On August 28, 2020 CollPlant (NASDAQ: CLGN), a regenerative and aesthetics medicine company, reported financial results for the second quarter ended June 30, 2020 and provided an update on the Company’s business developments (Press release, CollPlant, AUG 28, 2020, View Source [SID1234564144]). Certain metrics, including those expressed on an adjusted basis, are non-GAAP measures. See "Use of Non-GAAP Measures" below.

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CollPlant’s rhCollagen based BioInk – the ideal building block for tissue and organ manufacturing (PRNewsfoto/CollPlant)
CollPlant reported revenues of $823,000 for the second quarter of 2020, a 36% increase from the $606,000 recorded in the second quarter of 2019. The Company ended the second quarter of 2020 with $3.7 million in cash and cash equivalents. Comprehensive loss for the second quarter of 2020 was $2.0 million on a GAAP basis, or adjusted comprehensive loss of $1.4 million, on a non-GAAP basis.

"We continue to make major strides in revolutionizing the fields of regenerative and aesthetic medicine through our first-in-class, recombinant human collagen (rhCollagen) platform technology. First, we are partnering with United Therapeutics Corporation (NASDAQ: UTHR) in efforts to address global organ shortages. We plan to leverage this experience in 3D bioprinting of lung scaffolds to explore other life-saving organs and tissues in the future," stated Yehiel Tal, the Chief Executive Officer of CollPlant. "Second, the combination of hyaluronic acid and rhCollagen in our next-generation, regenerative, photocurable dermal fillers will provide superior skin rejuvenation inclusive of the ability to inject into deep wrinkles, as well as other key attributes. Moreover, we are looking forward to sharing new data on our innovative photocurable dermal fillers and additional updates on our breast implant product pipeline at the exclusive Science of Aging Virtual Symposium 2020, which will be held digitally on September 16, 2020. Third, we continue to abide by Israeli Health Ministry guidelines for optimal protection of our employees. To accommodate heightened social distancing policies amid the ongoing pandemic, we have concentrated efforts on amplifying corporate visibility through a stronger online and social media presence. Finally, we remain committed to bolstering our workforce with brilliant scientists and support staff from prestigious institutions here in Israel. We are opportunistic about establishing relationships with new strategic partners who can support our pipeline development efforts."

Financial Results

Second Quarter 2020 Financial Results on US GAAP basis ("GAAP")

Revenues for the three months ended June 30, 2020 increased by 36% to $823,000, compared to $606,000 in the second quarter of 2019. Revenues were derived mainly from CollPlant’s BioInk for the development of 3D bioprinting of human organs, and from sales of rhCollagen for medical aesthetics product development.

Cost of revenue was $748,000 in the three months ended June 30, 2020, an increase of 62% compared to $463,000 in the same period in 2019. The increase is primarily related to differences in the mix of products sold, different profitability and the different capacity of production in the reported periods presented.

The Company’s gross profit for the three months ended June 30, 2020 decreased by $68,000 to $75,000 compared to $143,000 in the second quarter of 2019.

Total operating expenses for the three months ended June 30, 2020 were $2.0 million, an increase of 5% compared to $1.9 million in the second quarter of 2019.

Operating loss for the three months ended June 30, 2020 was $1.9 million, an increase of 6% compared to an operating loss of $1.8 million in the second quarter of 2019.

Financial expense, net for the three months ended June 30, 2020 was $58,000 compared to financial income, net of $513,000 in the second quarter of 2019. Financial expense in the three months ended June 30, 2020 derived from non-cash exchange differences of operating lease liabilities under ASC 842, compared to financial income in the three months ended June 30, 2019 which derived from re-evaluation of financial instruments.

Comprehensive loss for the second quarter of 2020 was $2.0 million, or $0.28 per share, compared to a comprehensive loss of $1.2 million, or $0.27 per share, for the second quarter of 2019.

Cash used in operating activities during the six months ended June 30, 2020 was $4.3 million compared to $2.7 million in the six months ended June 30, 2019. As of June 30, 2020, cash and cash equivalents totaled $3.7 million.

Cash used in investing activities during the six months ended June 30, 2020 was $246,000 compared to $1.1 million in the six months ended June 30, 2019. The decrease is mainly attribute to costs incurred in the establishment in 2019 of CollPlant’s new HQ and R&D center in Rehovot, Israel.

Cash provided by financing activities during the six months ended June 30, 2020 was $4.5 million compared to cash used in financing activities of $18,000 in the six months ended June 30, 2019. The increase is mainly attribute to proceeds from issuance of shares in a private placement in February 2020.

Second Quarter 2020 Financial Results on Non-US GAAP Basis ("non-GAAP")

On a non-GAAP basis, the operating expenses for the second quarter of 2020 were $1.4 million, compared to $1.5 million for the second quarter of 2019.

Comprehensive loss for the second quarter of 2020 was $1.4 million, or $0.20 per share, compared to $1.5 million, or $0.31 per share, for the second quarter of 2019.

Non-GAAP measures exclude certain non-cash expenses. The table on page 10 includes a reconciliation of the Company’s GAAP results to non-GAAP results. The reconciliation reflects non-cash expenses in the amount of $555,000 with respect to (i) change in fair value of financial instruments, (ii) share-based compensation to employees, directors and consultants and (iii) change of operating lease accounts, including related financial expenses.