On February 10, 2022 Applied DNA Sciences, Inc. (NASDAQ: APDN) (the "Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA manufacturing and nucleic acid-based technologies, reported consolidated financial results for the first quarter of fiscal 2022, ended December 31, 2021.

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"Applied DNA had an excellent start to fiscal 2022 as we continued to capitalize on the demand for enterprise-scale COVID-19 testing while making meaningful progress in developing LinearDNA, our long-term, biotherapeutic growth platform," stated Dr. James A. Hayward, president and CEO. "Following record-high revenues in fiscal 2021, we are pleased to deliver another quarter of record revenues. Growth in our top-line was driven principally by higher demand for COVID-19 testing that was further catalyzed by the emergence of the Omicron variant, and due to the final shipment of molecular taggant under a previously awarded $1.6 million order to tag textile fibers.

"The first quarter was also noteworthy for progress in positioning our LinearDNA platform as an alternative to plasmid DNA (pDNA) in the manufacture of nucleic acid-based therapeutics," continued Dr. Hayward. "Data generated from the ongoing animal clinical trials of our initial LinearDNA therapeutic candidate, our vaccine against SARS-CoV-2 in domestic felines and ferrets, as well as the application of LinearDNA constructs in a non-viral CAR-T manufacturing system alongside a European Union-based client, have been highly encouraging. With clinical development pipelines industrywide focused on therapies that require DNA for production and growing interest in pDNA alternatives with early- to late-stage manufacturing capacity that can allow therapeutic programs to evolve efficiently, we believe we are building a very compelling case for LinearDNA as a viable alternative to pDNA."

Continued Dr. Hayward, "Looking ahead, we believe we are well-positioned for continued growth as investments in our clinical testing and services offering continue to yield growth. Testing momentum continued into the second quarter and contributed most of unaudited January revenues of approximately $2.0 million, and we anticipate higher demand from our largest testing client to ensure a safe start to the Spring semester for a larger on-campus population. We are also broadening the base of prospective testing clients nationwide upon authorization of our Linea 2.0 COVID-19 Assay (the "Linea 2.0 Assay") and Linea Unsupervised At-Home Sample Collection Kit (the "Collection Kit") EUA request. Existing clients have also expressed an interest in the Collection Kit as it enhances safeCircle’s operational flexibility to end-users. Longer-term, we are working to ensure that our investments to support COVID-19 testing serve as the foundation for a stable and profitable clinical lab business based on a more diversified offering of molecular and genetic tests that parallel the therapeutic objectives for LinearDNA.

"The next steps for our LinearDNA platform center on initiatives to optimize the design and delivery of LinearDNA, including the deployment of a Lipid Nanoparticle (LNP) system that we believe makes our platform more attractive to potential contract development and manufacturing company (CDMO) customers and enhances the development of our therapeutic pipeline. Our clinical development priorities align with our contract research organization (CRO) customers as we seek to mature these relationships into CDMO customers. With nearly one-half of our customers utilizing LinearDNA to manufacture preclinical CAR-T cells, we are working under the auspices of European Medicines Agency regulations with a European Union-based customer to define the first-ever Phase 1 LinearDNA CAR T clinical trial. Another substantial portion of our customers use LinearDNA as a template to manufacture preclinical mRNA therapeutics. Thanks to the success of COVID-19 vaccines, we believe the regulatory pathway for mRNA-based vaccines and therapeutics is well established, and developers are pursuing mRNA therapeutics for numerous indications beyond COVID-19. We believe that LinearDNA is well suited to supplant pDNA as the template for in vitro transcription, the process by which mRNA therapeutics are manufactured. In parallel, we expect to advance our veterinary COVID-19 vaccine candidate for its clinical data, its potential commercial utility, and its value as the prelude to LinearDNA vaccines for humans."

First Quarter Fiscal 2022 Financial Highlights:

Revenues increased 158% for the first quarter of fiscal 2022 to $4.2 million, compared with $1.6 million reported in the same period of the prior fiscal year and increased 37% from $3.0 million for the fourth quarter of fiscal 2021. The increase in revenues year-over-year was due primarily to an increase in clinical laboratory service revenues from our safeCircle COVID-19 testing platform of $2.4 million. In addition, product revenues increased by $276 thousand due mainly to an increase in sales of DNA concentrate of approximately $308 thousand to protect a textile supply chain offset by a decrease of approximately $52 thousand in sales of our Linea 1.0 COVID-19 Assay Kit.
Gross profit for the three months ended December 31, 2021, was $1.1 million, or 27%, compared with $1.1 million and 68% for the same period in the prior fiscal year. The decline in gross margin was primarily the result of a higher portion of our clinical laboratory service revenues coming from the testing contracts where we also provide and staff the test collection centers, as these contracts have higher costs associated with them compared with our surveillance testing contracts. The Company believes that gross margin will improve with the decrease in COVID-19 positivity rates as sample pooling returns, and, if sample numbers remain at the higher levels recorded by safeCircle for January 2022, the Company expects enhanced absorption of fixed costs for the collection centers.
Total operating expenses increased to $5.7 million for the first quarter of fiscal 2022, compared with $4.1 million in the prior-year quarter. The year-over-year increase is primarily attributable to an increase in stock-based compensation expense of approximately $1.1 million relating primarily to officer stock option grants that vested immediately, as well as to the annual non-employee board of director grant that vests one year from the date of the grant. To a lesser extent, the increase was attributable to an increase in Research and Development expenses of $316 thousand.
Net loss applicable to common stockholders for the first quarter of fiscal 2022, was $4.7 million, or $0.63 per share, compared with a net loss of $4.8 million, or $0.88 per share, for the prior-year quarter.
Excluding non-cash expenses, Adjusted EBITDA was negative $2.7 million and negative $2.4 million for the first quarters of fiscal 2022 and 2021, respectively. See below for information regarding non-GAAP measures.
Cash and cash equivalents stood at $2.7 million on December 31, 2021, compared with $6.6 million as of September 30, 2021.
First Quarter Fiscal 2022 Conference Call Information
The Company will hold a conference call and webcast to discuss its first quarter fiscal 2022 financial results today, Thursday, February 10, 2022, at 4:30 PM ET. To participate in 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, 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 and Replay of webcast: View Source

Telephonic replay (available 1 hour following the conclusion of the live call through February 17, 2022):

Participant Toll Free: 1-877-344-7529
Participant Toll: 1-412-317-0088
Participant Passcode: 2723913
Presentation slides will also be posted to the ‘Company Events’ sub-page of the Company’s Investor Relations website and embedded into the live webcast.

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.