CollPlant(CLGN) - 2023 Q4 - Annual Report

Corporate Update and Business Highlights Collaboration Updates In 2023, CollPlant significantly advanced its collaboration with AbbVie on a dermal and soft tissue filler program, which has now entered the clinical phase, triggering a $10 million milestone payment, and entered a new joint development agreement with Stratasys for an industrial-scale bioprinter for its regenerative breast implant program - The dermal filler program in partnership with AbbVie has advanced to the clinical development phase[1][2][3] - Achieved a significant milestone under the AbbVie collaboration, resulting in a $10 million payment to CollPlant in June 2023 The agreement includes potential for further milestone payments and royalties[2][4] - Announced a joint development and commercialization agreement with Stratasys Ltd to develop a bioprinter for creating CollPlant's regenerative breast implants, aiming for an industrial-scale production solution[5] Product Pipeline Development The company's regenerative breast implant program is progressing, with a large-animal study of commercial-size implants initiated in late 2023; topline data is anticipated in Q4 2024, targeting a $2.9 billion market, while the gut-on-a-chip program has been temporarily paused to reallocate resources towards core medical aesthetics projects - The regenerative breast implant program targets the $2.9 billion global breast implant market, offering a potential alternative to synthetic silicone implants[7] - In December 2023, a large-animal study was initiated to evaluate commercial-size regenerative breast implants, with topline data expected in Q4 2024[11] - The gut-on-a-chip program for ulcerative colitis has been put on hold to prioritize resources for the medical aesthetics area and the AbbVie collaboration[15] Intellectual Property CollPlant strengthened its intellectual property portfolio for its photocurable dermal filler technology, securing a key patent from the U.S. Patent and Trademark Office in November 2023, with subsequent allowances in Brazil, Israel, and Australia, providing protection until 2039 - The U.S. Patent and Trademark Office granted a patent for the company's photocuring technology, which is fundamental to its photocurable dermal filler product candidate[12][13] - The same patent application received allowance in Brazil, and patents were also granted in Israel and Australia, providing protection until 2039 in these jurisdictions[12] Corporate Governance In 2023, CollPlant enhanced its commitment to corporate responsibility by hiring a dedicated expert to lead its ESG initiatives and joining the United Nations Global Compact, with its first ESG report planned for release in the second quarter of 2024 - Hired a dedicated expert to lead its Environment, Social and Governance (ESG) efforts and plans to file its first ESG report in Q2 2024[16] - Joined the United Nations Global Compact, reinforcing its commitment to sustainable and responsible corporate governance[17] Financial Performance for Fiscal Year 2023 Summary of Financial Results For the fiscal year ended December 31, 2023, CollPlant's revenues surged to $11.0 million from $299,000 in 2022, primarily driven by a $10.0 million milestone payment from its partner, AbbVie, leading to a gross profit of $9.0 million and a narrowed GAAP net loss of $7.0 million ($0.62 per share) from $16.9 million ($1.53 per share) in 2022 FY2023 vs FY2022 Key Financials (GAAP) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues | $11.0M | $0.3M | +$10.7M | | Gross Profit (Loss) | $9.0M | ($0.1M) | +$9.1M | | Operating Expenses | $16.5M | $17.0M | -$0.5M | | Net Loss | ($7.0M) | ($16.9M) | +$9.9M | | Basic Loss Per Share | ($0.62) | ($1.53) | +$0.91 | - The substantial increase in revenue is mainly attributed to the achievement of a milestone under the AbbVie Agreement, which triggered a $10.0 million payment[18] - Operating expenses saw a slight decrease of $0.5 million, primarily due to lower general and administrative costs[21] Balance Sheet and Cash Flow Highlights CollPlant concluded 2023 with a strong balance sheet, holding $26.7 million in cash and cash equivalents, and dramatically improved cash flow from operations, with cash used in operating activities decreasing to $2.8 million for the year, compared to $13.7 million in 2022, largely due to the $10 million milestone payment from AbbVie - The company ended 2023 with a cash and cash equivalents balance of $26.7 million[1][24] Cash Flow from Activities (Year-ended Dec 31) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Cash used in operating activities | ($2.8M) | ($13.7M) | | Net cash used in investing activities | ($1.2M) | $28.9M (provided) | | Cash provided by financing activities | $1.1M | $1.9M | Consolidated Financial Statements This section presents the detailed consolidated financial statements for the year ended December 31, 2023, including the Balance Sheets, Statements of Operations, and Statements of Cash Flows, providing a comprehensive view of the company's financial position and performance Condensed Consolidated Balance Sheets As of December 31, 2023, total assets were $34.1 million, down from $37.8 million in 2022, primarily due to a decrease in cash, with total liabilities at $5.8 million, resulting in total shareholders' equity of $28.3 million Balance Sheet Summary (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $26,674 | $29,653 | | Total current assets | $28,022 | $31,658 | | Total assets | $34,126 | $37,768 | | Liabilities & Equity | | | | Total current liabilities | $3,251 | $3,105 | | Total liabilities | $5,786 | $5,487 | | Total shareholders' equity | $28,340 | $32,281 | Condensed Consolidated Statements of Operations For the year ended December 31, 2023, the company reported revenues of $11.0 million and a gross profit of $9.0 million, with a net loss of $7.0 million, or $0.62 per share, after total operating expenses of $16.5 million Statement of Operations Summary (in thousands, except per share data) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Revenues | $10,959 | $299 | | Gross profit (loss) | $8,968 | $(101) | | Research and development | $10,484 | $10,255 | | General, administrative and marketing | $5,996 | $6,741 | | Net income (loss) | $(7,019) | $(16,925) | | Basic net income (loss) per ordinary share | $(0.62) | $(1.53) | Condensed Consolidated Statements of Cash Flows For 2023, net cash used in operating activities was $2.8 million, investing activities used $1.2 million, and financing activities provided $1.1 million, resulting in a net decrease in cash and cash equivalents of $3.2 million for the year Cash Flow Summary (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(2,763) | $(13,698) | | Net cash provided by (used in) investing activities | $(1,156) | $28,922 | | Net cash provided by financing activities | $1,108 | $1,874 | | Net decrease in cash and cash equivalents | $(3,190) | $16,490 | | Cash and cash equivalents at end of the year | $26,674 | $29,864 | Reconciliation of GAAP to Non-GAAP Financial Measures The company provides non-GAAP financial measures to supplement its GAAP results, primarily by excluding non-cash share-based compensation expenses, with a non-GAAP net loss of $5.2 million ($0.46 per share) for 2023, compared to the GAAP net loss of $7.0 million ($0.62 per share), offering a clearer view of operational performance - Non-GAAP financial measures are provided to exclude the effects of non-cash expenses, mainly share-based compensation, to better evaluate operating performance[45] GAAP to Non-GAAP Reconciliation Summary (2023, in thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating loss | $(7,512) | $1,937 | $(5,575) | | Net loss | $(7,019) | $1,826 | $(5,193) | | Loss per share | $(0.62) | $0.16 | $(0.46) | Other Information About the Company CollPlant is a regenerative and aesthetic medicine company specializing in 3D bioprinting of tissues and organs, leveraging its proprietary plant-based recombinant human collagen (rhCollagen) technology, and holds a significant development and commercialization agreement with Allergan, an AbbVie company, for dermal and soft tissue fillers - The company focuses on regenerative and aesthetic medicine, including 3D bioprinting of tissues and organs[42] - Products are based on its proprietary plant-based recombinant human collagen (rhCollagen) technology[42] - Has a key development and global commercialization agreement with Allergan (an AbbVie company) for dermal and soft tissue fillers, initiated in 2021[43] Forward-Looking Statements This section serves as a standard safe harbor disclaimer, advising investors that the press release contains forward-looking statements which are not guarantees of future performance, highlighting that actual results may differ materially due to various risks and uncertainties, such as the company's history of losses, the need to raise capital, clinical trial outcomes, regulatory actions, market competition, and general economic conditions - The press release includes forward-looking statements based on management's current expectations and are subject to significant risks and uncertainties[51] - Key risks include a history of significant losses, the need for additional capital, uncertainty of clinical trial results, regulatory hurdles, market acceptance of products, and reliance on strategic partnerships[52]