T2 Biosystems(US:TTOO)2021-08-09 20:17PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) The unaudited financial statements for T2 Biosystems, Inc. as of June 30, 2021, report a net loss of $23.1 million, total assets of $78.9 million, and liabilities of $69.9 million, with significant going concern doubt Condensed Consolidated Balance Sheets As of June 30, 2021, total assets were $78.9 million, total liabilities $69.9 million, and stockholders' equity $9.0 million, with increased cash and notes payable Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $32,708 | $16,793 | | Total current assets | $63,859 | $53,584 | | Total assets | $78,898 | $79,078 | | Liabilities & Equity | | | | Total current liabilities | $9,345 | $9,800 | | Notes payable | $46,487 | $45,235 | | Total liabilities | $69,889 | $70,352 | | Total stockholders' equity | $9,009 | $8,726 | Condensed Consolidated Statements of Operations and Comprehensive Loss Total revenue for H1 2021 increased to $13.7 million, driven by product sales, resulting in a net loss of $23.1 million, an improvement from the prior year Statement of Operations Summary (in thousands) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Total revenue | $13,650 | $5,097 | | - Product revenue | $8,328 | $2,086 | | - Contribution revenue | $5,322 | $3,000 | | Total costs and expenses | $34,132 | $27,497 | | Loss from operations | $(20,482) | $(22,400) | | Net loss | $(23,135) | $(25,634) | | Net loss per share | $(0.15) | $(0.27) | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $19.3 million, offset by $14.9 million from investing and $20.3 million from financing, leading to a $15.9 million cash increase Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(19,305) | $(28,231) | | Net cash provided by (used in) investing activities | $14,948 | $(9,370) | | Net cash provided by financing activities | $20,272 | $53,097 | | Net increase in cash, cash equivalents and restricted cash | $15,915 | $15,496 | Notes to Condensed Consolidated Financial Statements Notes detail business, accounting policies, and financial arrangements, highlighting substantial doubt about going concern, BARDA contract revenue, CRG term loan, and equity offerings - The company has concluded that substantial doubt exists about its ability to continue as a going concern for at least 12 months from the issuance of the financial statements, as management's plans to raise sufficient funding or reduce expenditures are considered less than probable33 - The company has a milestone-based contract with BARDA, initially valued at $6.0 million with a potential value up to $69.0 million, with revenue from this contract being $5.3 million for the first six months of 2021125127 - The company has a Term Loan Agreement with CRG, which requires maintaining a minimum cash balance of $5.0 million and meeting certain revenue targets, which were met as of June 30, 20213197 - In July 2021, shareholders approved an increase in authorized common stock from 200 million to 400 million shares137 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue growth from the T2SARS-CoV-2 panel, reiterating substantial doubt about going concern due to historical losses and the need for future funding - The company is an in vitro diagnostics leader in the rapid detection of sepsis-causing pathogens using its proprietary T2MR technology, with key products including T2Dx Instrument, T2Candida, T2Bacteria, and the T2SARS-CoV-2 Panel143 - The company has never been profitable, with an accumulated deficit of $446.1 million as of June 30, 2021, and future operations depend on raising additional capital151 - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern for at least one year, as plans to secure funding or reduce spending are not considered probable156 Results of Operations Total revenue for H1 2021 increased 168% to $13.7 million, driven by product and contribution revenue, while net loss improved to $23.1 million Comparison of Results for the Six Months Ended June 30 (in thousands) | Line Item | 2021 | 2020 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $13,650 | $5,097 | $8,553 | 167.8% | | Product revenue | $8,328 | $2,086 | $6,242 | 299.2% | | Contribution revenue | $5,322 | $3,000 | $2,322 | 77.4% | | Total costs and expenses | $34,132 | $27,497 | $6,635 | 24.1% | | Cost of product revenue | $10,621 | $6,971 | $3,650 | 52.4% | | Research and development | $10,064 | $8,566 | $1,498 | 17.5% | | Selling, general and administrative | $13,447 | $11,960 | $1,487 | 12.4% | | Loss from operations | $(20,482) | $(22,400) | $1,918 | -8.6% | | Net loss | $(23,135) | $(25,634) | $2,499 | -9.7% | - The increase in product revenue for H1 2021 was driven primarily by higher consumables revenue of $5.8 million, mainly from the T2SARS-CoV-2 Panel which launched in Q3 2020190 - The increase in R&D expenses was driven by higher lab/facility expenses ($0.6 million), IT support ($0.5 million), and payroll ($0.3 million), largely related to the BARDA agreement194 Liquidity and Capital Resources As of June 30, 2021, the company held $32.7 million in cash, raised $20.0 million from equity offerings, but faces substantial doubt about its going concern ability - The company had an accumulated deficit of $446.1 million as of June 30, 2021200 - On March 31, 2021, the company entered into a new Sales Agreement with Canaccord to sell up to $75.0 million of common stock, having sold shares for net proceeds of $20.0 million by June 30, 2021204 - The company's Term Loan with CRG requires maintaining a $5.0 million minimum cash balance, and while compliance is expected, assurances cannot be provided without additional funding213 Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, T2 Biosystems is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, T2 Biosystems is not required to provide information for this item234 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2021236 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls237 PART II OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal claims or actions that would adversely affect its financial condition or operations - There are currently no claims or legal actions that would have a material adverse effect on the company's financial condition or results of operations240 Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020241 Other Items (Items 2, 3, 4, 5) Items 2, 3, 4, and 5 report no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and no other information - Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are all reported as 'None' or 'Not applicable'242243244245