Applied DNA Sciences(APDN) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q1 fiscal 2025 were $1.2 million, an increase from $891,000 in the same period of fiscal 2024, driven by higher product revenue from the DNA tagging business and isotopic testing services [10][11] - Operating loss for Q1 was $3 million, improved from $3.8 million in the prior year, primarily due to lower selling, general, and administrative costs [11] - Net loss for Q1 was $2.7 million compared to $1.1 million in the prior year, with adjusted EBITDA improving to a negative $2.9 million from negative $3.2 million [12][13] - Cash and cash equivalents as of December 31, 2024, totaled $9.3 million, up from $6.4 million on September 30, 2024 [13] Business Line Data and Key Metrics Changes - The company announced its exit from the DNA tagging and security products segment, with a workforce reduction of approximately 20% related to this segment [9][10] - The restructuring aims to optimize the cost structure and support the growth of the LineaRx subsidiary, which is expected to create sustainable value for shareholders [8][9] Market Data and Key Metrics Changes - The biotherapeutics market is showing increased interest in the LineaRx subsidiary, which focuses on enzymatically produced DNA to meet growing demand [19][20] - LineaRx engaged over twenty-five customer projects in fiscal 2024, with expectations for multiple projects to enter clinical trials in calendar 2025 [24] Company Strategy and Development Direction - The strategic restructuring reflects a commitment to rebuilding shareholder value through optimized cost structures and a focus on LineaRx [19][21] - The company aims to leverage its GMP-certified facility to expand its product offerings and enter new markets, particularly in enzymatic DNA production [41][60] Management's Comments on Operating Environment and Future Outlook - Management highlighted the operational launch of the GMP facility as a pivotal moment for the company, enabling entry into higher-margin markets [47] - The company is focused on maintaining disciplined operational expenditures while pursuing growth through enzymatic DNA production [60] Other Important Information - The company has received regulatory approval for its pharmacogenomics assay, TREAT PGx, and expanded its mBox assay to accept samples from all fifty states [27] - The company is actively developing new forms of linear DNA, including Linea Donor DNA for CRISPR applications, which is expected to be available for research use [39][40] Q&A Session Summary Question: Can you provide insights on the new Linear product and its market opportunity? - The company sees parallels between the IVT template and donor DNA markets, with significant opportunities in CRISPR and gene therapy applications [66] Question: Where did the revenue increases come from in Q1? - Revenue increases were primarily from a shipment of DNA tagging for cotton marking and increased volume in isotopic testing services [69][70] Question: What is the timeline for the AML therapy trial and revenue recognition? - The phase one trial in the Czech Republic is expected to last about eighteen months, with the therapy chosen for its faster regulatory approval process [72][74]