Orgenesis(ORGS) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (unaudited) Orgenesis Inc reported Q1 2022 total revenues of $7.2 million, a net loss of $4.0 million, and negative operating cash flow, with total assets decreasing to $58.5 million Condensed Consolidated Balance Sheets Total assets decreased to $58.5 million by March 31, 2022, driven by reduced cash, while total liabilities increased to $23.7 million, leading to a decline in total equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,123 | $5,473 | | Accounts receivable, net | $17,075 | $15,245 | | Total current assets | $24,010 | $25,758 | | Total non-current assets | $34,528 | $34,083 | | TOTAL ASSETS | $58,538 | $59,841 | | Liabilities & Equity | | | | Total current liabilities | $15,253 | $15,365 | | Total long-term liabilities | $8,428 | $5,845 | | TOTAL LIABILITIES | $23,681 | $21,210 | | Total equity | $34,857 | $38,631 | | TOTAL LIABILITIES AND EQUITY | $58,538 | $59,841 | Condensed Consolidated Statements of Loss and Comprehensive Loss The company reported a net loss of $4.0 million for Q1 2022, a significant increase from $165 thousand in Q1 2021, driven by decreased revenues and higher R&D expenses Consolidated Statements of Loss (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total revenues | $7,212 | $9,389 | | Cost of development services and R&D expenses | $6,651 | $5,357 | | Operating loss (income) | $3,236 | $(56) | | Net loss | $3,997 | $165 | | Net loss attributable to Orgenesis Inc | $4,009 | $219 | | Basic and diluted loss per share | $0.16 | $0.01 | Condensed Consolidated Statements of Changes in Equity Total equity decreased by $3.8 million to $34.9 million in Q1 2022, primarily due to a comprehensive loss of $4.1 million - Total equity decreased from $38.6 million to $34.9 million in Q1 2022[17] - The decrease was primarily driven by a comprehensive loss of $4.1 million for the period[17] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $2.8 million, with total cash decreasing by $4.4 million to $1.6 million due to significant investing outflows Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,792) | $(4,547) | | Net cash used in investing activities | $(1,613) | $(539) | | Net cash provided by financing activities | $1 | $1,898 | | Net change in cash | $(4,404) | $(3,188) | - Cash used in investing activities increased significantly, mainly due to a $1.5 million loan granted to an associated entity[23][105] Notes to Condensed Consolidated Financial Statements Notes detail the company's biotech business, recent financing, strategic agreements, the Mida Biotech acquisition, and a disclosed legal proceeding - The company is a global biotech firm focused on making cell and gene therapies (CGTs) accessible through its Point of Care (POCare) Platform[26][28] - As of March 31, 2022, the company had an accumulated deficit of $110 million and negative operating cash flows of $3 million for the quarter, indicating liquidity risks[38] - In March 2022, the company entered a securities purchase agreement to raise up to $14.8 million, though only $1.8 million was received by the filing date with the closing extended[52] - The company is facing a lawsuit from Sheba Medical Center in Israel seeking royalties, but management believes the claims are without merit and has not provisioned for a loss[64] - Subsequent to the quarter end, in April and May 2022, the company entered into convertible loan agreements for an aggregate of $13 million, receiving $9 million by the filing date[65][67] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue decline to completed contracts, explains increased R&D, and expresses confidence in liquidity based on recent financing and strategic developments - Revenue from point-of-care development services decreased by 31% in Q1 2022 compared to Q1 2021, as major performance obligations for setting up customer territories were largely completed in 2021[93] - Cost of development and R&D expenses increased by 24% year-over-year, mainly due to hiring more employees to support the expansion and development of new POCare activities and technologies[95][96] - The company believes it has sufficient liquidity to fund operations for at least the next 12 months, based on current cash and funds from convertible loan agreements executed in April and May 2022[108] - Significant developments during the quarter include a license agreement with Yeda for TIL and CAR-T platforms, a joint venture with Proterna for mRNA vaccines, and the acquisition of Mida Biotech[88][89] Quantitative and Qualitative Disclosures About Market Risk The company indicates that this section is not applicable - Not applicable[110] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[112] - 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 control[113] PART II - OTHER INFORMATION Legal Proceedings The company is involved in a legal dispute with the State of Israel and Sheba Medical Center seeking royalties, which the company intends to vigorously defend - A complaint was filed against the company and its Israeli subsidiary by the State of Israel (as owner of Chaim Sheba Medical Center) seeking royalties and payment of NIS 10 million[115] - The company believes the allegations are without merit and intends to vigorously defend against the claims[115] Risk Factors No material changes to risk factors were reported from the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the risk factors from those disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021[117] Unregistered Sales of Equity Securities and Use of Proceeds The company issued 29,940 common shares for the Mida Biotech BV acquisition in an unregistered sale, with no equity repurchases during the quarter - On February 22, 2022, the company issued 29,940 shares of Common Stock, valued at $100,000, to acquire Mida Biotech BV. This was an unregistered sale relying on exemptions under the Securities Act[118] - There was no repurchase activity under the company's Stock Repurchase Plan during the quarter ended March 31, 2022[120] Defaults Upon Senior Securities No defaults upon senior securities were reported - None[121] Mine Safety Disclosures This section is not applicable - Not Applicable[122] Other Information No other information was reported - None[123] Exhibits This section lists required exhibits, including Sarbanes-Oxley Act certifications and Interactive Data Files (Inline XBRL) - Lists required exhibits, including Sarbanes-Oxley Act certifications and Inline XBRL data files[125] Signatures