Company to Hold Conference Call and Webcast
Today, Thursday, May 14, 2020, at 4:30 p.m. EDT
Applied DNA Sciences Inc. (NASDAQ: APDN) (“Applied DNA” or the
“Company”) a leader in Polymerase Chain Reaction (PCR)-based DNA
manufacturing that enables in vitro diagnostics, pre-clinical
nucleic acid-based therapeutic drug candidates, supply chain
security, anti-counterfeiting and anti-theft technology, today
announced consolidated financial results for the fiscal second
quarter and the six months ended March 31, 2020.
“Continued execution on our strategic priorities in our second
fiscal quarter resulted in an expansion of our linear DNA story to
include COVID-19 vaccine candidate and diagnostic kit programs and
the addition of new development customers. These new development
customers, several of which are leaders in the field of gene and
redirected-cell therapies, demonstrate broadening interest and
adoption of our proprietary linear DNA approach to preclinical
biotherapeutics and diagnostics development and further validate
linear DNA as a viable alternative for plasmid DNA,” stated Dr.
James A. Hayward, president and CEO of Applied DNA.
“Most of our activities during the quarter were devoted to our
COVID-19 development programs that serve to also elevate the
profile of our PCR-based LinearDNA™ platform to the biopharma
industry as a powerful, large-scale tool for the rapid manufacture
of DNA-based therapeutics,” continued Dr. Hayward. “The global
focus on the pandemic and the speed with which vaccine candidates
are being developed are laying bare the limitations of modern
vaccine development that are almost-exclusively reliant on
plasmid-based technologies that are often slow and require much
more downstream processing. Because our linear DNA approach does
not require bacterial fermentation and has the added advantage of
essentially no risk of contamination by genes for antibiotic
resistance and other genetic contaminants, we believe our platform
is well suited for such DNA-based therapeutics as engineered T
cells, gene therapies, RNAi, and vaccines, such as for COVID-19 or
future emerging infectious diseases. One new development customer,
a global Top-20 pharmaceutical manufacturer, is evaluating the full
scope of our platform to potentially serve as a foundational tool
for their future genetic therapy pipeline. As the industry comes to
terms with the limitations of plasmid-based technologies in terms
of production speed and risk, we believe this will set the stage
for a paradigm shift towards the rapid manufacturing of linear DNA
vaccines with our LinearDNA platform as the accelerator.”
Concluded Dr. Hayward, “Looking ahead, we remain focused on
driving interest and building demand for our linear DNA approach
across certain highly-regulated markets, such as drug development,
that we believe offer a path to higher and more recurring revenue.
Takis Biotech (“Takis”) has initiated preclinical animal trials of
our LinearDNA version of their vaccine candidates that we believe
will demonstrate similar, robust immune responses to their
plasmid-based constructs, but with the added advantage of speed and
scalability to manufacture for global use. Concurrently, we are
preparing for the possibility for Takis to progress to human trials
this fall by readying our facility for compliance with the FDA’s
cGMP regulations that govern the quality of biologics for human
use. We have also developed our Linea™ COVID-19 high-throughput and
high-sensitivity SARS-CoV-2 detection kit to enable mass-testing
that can be a crucial tool in the toolbox of health systems and
governments in the fight to further ‘flatten the curve’. Having
received Emergency Use Authorization from the FDA today, we are now
focused on the commercialization of our kit to assist frontline
workers leading the charge against the pandemic. Pharmaceutical
molecular tagging is another target market and one where the FDA
has granted us entry into its Emerging Technology Program that
gives us a path to drive the industry’s adoption of our
authentication technologies and mitigate participation of
counterfeit and adulterated drugs in the legitimate pharmaceutical
supply chain. We will continue to build our business development
pipeline and execute on our strategy to advance and prove the
capabilities of linear DNA to drug developers and the broader
pharmaceutical industry.”
Fiscal Second Quarter 2020 Financial Results:
- Revenues decreased 29% for the second quarter of fiscal 2020 to
$552 thousand, compared with $778 thousand reported in the same
period of the prior fiscal year and decreased 13% from $634 for the
first quarter of fiscal 2020. This decrease in revenues year over
year is due to a decrease of $305 thousand in service revenues,
offset by an increase of $79 thousand in product revenues. The
decrease in service revenues is primarily attributable to a
decrease from a government contract award that ended during the
second half of fiscal 2019 and a decline in precommercial
feasibility projects in both textiles and cannabis. The increase in
product revenues was primarily related to an increase in
biopharmaceutical revenues during the quarter ended March 31,
2020.
- Total operating expenses decreased to $3.1 million for the
second fiscal quarter of 2020, compared with $3.3 million in the
prior fiscal year’s second quarter. This decrease is attributable
to a decrease in professional fees of approximately $183 thousand
due to reduced legal fees. To a lesser extent, the decrease relates
to a reduction of approximately $64 thousand in travel fees as
result of travel restrictions associated with COVID-19. This
decrease was offset by an increase in research and development
expenses of $52 thousand.
- Net loss for the quarter ended March 31, 2020 was $3.0 million,
or $0.79 per share, compared with a net loss of $2.7 million, or
$3.22 per share, for the quarter ended March 31, 2019, an increase
of 10%, and a net loss of $2.7 million, or $1.12 per share, for the
quarter ended December 31, 2019.
- Excluding non-cash expenses, Adjusted EBITDA was negative $2.6
million and a negative $2.3 million for the quarters ended March
31, 2020 and 2019, respectively. See below for information
regarding non-GAAP measures.
- Cash was $8.7 million at March 31, 2020 that includes the
exercise of warrants associated with the November 15, 2019
underwritten public offering (“the offering”) totaling
approximately $2.8 million in net proceeds. Subsequent to March 31,
2020 the Company received a further $2.9 million of net proceeds
through the exercise of warrants associated with the offering.
There is a total of approximately 1.5 million warrants outstanding
from the offering at May 14, 2020.
Six Months Ended March 31, 2020 Financial Results:
- Revenues decreased 29% for the first half of fiscal 2020 to
$1.2 million, compared with $1.7 million reported in the same
period of the prior fiscal year. This decrease in revenue year over
year is due to a decrease of $472 thousand in service revenues and
a decrease of $5 thousand in product revenues. The decrease in
service revenues is primarily attributable to a decrease from a
government contract award that ended during the second half of
fiscal 2019.
- Total operating expenses decreased to $6.1 million for the six
months ended March 31, 2020, compared with $7.2 million in the
prior fiscal year’s first six months. This decrease is primarily
attributable to decreases in payroll of approximately $272
thousand, attributable to headcount reductions, a decrease in
stock-based compensation expense of approximately $262 thousand as
well as decreases in legal and professional fees of $139 thousand,
consulting fees of $121 thousand, reduced travel expenses of $110
thousand and research and development of $93 thousand.
- Net loss for the six-month period ended March 31, 2020 was $5.6
million, or $1.76 per share, compared with a net loss of $5.9
million, or $6.51 per share, for the six months ended March 31,
2019, an improvement of 5%.
- Excluding non-cash expenses, Adjusted EBITDA was negative $5.0
million and a negative $4.9 million for the six months ended March
31, 2020 and 2019, respectively. See below for information
regarding non-GAAP measures.
Select Quarterly Operational Highlights:
Applied DNA progressed its COVID-19 development program that
spans both vaccine development and clinical diagnostic kit
development:
- On May 14, 2020, Applied DNA announced that it had received
Emergency Use Authorization for its COVID-19 diagnostic Assay kit
from the U.S. FDA. Clinical laboratories in the United States
certified under Clinical Laboratory Improvement Amendments can
immediately begin ordering and using the Linea™ COVID-19 assay kit
to detect SARS-CoV-2, the virus that causes COVID-19;
- On May 5, 2020, the Company announced that it had applied to
the U.S. Food and Drug Administration for Emergency Use
Authorization for its COVID-19 diagnostic kit, Linea™ COVID-19, a
RT-PCR-based, high-sensitivity and high-throughput COVID-19
diagnostic test;
- On May 4, 2020, Applied DNA and its COVID-19 development
partner, Takis, announced that the first injections of their DNA
vaccine candidates against the Spike protein (‘S’ gene) of the
SARS-CoV-2 virus that causes the COVID-19 disease, have produced
neutralizing antibodies in test animals. The studies were completed
at the renowned Lazzaro Spallanzani (“Spallanzani”) National
Institute for Infectious Diseases in Rome. These initial results
were obtained using plasmids (the templates for LinearDNA™) to
baseline results; Applied DNA’s linear DNA dose-response trials
begin in the week of May 4, 2020;
- On April 21, 2020, the Company signed an agreement with Stony
Brook University Hospital to validate and implement the Company’s
COVID-19 diagnostic test; Linea™ COVID-19. The diagnostic test
targets the SARS-CoV-2 Spike (S) gene, which is also the subject of
the Company’s COVID-19 vaccine development program.;
- On April 15, 2020, Applied DNA announced that it had shipped
five linear DNA versions of COVID-19 vaccine candidates to its drug
development partner, Takis, to support the immediate start of
preclinical animal testing. Shipment of the vaccine candidates
follows Takis’ receipt of approval from Italy’s Ministry of Health
to begin preclinical testing. Concurrent with Takis’ animal trials,
Applied DNA is preparing for cGMP production of selected vaccine
candidate(s) to support human trials scheduled to begin this fall;
and
- On March 24, the Company announced that it had filed a
provisional patent application with the U.S. Patent and Trademark
Office for a diagnostic assay for COVID-19.
The Company’s LinearDNA™ platform for preclinical biotherapeutic
(gene and redirected-cell therapies) and diagnostic applications
development continued to shift towards broader adoption:
- On March 26, the Company announced that it had shipped CAR T
amplicons proprietary to a new development customer, the biologics
subsidiary of a U.S.-based, global biopharmaceutical company, for
use in evaluating the use of linear DNA; and
- On March 20, Applied DNA announced the signing of a research
agreement with a new development customer, a global Top-20
pharmaceutical manufacturer, to evaluate the full scope of the
Company’s linear DNA platform to potentially improve the efficacy
and safety of the customer’s CAR T therapy pipeline. The research
agreement includes the Company’s patented technologies to maximize
protein expression and unique linear DNA anti-CD19 CAR T construct
for the treatment of acute lymphocytic leukemia.
The Company’s DNA tagging business for supply chain security
continued to build awareness and adoption:
- On February 24, the Company announced the receipt of
international patents on its Beacon® secure optical molecular
market technologies in China, Canada, and the U.S., each a key
market for brand protection and assurance for Applied DNA;
- On February 20, Applied DNA received Pareve kosher
certification for products within its SigNature® and CertainT®
brands from Orthodox Union, the world’s largest and most widely
recognized international kosher certification agency. Certification
supports the Company’s business development efforts in the food,
pharmaceutical, and dietary supplements markets to maximize
adoption of its molecular-based tagging platform;
- On February 19, the Company entered the dietary supplements
market with a multi-year contract with Nutrition21, a trusted
developer and supplier of novel and clinically substantiated
branded ingredients for the nutritional supplement industry. Under
the terms of the contract, the application of Applied DNA’s
CertainT platform to Nutrition21’s leading sports supplement,
Nitrosigine®, offers Nutrition21 the certainty of its ingredients
all the way through to their customers’ finished products and onto
retail shelves and online stores. Separately, the two companies
signed an additional agreement to enable Nutrition21 to represent
the CertainT platform throughout Nutrition21’s extensive network in
the dietary supplement market.
Fiscal Second Quarter 2020 Conference Call
Information
The Company will hold a conference call and webcast to discuss
its fiscal second quarter-end 2020 results on Thursday, May 14,
2020 at 4:30 PM ET. To participate on the conference call, please
follow the instructions below. While every attempt will be made to
answer investors’ questions on the Q&A portion of the call, due
to the large number of expected participants, not all questions may
be answered.
To Participate:
- Participant Toll Free:1-844-887-9402
- Participant Toll: 1-412-317-6798
- Please ask to be joined to the Applied DNA Sciences call
Live webcast:
https://services.choruscall.com/links/apdn200507.html
Replay (available 1 hour following the conclusion of the live
call through May 21, 2020):
- Participant Toll Free: 1-877-344-7529
- Participant Toll: 1-412-317-0088
- Participant Passcode: 10141899
- Webcast replay:
https://services.choruscall.com/links/apdn200507.html
For those unable to attend the live call, a
copy of management’s PowerPoint presentation will be available for
review under the ‘Events and Presentations’ section of the
company’s Investor Relations web site:
https://adnas.com/molecular-based-security/investors/
Information about Non-GAAP Financial Measures
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. To supplement our
condensed consolidated financial statements prepared and presented
in accordance with GAAP, this earnings release includes Adjusted
EBITDA, which is a non-GAAP financial measure as defined in Rule
101 of Regulation G promulgated by the Securities and Exchange
Commission. Generally, a non-GAAP financial measure is a numerical
measure of a company’s historical or future performance, financial
position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. The presentation of this non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information presented in accordance
with GAAP. We use this non-GAAP financial measure for internal
financial and operational decision making purposes and as a means
to evaluate period-to-period comparisons of the performance and
results of operations of our core business. Our management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding the performance of our business
by excluding non-cash expenses that may not be indicative of our
recurring operating results. We believe this non-GAAP financial
measure is useful to investors as they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making.
“EBITDA”- is defined as earnings (loss) before interest expense,
income tax expense and depreciation and amortization expense.
“Adjusted EBITDA”- is defined as EBITDA adjusted to exclude (i)
stock-based compensation and (ii) other non-cash expenses.
About Applied DNA Sciences
Applied DNA is a provider of molecular technologies that enable
supply chain security, anti-counterfeiting and anti-theft
technology, product genotyping, and pre-clinical nucleic acid-based
therapeutic drug candidates.
Visit adnas.com for more information. Follow us on Twitter and
LinkedIn. Join our mailing list.
The Company’s common stock is listed on NASDAQ under ticker
symbol ‘APDN’, and its publicly-traded warrants are listed on OTC
under ticker symbol ‘APPDW’.
Forward-Looking Statements
The statements made by Applied DNA in this press release may be
“forward-looking” in nature within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities Exchange
Act of 1934 and the Private Securities Litigation Reform Act of
1995. Forward-looking statements describe Applied DNA’s future
plans, projections, strategies and expectations, and are based on
assumptions and involve a number of risks and uncertainties, many
of which are beyond the control of Applied DNA. Actual results
could differ materially from those projected due to the possibility
of a failure to make timely payment on its outstanding secured
convertible notes and resulting enforcement by noteholders of
remedies on collateral which includes substantially all of Applied
DNA’s assets, its history of net losses, limited financial
resources, limited market acceptance, the uncertainties inherent in
research and development, future clinical data and analysis,
including whether any of Applied DNA’s or its partners therapeutic
or diagnostic candidates will advance further in the preclinical
research or clinical trial process, including receiving clearance
from the U.S. Food and Drug Administration or equivalent foreign
regulatory agencies to conduct clinical trials and whether and
when, if at all, they will receive final approval from the U.S. FDA
or equivalent foreign regulatory agencies, the fact that there has
never been a commercial drug product utilizing PCR-produced DNA
technology approved for therapeutic use, the unknown outcome of any
applications or requests to U.S. FDA or equivalent foreign
regulatory agencies, the unknown limited duration of any Emergency
Use Authorization (EUA) approval from U.S. FDA, disruptions in the
supply of raw materials and supplies, and various other factors
detailed from time to time in Applied DNA’s SEC reports and
filings, including our Annual Report on Form 10-K filed on December
12, 2019 and our subsequent quarterly reports on Form 10-Q filed on
February 6, 2020 and May 14, 2020, and other reports we file with
the SEC, which are available at www.sec.gov. Applied DNA undertakes
no obligation to update publicly any forward-looking statements to
reflect new information, events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events, unless
otherwise required by law.
APPLIED DNA SCIENCES,
INC.
CONSOLIDATED BALANCE
SHEETS
MARCH 31, 2020 AND
September 30, 2019
March 31, 2020 September 30, 2019
ASSETS (unaudited) Current assets: Cash and cash
equivalents
$
8,662,889
$
558,988
Accounts receivable, net of allowance of $4,500 at March 31, 2020
and September 30, 2019, respectively
549,123
839,951
Inventories
88,941
142,629
Prepaid expenses and other current assets
678,120
604,740
Total current assets
9,979,073
2,146,308
Property and equipment, net
265,400
226,221
Other assets: Deferred offering costs
-
109,698
Deposits
76,085
62,351
Goodwill
285,386
285,386
Intangible assets, net
720,953
734,771
Total Assets
$
11,326,897
$
3,564,735
LIABILITIES AND EQUITY (DEFICIT) Current
liabilities: Accounts payable and accrued liabilities (including
related party of $40,000 at March 31, 2020)
$
1,178,358
$
1,616,997
Deferred revenue
671,526
628,993
Total current liabilities
1,849,884
2,245,990
Long term accrued liabilities
722,564
621,970
Secured convertible notes payable, related party. net of
debt issuance costs
1,485,673
1,442,497
Secured convertible notes payable, recorded at fair value
-
102,777
Total liabilities
4,058,121
4,413,234
Commitments and contingencies Applied DNA Sciences,
Inc. Stockholders’ Equity (Deficit) : Preferred stock, par value
$0.001 per share; 10,000,000 shares authorized; -0- shares issued
and outstanding as of March 31, 2020 and September 30, 2019,
respectively
-
-
Series A Preferred stock, par value $0.001 per share; 10,000,000
shares authorized; -0- issued and outstanding as of March 31, 2020
and September 30, 2019, respectively
-
-
Series B Preferred stock, par value $0.001 per share; 10,000,000
shares authorized; -0- issued and outstanding as of March 31, 2020
and September 30, 2019, respectively
-
-
Common stock, par value $0.001 per share; 500,000,000 shares
authorized; 4,059,943 and 1,207,993 shares issued and outstanding
as of March 31, 2 020 and September 30, 2019, respectively
4,060
1,208
Additional paid in capital
269,693,833
255,962,922
Accumulated deficit
(262,423,267
)
(256,805,589
)
Applied DNA Sciences, Inc. stockholders’ equity (deficit):
7,274,626
(841,459
)
Noncontrolling interest
(5,850
)
(7,040
)
Total equity (deficit)
7,268,776
(848,499
)
Total liabilities and equity (deficit)
$
11,326,897
$
3,564,735
APPLIED DNA SCIENCES,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
THREE AND SIX MONTHS ENDED
MARCH 31, 2020 AND 2019
(unaudited)
Three Months Ended March
31,
Six Months Ended March
31,
2020
2019
2020
2019
Revenues: Product
$
197,801
$
119,036
$
435,671
$
440,747
Service
354,672
659,432
750,321
$
1,222,044
Total revenues
552,473
778,468
1,185,992
1,662,791
Cost of revenues
179,582
133,141
411,613
286,626
Operating expenses: Selling, general and administrative
2,285,544
2,528,914
4,658,957
5,611,295
Research and development
703,018
651,377
1,267,444
1,360,941
Depreciation and amortization
66,537
97,673
141,604
232,724
Total operating expenses
3,055,099
3,277,964
6,068,005
7,204,960
LOSS FROM OPERATIONS
(2,682,208
)
(2,632,637
)
(5,293,626
)
(5,828,795
)
Other (expense) income: Interest (expense) income, net
(including related parties interest of $25,840 and $49,310 for the
three and six months ended March 31, 2019, respectively)
(29,096
)
(37,417
)
(58,187
)
(69,028
)
Other expense, net
(239,601
)
(16,703
)
(261,833
)
(23,254
)
Loss before provision for income taxes
(2,950,905
)
(2,686,757
)
(5,613,646
)
(5,921,077
)
Provision for income taxes
-
-
-
-
NET LOSS
(2,950,905
)
(2,686,757
)
(5,613,646
)
(5,921,077
)
Less: Net (income) loss attributable to noncontrolling interest
(1,220
)
-
(1,190
)
-
NET LOSS attributable to Applied DNA Sciences, Inc.
(2,952,125
)
(2,686,757
)
(5,614,836
)
(5,921,077
)
Deemed dividend related to warrant modifications
-
-
2,842
-
NET LOSS applicable to common stockholders
(2,952,125
)
(2,686,757
)
(5,617,678
)
(5,921,077
)
Net loss per share applicable to common stockholders-basic
and diluted
$
(0.79
)
$
(3.22
)
$
(1.76
)
$
(6.51
)
Weighted average shares outstanding-basic and diluted
3,758,512
834,990
3,196,616
909,623
APPLIED DNA SCIENCES,
INC.
CALCULATION AND RECONCILIATION
OF ADJUSTED EBITDA
(unaudited)
Three Month Period Ended March
31,
2020
2019
% ∆
Net Loss
$
(2,950,905
)
$
(2,686,757
)
Interest expense (income), net
29,096
37,417
Depreciation and amortization
66,537
97,673
Stock based compensation expense (income)
226,668
267,094
Bad debt expense
-
-
Total non-cash items
322,301
402,184
Consolidated Adjusted EBITDA (loss)
$
(2,628,604
)
$
(2,284,573
)
15
%
Six Month Period
Ended March 31,
2020
2019
% ∆
Net Loss
$
(5,613,646
)
$
(5,921,077
)
Interest expense (income), net
58,187
69,028
Depreciation and amortization
141,604
232,724
Stock based compensation expense
432,758
757,338
Bad debt expense
-
(8,633
)
Total non-cash items
632,549
1,050,457
Consolidated Adjusted EBITDA (loss)
$
(4,981,097
)
$
(4,870,620
)
2
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200514005662/en/
Investor contact: Sanjay M. Hurry, 212-838-3777 LHA
Investor Relations shurry@lhai.com Web: www.adnas.com
Twitter: @APDN
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