Thermogenesis Holdings Inc (THMO) 2022 Q1 法說會逐字稿

Good day, and welcome to the ThermoGenesis Holdings conference call and webcast to review financial and operating results for the first quarter ended March 31, 2022. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to our host, Paula Schwartz of Rx Communications. Please go ahead.

Thank you, operator. This conference call contains forward-looking statements within the meaning of the federal securities laws. The company's actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that might cause actual results to differ materially from those in the forward-looking statements is contained in the company's periodic reports filed with the Securities and Exchange Commission.

The information presented today is time-sensitive and is accurate only as of the date of this call, May 19, 2022. If any portion of this call is being rebroadcast, retransmitted, or redistributed at a later date, ThermoGenesis will not be reviewing or updating this material.

Participating on today's call are Dr. Chris Xu, Chief Executive Officer; and Jeff Cauble, Chief Financial Officer. I'd now like to turn the call over to Chris. Please go ahead, Chris.

Thank you, Paula. And thank you to everyone for joining the call this afternoon. We appreciate you taking the time to listen in. Throughout its 35-year history, ThermoGenesis has proven its ability to pioneer the development and production of a long list of cutting-edge, automated technologies and products for the cell banking and cell therapy industry. With this year's approval of Legend and Janssen's CARVYKTI, a CAR-T therapy for relapsed and refractory multiple myeloma, the number of FDA-approved autologous CAR-T drugs has grown to a total of six.

As the demand for cell gene therapies continue to explode, there are now an estimated 350-plus US companies alone are working in the immune cell therapy arena. And more than 1,000 pipeline assets are in clinical development, targeting a variety of blood and solid tumors worldwide. As a result, the significant need for cGMP manufacturing of these extremely complex, personalized and life-saving therapies is as important as ever.

At ThermoGenesis, we are moving closer to achieving our goal to leveraging our unique and proprietary automated and semi-automated cell processing technologies, including the CAR-TXpress platform, to transition from a device-only company to one focused on providing companies and academic institutions in this space with cell-based contract development and manufacturing service, or CDMO service, to help bring these therapies through the clinic and patient, and treat patients in need.

As we announced during our year-end call in March, we signed a License and Technology Access Agreement and lease for a cell manufacturing facility with the intent to form a new TG Biosynthesis division, which will operate as a world-class CDMO for cell and cell-based gene therapy manufacturing. As you may recall, we have partnered with Boyalife Genomics, a China-based CDMO organization, for the exclusive license in the US to use Boyalife Genomics' existing and future know-how in international properties relating to the cell manufacturing and related processes, including certain cell manufacturing technologies for varieties of clinical-grade and nonclinical-grade cellular products.

At the same time, we entered into a lease agreement for more than 35,000 square foot of space in Sacramento, California area, close to our current headquarters. The space is being built out to create a state of art current good manufacturing practice or cGMP-compliant facility with 12 cGMP clean room suites. The TG Biosynthesis division will look to address the growing need for CDMO services by providing high-quality development and manufacturing capacities, cell and tissue processing development, quality systems, regulatory compliance, and other cell manufacturing solutions for clients with therapeutic candidates in various stage of development.

The industry fully expects to see a wave of additional FDA approvals going forward with as many as 10 to 20 new therapies each year, starting in 2025. This will likely accelerate over time. Currently, each of the six approved CAR-T cell therapies are extremely expensive, limiting patient access to these life-saving therapies. Given that they cost approximately $373,000 to $475,000 per dose, making them among the most expensive drugs in the market.

The manufacturing cost alone for each dose of these CAR-T therapeutics exceed $100,000, 79% of which can be attributed to labor and GMP facility cost. The demand for GMP manufacturing facility and resources will continue to rise. With a global success rate of 50% to 80%, CAR-T therapy is an effective treatment that has a potential to improve millions of people's lives.

As I have outlined before, the surge in clinical activity has not been matched by an increase in production capacity. Even though over 65% of all cell and gene therapies are manufactured in all sorts of facilities, only a fraction of these required capacity exists in the marketplace today, creating a critical 12 to 18 months backlog in commercial manufacturing. This will only be exacerbated by accelerated approvals.

For developers of cell gene therapies, translating a drug from bench to bedside has been limited by these manufacturing bottlenecks, which can be the largest of challenges in achieving commercial success. Even during the research stage, cell manipulations are manual, are technically complicated, and are demonstrated only at laboratory scale for proof of concept in preclinical studies.

Developers will need to switch from manual process if they intend to overcome their manufacturing challenges. As a reminder, the [heterogeneous] nature of the cell therapy products has introduced the manufacturing complexities and regulatory concerns, as well as scale up complexities that are not present within traditional pharmaceutical manufacturing.

Smaller biotech companies cannot afford the sizable cost that manufacturing scale-up requires. Even for some large companies, establishing a manufacturing facility for cell therapy requires specific expertise and significant capital that can delay clinical trials. These facts often result in significant number of cell therapy based companies seeking CDMOs for their cell manufacturing needs.

With a strong intellectual property, cutting edge technology and expertise, and when [build out] state-of-art manufacturing capabilities, our TG Biosynthesis division expects to capitalize on these efficiencies in the industry to become a world-class CDMO cell manufacture service provider. [Specifically], we will leverage our newly in-licensed technology from Boyalife Genomics with our existing technologies, including our high-efficiency, semi-automated CAR-TXpress platform, capable of reducing processing time significantly in improving cell recovery and potentially cut 60% to 70% of the manufacturing cost to create a significant quality and pricing advantage.

Providing CDMO service is a natural extension of the capabilities and we look forward to marketing these services to clients in order to accelerate the development cycle of the cell gene therapies while reducing timeline and overhead costs. As we have stated, we anticipate to launch our CDMO service to customer towards the end of 2022. We look forward to reporting more on this exciting transformation in the coming months.

And with that, let me turn the call over to Jeff to share the key financial results for this first quarter. Jeff?

Thank you, Chris. Net revenues increased to $2.7 million for the quarter ended March 31, 2022, up 76% from the first quarter of last year. The increase was driven by AXP disposable sales, which increased by approximately $1.5 million with over 600 more cases sold in the current quarter. Gross profit was $940,000 or 35% of net revenues for the quarter ended March 31, 2022, as compared to $700,000 in the same quarter last year, with the additional gross profit driven by the increased AXP disposable sales.

Selling, general, and administrative expenses were $1.7 million for the quarter ended March 31, 2022, as compared to $2 million for the first quarter of last year. The decrease was primarily due to lower stock compensation expense in the current quarter. Research and development expenses were $500,000 for the quarter ended March 31, 2022, as compared to $400,000 for the first quarter of last year.

For the quarter ended March 31, 2022, the company reported a basic and diluted net loss attributable to common stockholders of $1.9 million or $0.16 per share, based on approximately 12.3 million shares outstanding. Compares to a basic and diluted net loss attributable to common stockholders of $2.4 million or $0.21 per share, based on approximately 11.4 million shares outstanding for the quarter ended March 31, 2021.

As of March 31, 2022, the company had cash and cash equivalents totaling $3.7 million compared with $7.3 million at December 31, 2021.

This concludes our prepared remarks, and I would like to open the call to your questions. Operator?

(Operator Instructions)

Showing no questions, this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you, operator. We look forward to updating you on our progress during our second quarter 2022 call. And thank you to everyone who participated today and for your interest in ThermoGenesis Holdings.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.