PR Newswire
EMERYVILLE, Calif., Aug. 14, 2023
Strategic Alternatives Process Continuing; Board Focused on Maximizing Stockholder Value
EMERYVILLE, Calif., Aug. 14, 2023 /PRNewswire/ -- PhenomeX, Inc. (Nasdaq: CELL), a life sciences tools company, today reported financial results for the second quarter ended June 30, 2023.
Recent Highlights
- Achieved total revenue of $14.1 million for the second quarter of 2023, with $7.3 million in recurring revenue
- Placed five platforms, including the sale of the first Beacon QuestTM, bringing total PhenomeX installed base to 435 placements
- Launched Beacon Quest and Beacon Selectâ„¢ for antibody discovery to broaden accessibility of technology through lower price point targeting the academic market and mid-sized CDMO/CRO market, respectively
- Advanced the development of PhoeniX, the next-generation optofluidics platform, which is expected to be in beta in 2024
- Demonstrated PhenomeX's adeno-associated virus (AAV) cell line development workflow is compatible with producer cell lines used by three different gene therapy developers
- Achieved more than $70 million in annualized run-rate synergies exceeding previously communicated financial target
"In the second quarter, PhenomeX delivered solid operational performance through the enhancement of our product portfolio and pricing strategy, highlighted by the recent launches of Beacon Quest into the academic market and Beacon Select for antibody discovery," said Siddhartha Kadia, Ph.D., chief executive officer of PhenomeX. "In addition, we have made significant progress in our Commercial operations and AAV cell line development workflow."
Commercial Update
Under the leadership of Dr. Yan Zhang, chief commercial officer, PhenomeX expanded its geographic presence in key markets in Asia while also stabilizing its sales force following the integration of Isoplexis. The Company hired seasoned life sciences executives as key regional general managers in Japan and China. The Commercial team has begun cross-selling training for both the optofluidics and proteomics technologies and is experiencing positive momentum globally with the Beacon Quest launch in the academic market.
AAV Cell Line Development Workflow Update
PhenomeX has validated that its AAV cell line development workflow is now compatible with producer cell lines used by three different gene therapy developers, compared to one developer last quarter. These evaluations drive confidence that the established AAV workflow on the Beacon platform can predict cell line productivities of multiple AAV serotypes and induction mechanisms, including cell lines induced using small molecules like doxycycline. Given stable producer cell lines for AAV production are induced using either helper virus or a small molecule inducer, the Beacon platform workflow addresses the key bottleneck in the adoption of stable cell lines in the gene therapy manufacturing space. AAV cell line development service agreements for gene therapy continues to be the largest commercial growth driver opportunity for PhenomeX.
Second Quarter 2023 Financial Results
Revenue was $14.1 million for the second quarter of 2023, comprised of $12.1 million of Optofluidics revenue and $2.0 million of Proteomics revenue. Platform revenue was $6.5 million and recurring revenue was $7.3 million in the second quarter of 2023.
The installed base increased by five platforms during the second quarter of 2023, with three Proteomic platforms and two Optofluidic platforms, including one Beacon, one Quest, and additional revenue from one trade up and two subscription buy outs. This brings the total installed base of PhenomeX to 435 platforms.
Gross profit was $6.0 million for the second quarter of 2023 compared to $12.9 million for the corresponding prior year period. Gross margin decreased from 67% to 43% primarily as a result of increased inventory reserves, idle manufacturing costs and amortization expense related to certain assets acquired in the IsoPlexis merger. Excluding a one-time excess and obsolete inventory reserve adjustment of $1.7 million and amortization expenses of $1.2 million, on a non-GAAP basis, the adjusted gross profit was $9.0 million and adjusted gross margin was 64%.
Operating expenses were $53.3 million, inclusive of $3.7 million of stock-based compensation, for the second quarter of 2023, compared to $38.5 million, inclusive of $6.6 million of stock-based compensation for the second quarter of 2022. Operating expenses in the second quarter of 2023 included a goodwill impairment charge of $16.6 million and restructuring charges of $1.1 million. Excluding these one-time charges, on a non-GAAP basis, adjusted operating expenses for the second quarter of 2023 were down by approximately 7% compared to the second quarter of 2022.
Net loss was $50.2 million for the second quarter of 2023, compared to $25.7 million for the corresponding prior year period.
Cash and cash equivalents were $31.0 million as of June 30, 2023. During the quarter, the Company repaid in full all outstanding indebtedness under the Second Amended Loan Agreement with East West Bank, resulting in a loss on debt extinguishment of $1.8 million primarily as a result of the write off of capitalized debt issuance costs and an early prepayment penalty.
2023 Guidance Outlook
PhenomeX reiterates full year 2023 revenue to be in the range of $75 to $85 million dollars and updates its GAAP gross margin target range to be 57% to 60%, as a result of purchase price accounting for the IsoPlexis acquisition. On a non-GAAP basis, the adjusted gross margin target range is expected to be 62% to 65%. This range factors in macroeconomic headwinds, significant slowdown in decision-making cycles for large capital purchases and our ongoing commercial integration efforts.
The Company continues to estimate its operating expenses for the third quarter to be approximately $35 million, and the fourth quarter of 2023 to be approximately $33 million, as communicated in its first quarter of 2023 earnings results. As a result, operating expenses for the full year 2023 is projected to be $135 million, which would be greater than a 40% reduction in non-GAAP operating expenses from $235 million in 2022 on a pro-forma basis, which excludes restructuring and transaction expenses.
Ongoing Exploration of Strategic Alternatives
On July 7, 2023, PhenomeX announced that its Board of Directors, with the support of management and legal advisors, launched a process to explore, review and evaluate a range of potential strategic alternatives focused on addressing capital requirements and maximizing stockholder value.
Dr. Kadia added, "The Board is continuing in its ongoing review of strategic alternatives and capital raising, and we are focused on arriving at an outcome that addresses our capital requirements and maximizes shareholder value."
In light of this ongoing process, the Company will not host a financial results conference call this quarter. Additional operational and financial details are included in this release and will be available in the Form 10-Q accessible on the Company's website at http://investors.phenomex.com.
About PhenomeX
PhenomeX is empowering scientists to leverage the full potential of each cell and drive the next era of functional cell biology that will advance human health. We enable scientists to reveal the most complete insights on cell function and obtain a full view of the behavior of each cell. Our unique suite of proven high-throughput tools and services offer unparalleled resolution and speed, accelerating the insights that are key to advancing discoveries that can profoundly improve the prevention and treatment of disease. Our award-winning platforms are used by researchers across the globe, including those at the top 15 global pharmaceutical companies and approximately 85% of leading U.S. comprehensive cancer centers.
Non-GAAP Financial Measures
To supplement the Company's financial statements, which are presented on the basis of U.S. generally accepted accounting principles (GAAP), the non-GAAP measures of adjusted gross profit, adjusted gross margin and adjusted operating expenses are included in this press release. Adjusted gross profit is gross profit adjusted to exclude one-time charges such as excess and obsolete inventory reserve adjustment and amortization expenses which the Company believes provide a more meaningful representation of the Company's profit. Adjusted operating expenses are operating expenses adjusted to exclude one-time charges such as goodwill impairment charge and restructuring charge that the Company does not consider to be part of its core operating results when assessing its performance. A reconciliation of GAAP to adjusted non-GAAP financial measures is included as an attachment to this press release.
The Company believes these non-GAAP financial measures are useful to investors in assessing its operating performance. The Company uses these financial measures internally to evaluate its operating performance and for planning and forecasting of future periods. PhenomeX believes that both management and investors benefit from referring to the non-GAAP financial measures in assessing the Company's performance and when planning, forecasting and analyzing future periods. The Company believes its non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial measures that it uses in making operating decisions and because its investors and analysts use them to help assess the health of the Company's business.
While the Company believes these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures may not be reported by competitors, and they may not be directly comparable to similarly titled measures of other companies due to differences in calculation methodologies. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the Company's GAAP financial statements. They should be used only as a supplement to GAAP information and should be considered only in conjunction with the consolidated financial statements prepared in accordance with GAAP.
Forward Looking Statements
This press release contains forward-looking statements that are based on management's beliefs and assumptions and on information currently available to management. All statements contained in this release other than statements of historical fact are forward-looking statements, including statements regarding expectations of future operating results or financial performance, our guidance for the full year 2023, the exploration, review and evaluation of a range of potential strategic alternatives focused on addressing capital requirements and maximizing stockholder value, expectations regarding acquisition-cost reductions and estimated annualized cost synergies as a result of our acquisition of IsoPlexis, management's estimates and expectations regarding growth of our business and market, including statements regarding the Company's ability and timing to introduce new product offerings, including the PhoeniX, and other matters regarding our business strategies, use of capital, results of operations and financial position, and plans and objectives for future operations.
In some cases, you can identify forward-looking statements by the words "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "target," "ongoing" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. There are a significant number of factors that could cause our actual results to differ materially from statements made in this press release, including: our ability to successfully integrate the businesses and operations of Berkeley Lights and IsoPlexis; our ability to raise additional capital; our ability to attract new and retain existing customers, or renew and expand our relationships with them; the failure to timely develop and achieve market acceptance of new products and services as well as existing products and services offerings; our limited operating history; our history of losses since inception; and general market, political, economic, and business conditions, including those related to the continuing impact of COVID-19 and geopolitical uncertainty. Additional risks and uncertainties are described under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. We caution you that forward-looking statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this press release represent our views as of the date hereof. We undertake no obligation to update any forward-looking statements for any reason, except as required by law.
PhenomeX Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data) | |||||||
Three months ended | Six months ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenue: | |||||||
Product revenue | $ 10,304 | $ 9,468 | $ 18,682 | $ 19,242 | |||
Service and other revenue | 3,758 | 9,682 | 13,896 | 20,114 | |||
Total revenue | 14,062 | 19,150 | 32,578 | 39,356 | |||
Cost of sales: | |||||||
Product cost of sales | 7,089 | 2,614 | 11,001 | 5,309 | |||
Service cost of sales | 930 | 3,610 | 2,106 | 7,294 | |||
Total cost of sales | 8,019 | 6,224 | 13,107 | 12,603 | |||
Gross profit | 6,043 | 12,926 | 19,471 | 26,753 | |||
Operating expenses: | |||||||
Research and development | 9,342 | 18,178 | 17,763 | 35,751 | |||
Selling, general and administrative | 26,258 | 20,295 | 52,805 | 37,822 | |||
Restructuring | 1,093 | — | 2,383 | — | |||
Loss on impairment of goodwill | 16,557 | — | 16,557 | — | |||
Total operating expenses | 53,250 | 38,473 | 89,508 | 73,573 | |||
Loss from operations | (47,207) | (25,547) | (70,037) | (46,820) | |||
Other income (expense): | |||||||
Interest expense | (1,632) | (227) | (2,016) | (451) | |||
Interest income | 694 | 53 | 1,521 | 87 | |||
Other income (expense), net | (2,049) | (22) | (3,061) | 35 | |||
Loss before income taxes | (50,194) | (25,743) | (73,593) | (47,149) | |||
Provision for income taxes | 51 | 4 | 71 | 24 | |||
Net loss | $ (50,245) | $ (25,747) | $ (73,664) | $ (47,173) | |||
Net loss attributable to common stockholders | $ (0.51) | $ (0.38) | $ (0.84) | $ (0.70) | |||
Weighted-average shares used in calculating | 98,900,780 | 67,985,664 | 87,394,201 | 67,842,372 | |||
PhenomeX Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) | |||
Assets | June 30, | December 31, | |
Current assets: | |||
Cash and cash equivalents | $ 30,964 | $ 86,522 | |
Short-term marketable securities | — | 46,252 | |
Trade accounts receivable, net | 14,375 | 18,534 | |
Inventory | 41,455 | 18,861 | |
Prepaid expenses and other current assets | 7,992 | 6,783 | |
Total current assets | 94,786 | 176,952 | |
Restricted cash | 93 | — | |
Property and equipment, net | 32,710 | 23,847 | |
Operating lease right-of-use assets | 26,224 | 23,326 | |
Intangible assets, net | 22,499 | — | |
Other assets | 2,020 | 1,969 | |
Total assets | $ 178,332 | $ 226,094 | |
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Trade accounts payable | $ 18,631 | $ 10,092 | |
Accrued expenses and other current liabilities | 13,946 | 21,340 | |
Current portion of long-term debt | — | 4,966 | |
Deferred revenue | 9,648 | 9,092 | |
Total current liabilities | 42,225 | 45,490 | |
Long-term debt | — | 14,860 | |
Deferred revenue, net of current portion | 876 | 963 | |
Lease liability, long-term | 23,950 | 22,726 | |
Total liabilities | 67,051 | 84,039 | |
Stockholders' equity: | |||
Common stock | 5 | 4 | |
Additional paid-in capital | 546,538 | 503,708 | |
Accumulated deficit | (435,312) | (361,648) | |
Accumulated other comprehensive Income (loss) | 50 | (9) | |
Total stockholders' equity | 111,281 | 142,055 | |
Total liabilities and stockholders' equity | $ 178,332 | $ 226,094 | |
PhenomeX Inc. |
(Unaudited in $ thousands) |
Three Months Ended | Three Months Change | ||||||
June 30, 2023 | June 30, 2022 (1) | Amount | % | ||||
GAAP Gross Profit | 6,043 | 12,926 | (6,883) | (53) % | |||
GAAP Gross Margin | 43 % | 67 % | (24) % | ||||
Excess and obsolete inventory | 1,742 | — | 1,742 | NM | |||
Amortization inventory step up | 939 | — | 939 | NM | |||
Amortization intangible assets | 232 | — | 232 | NM | |||
Non-GAAP Gross Profit | 8,956 | 12,926 | (3,970) | (31) % | |||
Non-GAAP Gross Margin | 64 % | 67 % | (3) % | ||||
Three Months Ended | Three Months Change | ||||||
June 30, 2023 | June 20, 2022 | Amount | % | ||||
GAAP Operating Expenses | 53,250 | 38,473 | 14,777 | 38 % | |||
Goodwill impairment | 16,557 | — | 16,557 | NM | |||
Restructuring charge | 1,093 | — | 1,093 | NM | |||
Non-GAAP Operating Expenses | 35,600 | 38,473 | (2,873) | (7) % | |||
(1) Three months ended June 30, 2022 reflect the stand-alone Berkeley Lights consolidated financial statements. |
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SOURCE PhenomeX
