CollPlant(CLGN) - 2023 Q2 - Quarterly Report

Executive Summary & Highlights CollPlant Biotechnologies reported Q1 2023 financial results, highlighting progress in strategic collaborations, successful completion of a large-animal study for regenerative breast implants, and strong sales of rhCollagen-based products Q1 2023 Key Achievements CollPlant Biotechnologies announced its first quarter 2023 financial results and provided a corporate update, emphasizing continued progress in strategic collaborations, successful completion of a large-animal study for 3D bioprinted regenerative breast implants, and a strong sales trajectory for its rhCollagen-based products - Continued advancement of strategic collaboration with AbbVie to develop dermal and soft tissue filler products using CollPlant's recombinant human Collagen[17] - Announced a collaborative agreement with Stratasys, a world-leader in 3D printing, to utilize their proprietary 3D printer technology with CollPlant's rhCollagen-based bioinks for high-resolution, scalable bioprinting of scaffolds[17] - Successfully completed the first large-animal study for 3D bioprinted regenerative breast implants and is readying sites to begin a second large-animal study planned in the second half of 2023[17][29][30] - Reported a strong positive sales trajectory for rhCollagen based products[29] Corporate Update CollPlant advanced its 3D bioprinted regenerative breast implant program, expanded strategic collaborations with Stratasys and AbbVie, and diversified its rhCollagen-based bioink portfolio for various medical applications Recent Corporate Highlights In January 2023, CollPlant successfully completed a large-animal study for its 3D bioprinted regenerative breast implants, demonstrating progressive tissue regeneration and neovascular networks with no adverse events. A follow-up study is planned for the second half of 2023 to support human studies and future commercialization - Successfully completed a large-animal study for 3D bioprinted regenerative breast implants in January 2023, showing progressive tissue regeneration and neovascular networks after three months with no adverse events[18] - Planning to initiate a follow-up, second, large-animal study in the second half of 2023 to support subsequent human studies and future product commercialization[18] Collaboration Updates CollPlant entered a joint development and commercialization agreement with Stratasys in April 2023 to bio-fabricate human tissues and organs, with an initial focus on regenerative breast implants. Additionally, a long-term preclinical study for CollPlant's photocurable dermal and soft-tissue filler demonstrated superior tissue regeneration and volume retention, granting AbbVie the right of first negotiation for a worldwide exclusive license - In April 2023, CollPlant announced a joint development and commercialization agreement with Stratasys to collaborate on bio-fabricating human tissues and organs using Stratasys' P3™ 3D technology-based bioprinter and CollPlant's rh-Collagen-based bioinks[19] - The first project with Stratasys focuses on developing an industrial-scale solution for CollPlant's regenerative breast implants program[19] - Twelve-month study results from a long-term preclinical study for CollPlant's photocurable dermal and soft-tissue filler demonstrated superior tissue regeneration, lifting capacity, and volume retention compared to a commercial standard[20] - CollPlant has granted its global pharmaceutical partner, AbbVie, the right of first negotiation to obtain a worldwide exclusive license to this product, with potential for additional milestone payments and future royalties, expecting the first milestone in 2023[20][32] Program Development CollPlant is developing breast implants composed of its proprietary plant-derived rhCollagen and other biomaterials, aiming to regenerate breast tissue without eliciting an immune response, offering a revolutionary alternative for aesthetic and reconstructive procedures. The company is also developing a photocurable regenerative soft tissue filler that combines rhCollagen with hyaluronic acid for contouring effects in aesthetic medicine - CollPlant's breast implants, comprised of proprietary plant-derived rhCollagen and other biomaterials, are expected to regenerate breast tissue without eliciting immune response, potentially providing a revolutionary alternative for aesthetic and reconstructive procedures[31] - CollPlant is developing a photocurable regenerative soft tissue filler for aesthetic medicine, based on a holistic platform technology combining rhCollagen properties with hyaluronic acid for contouring effects[33] - CollPlant remains engaged in partnering discussions with several industry leaders and academic institutions interested in its rhCollagen technology and expertise in 3D bioprinting to develop therapeutics and medical applications[49] Commercial Portfolio of Bioink Solutions CollPlant expanded its rhCollagen-based bioink portfolio in January 2023 by adding Collink.3D-50L, the first bioink available in powder form, which offers enhanced operational flexibility for printing soft and hard tissues. The company is also collaborating to co-develop a bioprinted human intestine model for drug discovery and personalized treatment of ulcerative colitis - In January 2023, CollPlant expanded its commercial portfolio of rhCollagen-based bioinks by adding Collink.3D-50L, the first bioink available in powder form, providing enhanced operational flexibility for end-users due to its mechanical properties for soft and hard tissues[50] - CollPlant is developing a diagnostic tool for personalized medicine, specifically a bioprinted human intestine model for drug discovery and personalized treatment of ulcerative colitis, through a collaboration agreement with Tel-Aviv University and Sheba Medical Center[22] - CollPlant's new bioinks expand fundamental optionality, enabling specificity and flexibility for end-users in a wide range of 3D bioprinting applications, including drug discovery, drug screening, tissue testing, and the development of transplantable tissues and organs[35] First Quarter Financial Results (GAAP) CollPlant reported significant revenue growth in Q1 2023, reduced GAAP and non-GAAP net losses, and maintained a strong cash position despite increased operating cash outflow Revenue and Cost of Revenue CollPlant's GAAP revenues for the first quarter ended March 31, 2023, significantly increased to $433,000, primarily driven by higher sales of its rhCollagen. Correspondingly, the GAAP cost of revenue also rose to $325,000, reflecting the increased sales volume and royalties Revenue and Cost of Revenue (USD thousands) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (YoY) | | :----------------- | :---------------------- | :---------------------- | :----------- | | Revenues | 433 | 66 | +$367 (+556%) | | Cost of Revenues | 325 | 31 | +$294 (+948%) | | Gross Profit | 108 | 35 | +$73 (+209%) | - The increase in cost of revenue is mainly attributed to the rhCollagen sales and royalties to the Israel Innovation Authority[23] Operating Expenses GAAP operating expenses for Q1 2023 decreased to $3.6 million from $3.8 million in Q1 2022. On a non-GAAP basis, operating expenses also saw a reduction to $3.1 million from $3.4 million, reflecting the exclusion of certain non-cash expenses Operating Expenses (USD thousands) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (YoY) | | :------------------------- | :---------------------- | :---------------------- | :----------- | | GAAP Operating Expenses | 3,600 | 3,800 | -$200 (-5.3%) | | Non-GAAP Operating Expenses| 3,100 | 3,400 | -$300 (-8.8%) | Net Loss and EPS CollPlant reported a reduced GAAP net loss of $3.7 million, or $0.33 basic loss per share, for Q1 2023, down from $3.9 million, or $0.36 basic loss per share, in Q1 2022. The non-GAAP net loss also decreased to $3.3 million, or $0.29 basic loss per share. Financial expenses, net, increased due to higher exchange rate expenses and decreased interest income Net Loss and EPS (USD thousands) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (YoY) | | :----------------------------- | :---------------------- | :---------------------- | :----------- | | GAAP Net Loss | 3,715 | 3,860 | -$145 (-3.8%) | | GAAP Basic Net Loss per Share | 0.33 | 0.36 | -$0.03 (-8.3%) | | Non-GAAP Net Loss | 3,306 | 3,493 | -$187 (-5.4%) | | Non-GAAP Basic Net Loss per Share| 0.29 | 0.32 | -$0.03 (-9.4%) | - GAAP financial expenses, net, increased to $196,000 in Q1 2023 from $92,000 in Q1 2022, mainly attributed to an increase in exchange rate expenses from cash and cash equivalents and a decrease in income interest received from short-term cash deposits[24] Liquidity and Cash Flow As of March 31, 2023, cash, cash equivalents, and short-term deposits totaled $26.5 million. Cash used in operating activities slightly increased to $3.4 million. Cash used in investing activities significantly decreased to $145,000, primarily due to the absence of large short-term deposit repayments seen in Q1 2022. Cash provided by financing activities decreased to $803,000 Liquidity and Cash Flow (USD thousands) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (YoY) | | :----------------------------------- | :---------------------- | :---------------------- | :----------- | | Cash, cash equivalents & short-term deposits (as of March 31) | 26,500 | N/A | N/A | | Cash used in operating activities | (3,400) | (3,200) | -$200 (-6.3%) | | Cash used in investing activities | (145) | 29,800 | -$29,945 (-100.2%) | | Cash provided by financing activities| 803 | 1,500 | -$697 (-46.5%) | - The decrease in cash provided by investing activities is mainly attributed to the repayment of short-term cash deposits during the first quarter of 2022, which did not recur in Q1 2023[39] - Cash provided by financing activities is mainly attributed to proceeds from the exercise of warrants into shares[26] Condensed Consolidated Financial Statements CollPlant's Q1 2023 financial statements show a decrease in total assets and shareholders' equity, with increased revenues, reduced net loss, and changes in cash flow from investing activities Condensed Consolidated Balance Sheets As of March 31, 2023, CollPlant's total assets were $35.76 million, a decrease from $37.77 million at December 31, 2022. This change was primarily driven by a reduction in cash and cash equivalents within current assets, partially offset by an increase in non-current assets. Total liabilities increased slightly, while total shareholders' equity decreased Condensed Consolidated Balance Sheets (USD thousands) | Metric (USD thousands) | March 31, 2023 (Unaudited) | December 31, 2022 (Audited) | Change | | :--------------------------------- | :------------------------- | :-------------------------- | :----- | | Cash and cash equivalents | 26,528 | 29,653 | (3,125) | | Total current assets | 29,063 | 31,658 | (2,595) | | Total non-current assets | 6,696 | 6,110 | 586 | | Total assets | 35,759 | 37,768 | (2,009) | | Total current liabilities | 2,921 | 3,105 | (184) | | Total non-current liabilities | 2,948 | 2,382 | 566 | | Total liabilities | 5,869 | 5,487 | 382 | | Total shareholders' equity | 29,890 | 32,281 | (2,391) | | Total liabilities and shareholders' equity | 35,759 | 37,768 | (2,009) | Condensed Consolidated Statements of Operations For the first quarter ended March 31, 2023, CollPlant reported revenues of $433,000 and a gross profit of $108,000. Operating expenses, including R&D and G&A, totaled $3.6 million, resulting in an operating loss of $3.5 million. The net loss for the quarter was $3.7 million, or $0.33 per basic and diluted ordinary share Condensed Consolidated Statements of Operations (USD thousands) | Metric (USD thousands) | Q1 2023 (Unaudited) | Q1 2022 (Unaudited) | | :--------------------------------- | :------------------ | :------------------ | | Revenues | 433 | 66 | | Cost of revenues | 325 | 31 | | Gross Profit | 108 | 35 | | Research and development | 2,102 | 2,242 | | General, administrative and marketing | 1,525 | 1,561 | | Total operating loss | 3,519 | 3,768 | | Financial expenses, net | 196 | 92 | | Net loss | 3,715 | 3,860 | | Basic net loss per ordinary share | 0.33 | 0.36 | | Diluted net loss per ordinary share| 0.33 | 0.36 | | Weighted average ordinary shares outstanding (basic/diluted) | 11,270,948 | 10,783,065 | Condensed Consolidated Statements of Cash Flows In Q1 2023, CollPlant's net cash used in operating activities was $3.45 million. Investing activities resulted in a net cash outflow of $145,000, a significant change from the $29.89 million provided in Q1 2022, primarily due to the absence of short-term deposit repayments. Financing activities provided $803,000, mainly from the exercise of warrants Condensed Consolidated Statements of Cash Flows (USD thousands) | Metric (USD thousands) | Q1 2023 (Unaudited) | Q1 2022 (Unaudited) | | :----------------------------------------- | :------------------ | :------------------ | | Net cash used in operating activities | (3,450) | (3,212) | | Net cash provided by (used in) investing activities | (145) | 29,885 | | Net cash provided by financing activities | 803 | 1,474 | | Increase (decrease) in cash and cash equivalents and restricted deposits | (2,792) | 28,147 | | Cash and cash equivalents and restricted deposits at end of period | 26,790 | 41,293 | Appendices to Condensed Consolidated Statements of Cash Flows This section provides supplementary information on non-cash investing and financing activities, such as obtaining right-of-use assets in exchange for lease liabilities and the capitalization of share-based compensation to inventory. It also includes a reconciliation of cash, cash equivalents, and restricted cash at the end of the period Non-Cash Investing and Financing Activities (USD thousands) | Activity (USD thousands) | Q1 2023 | Q1 2022 | | :----------------------------------------------------- | :------ | :------ | | Obtaining right of use assets in exchange for a lease liability | 788 | 24 | | Capitalization of Share-based compensation to inventory| 7 | - | Reconciliation of Cash, Cash Equivalents, and Restricted Deposits (USD thousands) | Item (USD thousands) | Q1 2023 | Q1 2022 | | :----------------------------------------------------- | :------ | :------ | | Cash and cash equivalents | 26,528 | 41,072 | | Restricted deposits (including long term) | 262 | 221 | | Total cash and cash equivalents and restricted deposits| 26,790 | 41,293 | Reconciliation of GAAP to Non-GAAP Financial Measures CollPlant provides non-GAAP financial measures, excluding non-cash expenses like share-based compensation and operating lease changes, to offer a clearer view of its operational performance Non-GAAP Financial Measures Explanation CollPlant presents non-GAAP financial measures for operating costs and expenses, operating income, net loss, and basic and diluted net loss per share, which exclude non-cash expenses such as share-based compensation and changes in operating lease accounts. Management believes these non-GAAP measures provide meaningful supplemental information for evaluating the company's performance and comparing it to historical results - Non-GAAP financial measures exclude the effects of non-cash expense for share-based compensation to employees, directors and consultants, and change in operating lease accounts[15] - CollPlant's management believes these non-GAAP measures provide meaningful supplemental information regarding the Company's performance, enhancing the ability to evaluate operating costs, comprehensive income, and income per share, and to compare them to historical results[15][16] Reconciliation Table The reconciliation table details the adjustments made to GAAP figures to derive non-GAAP operating costs and expenses, operating loss, net loss, and basic/diluted net loss per share for the three months ended March 31, 2023, and 2022, primarily by adding back share-based compensation and adjusting for operating lease accounts Reconciliation of GAAP to Non-GAAP Financial Measures (USD thousands) | Metric (USD thousands) | Q1 2023 | Q1 2022 | | :------------------------------------------------------- | :------ | :------ | | GAAP gross profit | 108 | 35 | | GAAP operating costs and expenses | 3,627 | 3,803 | | Change of operating lease accounts (adjustment) | 21 | 94 | | Share-based compensation (adjustment) | (514) | (461) | | Non-GAAP operating costs and expenses | 3,134 | 3,436 | | GAAP operating loss | 3,519 | 3,768 | | Non-GAAP operating loss | 3,026 | 3,401 | | GAAP net loss | 3,715 | 3,860 | | Change of operating lease accounts (adjustment) | 105 | 94 | | Share-based compensation (adjustment) | (514) | (461) | | Non-GAAP net loss | 3,306 | 3,493 | | GAAP Basic net loss per ordinary share | 0.33 | 0.36 | | Non-GAAP Basic net loss per ordinary share | 0.29 | 0.32 | About CollPlant CollPlant is a regenerative and aesthetic medicine company leveraging proprietary plant-derived recombinant human collagen for 3D bioprinting of tissues and organs, and medical aesthetics Company Overview CollPlant is a regenerative and aesthetic medicine company focused on 3D bioprinting of tissues and organs, and medical aesthetics. Its products are based on proprietary recombinant human collagen (rhCollagen) produced using plant-based genetic engineering technology, addressing diverse fields of tissue repair, aesthetics, and organ manufacturing. In 2021, CollPlant entered a development and global commercialization agreement for dermal and soft tissue fillers with Allergan, an AbbVie company - CollPlant is a regenerative and aesthetic medicine company focused on 3D bioprinting of tissues and organs, and medical aesthetics[13] - The Company's products are based on its rhCollagen (recombinant human collagen) produced with CollPlant's proprietary plant-based genetic engineering technology[13] - In 2021, CollPlant entered into a development and global commercialization agreement for dermal and soft tissue fillers with Allergan, an AbbVie company, the global leader in the dermal filler market[14] Safe Harbor Statements This section outlines forward-looking statements regarding CollPlant's future, emphasizing inherent risks and uncertainties that could cause actual results to differ materially Forward-Looking Statements and Risks This section contains forward-looking statements regarding CollPlant's future objectives, plans, and strategies, which are not guarantees of future performance and are subject to significant risks and uncertainties. These risks include the company's history of losses, need for additional capital, ability to achieve favorable clinical trial results, regulatory approvals, commercial success, intellectual property protection, economic conditions, and competition, which could cause actual results to differ materially - Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially[1][10] - Many factors could cause actual results to differ, including the Company's history of significant losses, need to raise additional capital, ability to obtain favorable pre-clinical and clinical trial results, regulatory action, commercial success and market acceptance, ability to establish partnerships, reliance on third parties for manufacturing, intellectual property protection, unfavorable economic conditions, and competition[1] - CollPlant does not undertake and specifically disclaims any obligation to update or revise any forward-looking statements[1] Contacts & Conference Call Information This section provides details for CollPlant's Q1 2023 financial results conference call and contact information for company and investor relations inquiries Conference Call Details CollPlant held a conference call on May 24, 2023, at 10:00 am U.S. ET to discuss its first quarter 2023 financial results and provide corporate updates. Dial-in information was provided for U.S., international, and Israel investors, with an option to submit questions to management in advance - A conference call to discuss first quarter 2023 financial results and corporate updates was held on May 24, 2023, at 10:00 am U.S. ET[17][40] - Dial-in information was provided for U.S. investors (1-877-407-9716), investors outside of the U.S. (1-201-493-6779), and Israel investors (1-809-406-247), with Conference ID: 13737936[27][55] - Investors could submit questions to management in advance of the call via email[40][55] Company Contacts Contact information for CollPlant's Deputy CEO & CFO, Eran Rotem, and Investor Relations through LifeSci Advisors, John Mullaly, is provided for inquiries - Contact for CollPlant: Eran Rotem, Deputy CEO & CFO, Tel: +972-73-2325600, Eran@collplant.com[11] - Contact for Investors: LifeSci Advisors, John Mullaly, jmullaly@lifesciadvisors.com[11]