important and valued Coiplan team members who have contributed to another successful and productive quarter. Operator?

Speaker 1

Thank you. That now concludes today's conference call and you may now disconnect.

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Key Takeaways

  • Coal Plant has produced commercial-size regenerative breast implants using proprietary RH Collagen bioinks and a Stratasys Origin 1 3D bioprinter, with 200 cc preclinical studies underway and key data on tissue growth and implant degradation expected in Q4 2024 and Q1 2025.
  • In its collaboration with AbbVie, Coal Plant’s dermal filler candidate is in clinical development after triggering a $10 million milestone in Q2 2023, with up to $26 million more in potential payments plus royalties and an AbbVie right of first negotiation on a photocurable filler.
  • Q2 2024 GAAP revenues were $249,000 versus $10.2 million in Q2 2023 (reflecting the prior year milestone), resulting in a net loss of $4.2 million ($0.37 per share), while cash of $18.9 million provides a runway through the end of 2025.
  • Coal Plant released its first ESG report, outlining targets across climate action, energy efficiency, sustainable sourcing and governance to support environmental sustainability and long-term value creation.
  • For the remainder of 2024 and into early 2025, management plans to advance the AbbVie dermal filler, generate additional safety and efficacy data for the breast implant program, and pursue new collaborations leveraging its RH Collagen and BioInk technologies.
AI Generated. May Contain Errors.
Earnings Conference Call
CollPlant Biotechnologies Q2 2024
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