SmartKem, Inc.(SMTK) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Smartkem's Q2 2025 results show decreased cash and revenue, increased operating expenses, and a larger operating loss, alongside advancements in MicroLED and AI chip packaging Second Quarter 2025 and Recent Highlights Smartkem's Q2 2025 results show decreased cash and revenue, increased operating expenses, and a larger operating loss, alongside advancements in MicroLED and AI chip packaging Operational Highlights Smartkem introduced a 12.3-inch MicroLED Smart Backlight demonstration, signed a preliminary joint development agreement with Manz Asia for inkjet dielectric inks, collaborated with Manz Asia for AI chip packaging solutions, and secured a new UK patent for a MicroLED manufacturing process - Introduced a 12.3-inch MicroLED Smart Backlight demonstration targeting next-generation automotive LCD displays[6] - Signed a preliminary joint development agreement with Manz Asia to co-develop inkjet dielectric inks for advanced chip packaging[6] - Secured a new UK patent for a MicroLED manufacturing process that enables wafer reuse and supports its expanding IP portfolio[6] Financial Highlights In Q2 2025, Smartkem's cash and cash equivalents significantly decreased to $1.2 million from $7.1 million at year-end 2024, with revenue declining to $32 thousand from $40 thousand YoY. Operating expenses rose to $4.7 million, primarily due to increased R&D and G&A costs, leading to an operating loss of $4.4 million Cash and cash equivalents Summary | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change (in millions) | | :----- | :-------------------------- | :------------------------------ | :------------------- | | Cash and cash equivalents | $1.2 | $7.1 | -$5.9 | - The company believes the cash balance at June 30, 2025, will be sufficient to fund operations through September 30, 2025[6] Revenue Summary | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change (in thousands) | | :----- | :--------------------- | :--------------------- | :------------------------ | | Revenue | $32 | $40 | -$8 | - Revenue decrease primarily resulted from sales of OTFT backplanes and TRUFLEX® materials for customer assessment and development purposes[6] Operating expenses Summary | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YoY Change (in millions) | | :----- | :-------------------- | :-------------------- | :----------------------- | | Operating expenses | $4.7 | $3.0 | +$1.7 | - Increase in operating expenses was due to a $1.5 million increase in R&D expenses (primarily from CPI Framework agreement extension and higher personnel expenses) and $0.6 million higher G&A expenses (related to professional services, including $0.3 million non-cash)[6] Loss from operations Summary | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YoY Change (in millions) | | :----- | :-------------------- | :-------------------- | :----------------------- | | Loss from operations | $4.4 | $2.8 | +$1.6 | About Smartkem Smartkem develops TRUFLEX® semiconductor polymers for displays and chip packaging, operating R&D in the UK, a field office in Taiwan, and holding an extensive IP portfolio Company Overview and Technology Smartkem aims to revolutionize electronics with its TRUFLEX® semiconductor polymers, enabling low-temperature printing for cost-effective, high-performance displays across MicroLED, LCD, and AMOLED technologies, as well as applications in advanced computer and AI chip packaging, sensors, and logic - Smartkem is developing a new class of transistor technology using proprietary advanced semiconductor materials[5] - TRUFLEX® semiconductor polymers enable low temperature printing processes compatible with existing manufacturing infrastructure to deliver low-cost, high-performance displays[5] - The semiconductor platform can be used in a range of display technologies including MicroLED, LCD and AMOLED, as well as in applications in advanced computer and AI chip packaging, sensors, and logic[5] Operations and Intellectual Property Smartkem conducts R&D and material development in Manchester, UK, with prototyping services at CPI in Sedgefield, UK, and a field application office in Hsinchu, Taiwan. The company is also developing commercial-scale production processes and EDA tools and holds an extensive IP portfolio of 140 granted patents, 14 pending patents, and 40 codified trade secrets - Smartkem designs and develops its materials at its research and development facility in Manchester, UK and provides prototyping services at the Centre for Process Innovation (CPI in Sedgefield, UK)[7] - It operates a field application office in Hsinchu, Taiwan, close to collaboration partner, The Industrial Technology Research Institute (ITRI)[7] - The company has an extensive IP portfolio including 140 granted patents across 17 patent families, 14 pending patents and 40 codified trade secrets[8] Financial Statements Smartkem's Q2 2025 balance sheet shows decreased assets and increased liabilities, resulting in a stockholders' deficit, while the income statement reflects an improved net loss due to foreign currency gains Consolidated Balance Sheets As of June 30, 2025, Smartkem's total assets decreased to $4.28 million from $8.90 million at December 31, 2024, primarily driven by a significant reduction in cash and cash equivalents. Total liabilities increased to $4.41 million from $2.31 million, resulting in a stockholders' deficit of $(0.13) million compared to equity of $6.59 million Cash and cash equivalents Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------- | :--------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $1,152 | $7,141 | -$5,989 | | Total current assets | $3,430 | $8,509 | -$5,079 | | Total assets | $4,282 | $8,904 | -$4,622 | | Total current liabilities | $3,988 | $2,288 | +$1,700 | | Total liabilities | $4,409 | $2,313 | +$2,096 | | Total stockholders' (deficit) / equity | $(127) | $6,591 | -$6,718 | Consolidated Statements of Operations and Comprehensive Loss Smartkem's Q2 2025 net loss improved to $(2.40) million from $(3.10) million YoY, driven by a foreign currency gain despite lower revenue and higher operating expenses, with basic net loss per share improving to $(0.30) Revenue Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue | $32 | $40 | $55 | $40 | | Gross profit | $4 | $8 | $26 | $8 | | Operating expenses | $4,655 | $3,021 | $8,066 | $5,672 | | Loss from operations | $(4,372) | $(2,777) | $(7,510) | $(5,226) | | Gain / (loss) on foreign currency transactions (non-operating) | $1,970 | $(243) | $2,939 | $(249) | | Net loss | $(2,400) | $(3,099) | $(4,534) | $(4,795) | | Basic net loss per common share (per share) | $(0.30) | $(0.98) | $(0.62) | $(1.63) | - The decrease in net loss for Q2 2025 compared to Q2 2024 was significantly influenced by a $1.97 million gain on foreign currency transactions in 2025, contrasting with a $(0.24) million loss in 2024[16] - Research and development expenses increased from $1.16 million in Q2 2024 to $2.43 million in Q2 2025[16] Additional Information This section outlines forward-looking statements, subject to risks and uncertainties, and provides contact information for Smartkem's communications and investor relations Forward-Looking Statements This report includes forward-looking statements on Smartkem's market, products, and partnerships, subject to known and unknown risks and uncertainties, with no obligation for future updates - Statements about market position, product development, manufacturing, sales, and partner relations are forward-looking[10] - Forward-looking statements involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and may be beyond the Company's control[10] - The Company undertakes no obligation to revise or update information in this release to reflect events or circumstances in the future, even if new information becomes available[10] Contacts Contact information is provided for Selena Kirkwood, Head of Communications for Smartkem, and David Barnard, CFA, of Alliance Advisors Investor Relations for U.S. investors - Selena Kirkwood is the Head of Communications for Smartkem[11] - David Barnard, CFA, of Alliance Advisors Investor Relations, is the contact for U.S. Investors[11]