SmartKem, Inc.(SMTK) - 2025 Q1 - Quarterly Results

First Quarter 2025 Overview Smartkem reported Q1 2025 financial results, highlighting progress in commercialization, strategic partnerships, and initial product sales, alongside a detailed financial summary Introduction and CEO Commentary Smartkem reported its Q1 2025 financial results and provided a business update, with CEO Ian Jenks highlighting continued progress towards commercialization and strategic partnerships - Smartkem (Nasdaq: SMTK) reported Q1 2025 financial results and a business update on May 14, 2025[2] - CEO Ian Jenks emphasized continued progress toward commercialization[3] Business Highlights and Strategic Progress Smartkem advanced commercialization efforts in Q1 2025 through key partnerships, initial product sales, and strategic appointments, further introducing its MiP4 platform in April - Commenced project with AUO to develop the world's first rollable, transparent MicroLED display[3] - Made first sales of TRUFLEX® advanced semiconductor materials to Chip Foundation[3] - Signed a memorandum of understanding with RiTdisplay Corporation for the integration of Smartkem's OTFT process on RiTdisplay's Gen2.5 line[3] - Appointed Jonathan Watkins as the new COO[3] - Introduced the first application of the 'MiP4' platform at Touch Taiwan 2025 in April, showcasing a MicroLED Smart Backlight for higher brightness and better contrast in LCDs, particularly for automotive displays[4] First Quarter 2025 Financial Highlights Summary Smartkem reported $23 thousand in revenue for Q1 2025, a significant increase from nil in Q1 2024, primarily due to initial sales. However, cash and cash equivalents decreased, and operating expenses and loss from operations increased year-over-year First Quarter 2025 Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Cash and cash equivalents (as of period end) | $3.9M | $7.1M (Dec 31, 2024) | -$3.2M | | Revenues | $23K | $0 | +$23K | | Operating expenses | $3.4M | $2.7M | +$0.7M | | Loss from operations | $3.1M | $2.4M | +$0.7M | Company and Technology Profile Smartkem leverages its proprietary TRUFLEX® organic transistor technology for advanced displays and chip packaging, supported by global R&D and an extensive patent portfolio About Smartkem and TRUFLEX® Technology Smartkem aims to revolutionize electronics with its proprietary TRUFLEX® organic transistor technology, applicable across various display types, advanced chip packaging, and sensors - Smartkem is developing a new class of transistor technology using proprietary advanced semiconductor materials[8] - TRUFLEX® materials can be used in next-generation MicroLED, LCD, and AMOLED displays, as well as advanced computer and AI chip packaging, and new types of sensors[8] Product Applications and Development Smartkem's MiP4 platform is designed to enhance LCD backlights by offering higher brightness, lower power, and reduced production costs, while its low-temperature process for MicroLED displays aims to reduce manufacturing defects and costs, making MicroLEDs more commercially viable across multiple sectors - Smartkem's MiP4 is designed to replace existing MiniLED packages in LCD backlights and signage applications, offering higher brightness at lower power, lower production costs, and compatibility with existing MiniLED die bonding equipment[10] - For MicroLED display applications, Smartkem's low-temperature process allows liquid transistors to be poured directly onto MicroLEDs, eliminating high-cost, low-yield manufacturing processes[11] - This innovation is expected to reduce defects, enhance yield, and integrate seamlessly into existing manufacturing infrastructure, potentially making MicroLED displays commercially viable across sectors like smartphones, wearables, automotives, and digital signage[11] Operational Footprint and Intellectual Property Smartkem conducts R&D in Manchester, UK, prototyping in Sedgefield, UK, and operates a field application office in Taiwan, while actively developing commercial-scale production processes and holding an extensive IP portfolio of 138 granted patents - Smartkem designs and develops materials at its R&D facility in Manchester, UK, and provides prototyping services at the Centre for Process Innovation (CPI) in Sedgefield, UK[12] - The company operates a field application office in Hsinchu, Taiwan, close to collaboration partner ITRI[12] - Smartkem is developing a commercial-scale production process and Electronic Design Automation (EDA) tools[12] - The company has an extensive IP portfolio including 138 granted patents across 17 patent families, 16 pending patents, and 40 codified trade secrets[13] Consolidated Financial Statements The consolidated financial statements detail Smartkem's Q1 2025 balance sheet, showing decreased assets and increased net loss, alongside operational performance Consolidated Balance Sheets As of March 31, 2025, Smartkem's total assets decreased to $5.91 million from $8.90 million at December 31, 2024, primarily driven by a reduction in cash and cash equivalents. Total liabilities also saw a slight decrease Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Cash and cash equivalents | $3,881 | $7,141 | -$3,260 | | Total current assets | $5,636 | $8,509 | -$2,873 | | Total assets | $5,910 | $8,904 | -$2,994 | | Total current liabilities | $2,102 | $2,288 | -$186 | | Total liabilities | $2,123 | $2,313 | -$190 | | Total stockholders' equity | $3,787 | $6,591 | -$2,804 | Consolidated Statements of Operations and Comprehensive Loss For the three months ended March 31, 2025, Smartkem reported revenue of $23 thousand, up from nil in the prior year. However, net loss increased to $2.13 million from $1.70 million (excluding preferred stock deemed dividends in 2024), driven by higher operating expenses, particularly in R&D and G&A. Basic and diluted net loss per common share improved significantly due to a higher weighted average share count Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenue | $23 | $0 | +$23 | | Gross profit | $22 | $0 | +$22 | | Research and development expenses | $1,497 | $1,276 | +$221 | | General and administrative expenses | $2,009 | $1,362 | +$647 | | Total operating expenses | $3,411 | $2,651 | +$760 | | Loss from operations | $(3,138) | $(2,449) | -$(689) | | Net loss | $(2,134) | $(1,696) | -$(438) | | Basic and diluted net loss per common share | $(0.32) | $(3.21) | +$2.89 | | Weighted average shares outstanding | 6,649,603 | 2,735,375 | +3,914,228 | Legal and Investor Information This section outlines forward-looking statements, emphasizing inherent risks and uncertainties, and provides essential contact information for investors and media Forward-Looking Statements The report contains forward-looking statements regarding Smartkem's market position, product development, manufacturing, sales, and partnerships, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially - Statements regarding market position, market opportunity, product development, manufacturing, sales, and relations with partners and investors are forward-looking[14] - These statements are based on current expectations, estimates, and projections but involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict[14] - Actual results may differ materially from forward-looking statements due to factors described in the Company's SEC filings, and the Company undertakes no obligation to revise or update this information[14] Investor and Media Relations Contact information is provided for industry representatives, media inquiries, and financial analysts and investors - Selena Kirkwood is the Head of Communications for Smartkem, serving as the contact for Industry Representatives and Media[15] - David Barnard, CFA, of Alliance Advisors Investor Relations, is the contact for Analysts and Investors[15]