Form: 6-K

Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

November 29, 2018

Documents

Exhibit 99.1

 

 

CollPlant Reports Third Quarter 2018 Financial Results and

Provides Business Update

 

Ness Ziona, November 29, 2018, CollPlant (NASDAQ:CLGN), a regenerative medicine company utilizing its proprietary plant-based rhCollagen technology for tissue repair products (recombinant human, “rhCollagen”), today announced financial results for the third quarter ended September 30, 2018 and provided an update on the Company’s business developments. Certain metrics, including those expressed on an adjusted basis, are non-GAAP measures. See “Use of Non-IFRS (non-GAAP) Measures” below.

 

CollPlant reported revenues of $224,000 (NIS 813,000) for the third quarter of 2018. The Company ended the third quarter of 2018 with $2.6 million (NIS 9.4 million) in cash and cash equivalents, excluding an additional $5.0 million (NIS 18.1 million) that the Company received from United Therapeutics at the beginning of November 2018. Comprehensive loss for the third quarter of 2018 was $1.3 million (NIS 4.8 million) on a GAAP basis, or adjusted comprehensive loss of $1.3 million (NIS 4.9 million), on a non-GAAP basis.

 

“Last month we entered into a license, development and commercialization agreement for 3D bioprinted lung transplants with United Therapeutics (UTHR). The agreement combines CollPlant’s rhCollagen and BioInk technology with the regenerative medicine and organ manufacturing capabilities of United Therapeutics. This strategic agreement is a major achievement for CollPlant as it aligns us with a global leader, validates our technology and creates value for our shareholders." stated Yehiel Tal, CollPlant’s Chief Executive Officer.

 

“During the third quarter we made progress advancing our other 3D bioprinting business. We are moving forward with our development activities with various companies that are using CollPlant’s rhCollagen based BioInk for the bioprinting of organs and tissues,” Mr. Tal added.

 

“In addition to the collaboration with United Therapeutics and progress we made with our BioInks, we are continuing the development of next-generation dermal fillers for the aesthetic market. Based on our work with major market players in the fields of 3D bioprinting and medical aesthetics, we believe that CollPlant’s rhCollagen is the ideal building block for regenerative medicine scaffolds available today, and will play a critical role in those markets” concluded Mr. Tal.

 

Third Quarter 2018 Financial Results on IFRS basis (“GAAP”)

 

Revenues for the three months ended September 30, 2018 increased 209% to $224,000 (NIS 813,000), compared to $73,000 (NIS 263,000) in the third quarter of 2017. Revenues were derived from sales in the U.S. of CollPlant’s BioInk for development of 3D bioprinting of organs, as well as sales in Europe of mainly CollPlant’s soft tissue repair matrix, VergenixSTR, for treating tendinopathy.

 

The Company’s gross profit for the three months ended September 30, 2018 increased 105% to $148,000 (NIS 539,000) compared to $73,000 (NIS 263,000) in the third quarter of 2017. The increase in gross profit derives from the increase in revenues and includes recognition of $76,000 (NIS 274,000) in cost of revenue in the three months ended September 30, 2018, compared to no recognition of cost of revenue in the third quarter of 2017.

 

Total operating costs and expenses were $1.7 million (NIS 6.1 million) compared to $1.1 million (NIS 4.0 million) in the third quarter of 2017. The net increase in the amount of $600,000 is attributed primarily to an increase in salaries and share based expenses of $296,000, costs attributed to being a public company traded on the Nasdaq in the United States of $188,000, and a $70,000 decrease in a 2018 grant from the Israel Innovation Authorities.

 

Operating loss was $1.5 million (NIS 5.6 million) compared to an operating loss of $1.0 million (NIS 3.7 million) in the third quarter of 2017. Comprehensive loss for the third quarter of 2018 was $1.3 million (NIS 4.8 million), or $0.01 (NIS 0.02) per share, compared to a comprehensive loss of $1.0 million (NIS 3.9 million), or $0.01 (NIS 0.03) per share, for the third quarter of 2017. Comprehensive loss per share assumes the full exercise of previously issued pre-paid warrants.

 

 

 

 

Third Quarter 2018 Financial Results on Non-IFRS Basis (“non-GAAP”)

 

On a non-GAAP basis, the operating costs and expenses for the third quarter of 2018 were $1.5 million (NIS 5.3 million), compared to $1.0 (NIS 3.5 million) for the third quarter of 2017. The comprehensive loss on a non-GAAP basis for the third quarter of 2018 was $1.3 million (NIS 4.9 million), or $0.01 (NIS 0.02) per share, compared to $1.0 million (NIS 3.5 million), or $0.01 (NIS 0.03) per share, for the third quarter of 2017. Non-GAAP measures exclude certain non-cash expenses. The table at the end of this press release titled “Reconciliation of GAAP to Non-GAAP Financial Measures” includes a reconciliation of the Company’s GAAP results to non-GAAP results. The net reconciliation reflects non-cash income in the amount of $7,000 (NIS 27,000) in the third quarter of 2018, with respect to (i) fair market value attributed to services received through a securities purchase agreement with an investor (the “Share Purchase Agreement”), (ii) change in fair value of financial instruments and (iii) share-based compensation to employees, directors and consultants.

 

Use of Non-IFRS (“non-GAAP”) Measures

 

This press release contains certain non-GAAP financial measures for operating costs and expenses, operating loss, comprehensive loss and basic and diluted comprehensive loss per share that exclude the effects of non-cash expense for fair market value attributed to services received through the Share Purchase Agreement, recognition and amortization of unrecognized day one loss, and share-based compensation to employees, directors and consultants. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance that enhances management’s and investors’ ability to evaluate the Company’s operating costs, comprehensive loss and loss per share, and to compare them to historical Company results.

 

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when operating and evaluating the Company’s business internally and therefore decided to make these non-GAAP adjustments available to investors. The non-GAAP financial measures used by the Company in this press release may be different from the measures used by other companies.

 

For more information on the non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” table on page _ in this press release. This accompanying table on page _ has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

 

For the convenience of the reader, the amounts have been translated from NIS into U.S. dollars, at the representative rate of exchange as of September 30, 2018 (U.S. $1.00 = NIS 3.627).

 

The Company’s consolidated financial results for the nine months ended September 30, 2018 are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

About CollPlant

 

CollPlant is a regenerative medicine company focused on 3D bioprinting of tissues and organs, and on developing and commercializing tissue repair products for orthobiologics, and advanced wound care markets. Our products are based on our rhCollagen (recombinant human collagen) that is produced with CollPlant’s proprietary plant based genetic engineering technology.

 

Our products address indications for diverse fields of organ and tissue repair, and are ushering in a new era in regenerative medicine. Our flagship rhCollagen BioInk product line is ideal for 3D bioprinting of tissues and organs, and our unique Vergenix line of rhCollagen products includes a soft tissue repair matrix for treating tendinopathy and a wound repair matrix to promote a rapid optimal healing of acute and chronic wounds.

 

For more information about CollPlant, visit http://www.collplant.com

 

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Safe Harbor Statements

 

This press release may include forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to CollPlant’s objectives plans and strategies, as well as statements, other than historical facts, that address activities, events or developments that CollPlant intends, expects, projects, believes or anticipates will or may occur in the future. These statements are often characterized by terminology such as “believes,” “hopes,” “may,” “anticipates,” “should,” “intends,” “plans,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy” and similar expressions and are based on assumptions and assessments made in light of management’s experience and perception of historical trends, current conditions, expected future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Many factors could cause CollPlant’s actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the following: the Company’s history of significant losses and its need to raise additional capital and its inability to obtain additional capital on acceptable terms, or at all; the Company’s expectations regarding the timing and cost of commencing clinical trials with respect to tissues and organs which are based on its rhCollagen based BioInk, VergenixSTR, and VergenixFG; the Company’s ability to obtain favorable pre-clinical and clinical trial results; regulatory action with respect to rhCollagen based BioInk, VergenixSTR, and VergenixFG including but not limited to acceptance of an application for marketing authorization, review and approval of such application, and, if approved, the scope of the approved indication and labeling; commercial success and market acceptance of the Company’s rhCollagen based BioInk, VergenixSTR, and VergenixFG; the Company’s ability to establish sales and marketing capabilities or enter into agreements with third parties and its reliance on third party distributors and resellers; the Company’s ability to establish and maintain strategic partnerships and other corporate collaborations; the Company’s reliance on third parties to conduct some or all aspects of its product manufacturing; the scope of protection we are able to establish and maintain for intellectual property rights and the Company’s ability to operate its business without infringing the intellectual property rights of others; the overall global economic environment; the impact of competition and new technologies; general market, political, and economic conditions in the countries in which the Company operates; projected capital expenditures and liquidity; changes in the Company’s strategy; and litigation and regulatory proceedings. More detailed information about the risks and uncertainties affecting CollPlant is contained under the heading “Risk Factors” included in CollPlant’s most recent annual report on Form 20-F filed with the SEC, and in other filings that CollPlant has made and may make with the SEC in the future. The forward-looking statements contained in this press release are made as of the date of this press release and reflect CollPlant’s current views with respect to future events, and CollPlant does not undertake and specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

  

Contact at CollPlant:
 
Eran Rotem
Chief Financial Officer
Tel: + 972-73-2325600/612
Email: Eran@collplant.com

 

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COLLPLANT HOLDINGS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)

 

   

Convenience translation

into USD

       
    September 30     September 30     December 31  
    2018     2018     2017  
   

USD

in thousands

   

NIS

in thousands

 
       
Assets                  
Current assets:                  
Cash and cash equivalents     2,603       9,442       17,817  
Accounts receivables:                        
Trade receivables     268       971       354  
Other     518       1,881       3,543  
Inventory     813       2,948       700  
      4,202       15,242       22,414  
Non-current assets:                        
Restricted deposit     145       526       503  
Long-term receivables     17       63       92  
Property and equipment, net     1,465       5,314       3,582  
Intangible assets, net     363       1,318       1,454  
      1,990       7,221       5,631  
TOTAL ASSETS     6,192       22,463       28,045  
                         
Liabilities and equity                        
Current liabilities -                        
Accounts payable:                        
Loan     22       84       -  
Trade payables     475       1,723       2,922  
Accrued liabilities and other     580       2,104       1,996  
      1,077       3,911       4,918  
Non-current liabilities                        
Debentures at fair value     -       -       12,639  
Warrants at fair value     1,057       3,832       -  
Derivatives     15       54       141  
Royalties to the Israel Innovation Authority     307       1,114       1,203  
Loan     29       105       -  
Long-term payables     -       -       61  
      1,408       5,105       14,044  
Total liabilities     2,485       9,016       18,962  
                         
Equity:                        
Ordinary shares     1,574       5,710       4,998  
Additional paid in capital and warrants     50,837       184,386       178,467  
Prepaid warrant     3,435       12,460       -  
Accumulated deficit     (52,139 )     (189,109 )     (174,382 )
TOTAL EQUITY     3,707       13,447       9,083  
TOTAL LIABILITIES AND EQUITY     6,192       22,463       28,045  

 

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COLLPLANT HOLDINGS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

 

      Convenience
translation into USD
                             
     

Nine months

ended

September 30

     

Three months

ended

September 30

      Nine months ended September 30       Three months ended September 30  
      2018       2018       2017       2018       2017       2018  
      USD in thousands       NIS in thousands  
                                                 
Revenue     619       224       716       2,245       263       813  
Cost of Revenue     165       76       -       598       -       274  
Gross Profit     454       148       716       1,647       263       539  
                                                 
Operating costs and expenses:                                                
Research and development expenses, net:     2,816       941       11,087       10,215       2,747       3,413  
General, administrative and marketing expenses     2,550       748       4,190       9,251       1,260       2,712  
Total operating costs and expenses:     5,366       1,689       15,277       19,466       4,007       6,125  
Operating loss     4,912       1,541       14,561       17,819       3,744       5,586  
Financial income     115       204       -       418       -       -  
Other financial expenses (income)     73       -       407       264       187       (739 )
Financial (income) expenses, net     (42 )     (204 )     407       (154 )     187       (739 )
Comprehensive loss     4,870       1,337       14,968       17,665       3,931       4,847  
Basic and diluted loss per ordinary share (NIS/USD)     0.02       0.01       0.12       0.08       0.03       0.02  
Weighted average ordinary shares outstanding     214,551,093       229,649,737       129,182,765       214,551,093       138,336,328       229,649,737  

 

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COLLPLANT HOLDINGS LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   

Convenience translation

into USD

       
    Nine months ended September 30  
    2018     2017     2018  
   

USD

in thousands

   

NIS

in thousands

 
       
Cash flows used in operating activities:                        
Comprehensive loss for the period     (4,870 )     (14,968 )     (17,665 )
Adjustments for:                        
Depreciation and amortization     283       842       1,027  
Share-based compensation to employees and consultants     810       1,508       2,938  
Changes in fair market value of services received through the Alpha Agreement     422       -       1,530  
Changes in fair value of financial instruments     55       -       198  
Exchange differences on cash and cash equivalents     (87 )     49       (317 )
Exchange differences on restricted cash     (6 )     45       (23 )
      (3,393 )     (12,524 )     (12,312 )
Changes in operating asset and liability items:                        
Decrease (increase) in trade receivables     (170 )     12       (617 )
Increase in inventory     (620 )     (63 )     (2,248 )
Decrease in other receivables (including long- term receivables)     43       2,255       161  
Decrease in trade payables (including long-term payables)     (295 )     (2,911 )     (1,071 )
Decrease in accrued liabilities and other payables     30       360       108  
Increase (decrease) in royalties to the IIA     (25 )     117       (89 )
      (1,037 )     (230 )     (3,756 )
Net cash used in operating activities     (4,430 )     (12,754 )     (16,068 )
Cash flows from investing activities:                        
Purchase of property and equipment     (723 )     (56 )     (2,623 )
Net cash used in investing activities     (723 )     (56 )     (2,623 )
Cash flows from financing activities:                        
Proceeds from issue of shares and warrants, net of issue expenses     2,757       13,846       9,999  
Exercise of warrants into shares     -       3,618       -  
Loan received     58       -       210  
Loan returned     (6 )     -       (21 )
Equipment purchased in unusual credit terms     (52 )     (190 )     (189 )
Net cash provided by financing activities     2,757       17,274       9,999  
Increase (Decrease) in cash and cash equivalents     (2,396 )     4,464       (8,692 )
Cash and cash equivalents at the beginning of the period     4,912       3,797       17,817  
Exchange differences on cash and cash equivalents     87       (49 )     317  
Cash and cash equivalents at the end of the period     2,603       8,212       9,442  
Non-cash investing activities:                        

Conversion of Debentures to pre-paid warrant

    3,504       -       12,708  
Conversion of pre-paid warrant to shares     68       -       248  

 

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CollPlant Holdings Ltd.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

 

      Convenience
translation into USD
                             
     

Nine months

ended

September 30

     

Three months

ended

September 30

      Nine months ended September 30       Three months ended September 30  
      2018       2018       2017       2018       2017       2018  
      USD in thousands       NIS in thousands  
                 
GAAP gross profit     454       148       716       1,647       263       539  
                                                 
GAAP operating costs and expenses:     5,366       1,689       15,277       19,466       4,007       6,125  
Fair market value attributed to services received through the Alpha Agreement     422       -       -       1,530       -       -  
Share-based compensation to employees, directors and consultants     810       220       1,508       2,938       452       797  
Non-GAAP operating costs and expenses:     4,134       1,469       13,769       14,998       3,555       5,328  
GAAP operating loss     4,912       1,541       14,561       17, 819       3,744       5,586  
Non-GAAP operating loss     3,680       1,321       13,053       13,351       3,292       4,789  
GAAP Comprehensive loss     4,870       1,337       14,968       17,665       3,931       4,847  
Fair market value attributed to services received through the Alpha Agreement     422       -       -       1,530       -       -  
Changes in fair value of financial instruments     54       (227 )     -       198       -       (824 )
Share-based compensation to employees, directors and consultants     810       220       1,508       2,938       452       797  
Non-GAAP Comprehensive loss     3,584       1,344       13,460       12,999       3,479       4,874  
GAAP Basic and diluted loss per ordinary share (NIS/USD)     0.02       0.01       0.12       0.08       0.03       0.02  
Non-GAAP Basic and diluted loss per ordinary share (NIS/USD)     0.02       0.01       0.10       0.06       0.03       0.02  

 

 

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