On August 12, 2021 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 three and nine months ended June 30, 2021 (Press release, Applied DNA Sciences, AUG 12, 2021, View Source [SID1234586439]).

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"We delivered excellent year-over-year revenue growth in the fiscal third quarter while laying the groundwork to secure a recently awarded COVID-19 testing services contract that has potential to be the largest contract in the Company’s history," said Dr. James A. Hayward, president and CEO of Applied DNA. "Demand for safeCircle, our pooled COVID-19 testing program, experienced a seasonal decline from the fiscal second quarter, reflecting the start of the summer recess months for our academic clients and progressively higher vaccination rates and lower positivity rates in our operating area. Our recent award from the City University of New York for large-scale turnkey COVID-19 testing services should continue to drive strong year-over-year revenue growth over the period of the contract."

Continued Dr. Hayward, "Our operating activities during the quarter were distinguished by an expansion of our COVID-19 offerings to drive incremental revenue and to drive adoption of LinearDNA as an alternative to plasmids for nucleic acid-based therapies. Following constructive interactions with the U.S. Food and Drug Administration (FDA) as part of a preliminary Emergency Use Authorization application process and the evolving nature of the pandemic, we revised our Linea SARS-CoV-2 Mutation (the "Linea Mutation Panel") (formerly SGS Mutation Panel) to target three SARS-CoV-2 mutations (E48K, L452R, N501Y) that have been designated substitutions (mutations) of therapeutic concern by the Centers for Disease Control and Prevention.

"Should the FDA grant an EUA for the Linea Mutation Panel, we believe that it will offer clinical utility to healthcare systems by enabling precision COVID-19 treatment and commercial utility to monoclonal antibody manufacturers by better characterizing patients before treatments. In recent months, several monoclonal antibody treatments have had their EUA revoked or have demonstrated a reduction in efficacy on a standalone or in combination with other treatments due to mutational impact. Use of the Linea Mutation Panel is tied to our Linea COVID-19 Assay Kit to determine positivity in clinical samples that would drive additional Assay demand if the EUA is granted for our Mutation Panel. We believe that an EUA-authorized Linea Mutation Panel will also provide additional value to our existing COVID-19 testing customers and, when combined with our Whole Genome Sequencing assets, provide data of interest to epidemiologists.

"Concurrently, the launch of our veterinary LinearDNA COVID-19 vaccine trial and the subsequently reported strong immune response that the vaccine candidate elicited, further reinforce the value proposition of LinearDNA, and, longer-term, generates invaluable preclinical data supporting the eventual application of LinearDNA to nucleic acid-based therapies in humans."

Concluded Dr. Hayward, "Looking ahead, the confluence of increasing positivity rates due to the Delta variant, the commingling of vaccinated, partially vaccinated, and unvaccinated individuals, and new mandatory testing requirements for local and state-level employees in our operating area affirm the need for ongoing and consistent COVID-19 screening available through safeCircle. Subject to FDA’s evolving EUA request review priorities, we expect to file shortly our formal request for EUA for our Linea Mutation Panel. In addition, in the coming weeks we intend to launch our COVID-19 veterinary vaccine candidate challenge trial in furtherance of a commercial animal health opportunity.

"Regarding our supply chain security business, we have cautious optimism within the cotton supply chains we serve as we approach the start of the cotton ginning season in the U.S. However, with Asia-Pacific beset by the Delta variant, man-made fiber opportunities remain static. With the tailwind of COVID-19 testing at our back supplemented by continued execution on business development initiatives, we believe we are laying the foundation for sustainable growth."

Fiscal Third Quarter 2021 Financial Highlights:

Revenues increased 294% for the third quarter of fiscal 2021 to $1.7 million, compared with $432 thousand reported in the same period of the prior fiscal year and decreased 36% from $2.7 million for the second quarter of fiscal 2021. The increase in revenues year over year was due primarily to an increase in service revenues of approximately $686 thousand and an increase of $583 thousand in product revenues. The increase in service revenue was primarily from revenues derived from our safeCircle COVID-19 surveillance testing. The increase in product revenue was mainly attributable to an increase in sales of our Linea COVID-19 Assay Kit. The decrease in revenues compared to the second quarter of fiscal 2021 was due to a decline in our safeCircle COVID-19 surveillance testing.
Total operating expenses increased to $4.5 million for the third fiscal quarter of 2021, compared with $3.5 million in the prior fiscal year’s third quarter and decreased from $4.6 million for the second quarter of fiscal 2021. The year-over-year increase is primarily attributable to an increase in total payroll of $535 thousand, of which $325 thousand was for staffing of Applied DNA Clinical Labs, LLC (ADCL). The increase in operating expenses was also the result of an increase of $148 thousand for supplies and equipment to operate the ADCL laboratory. The increase also relates to increases in research and development expenses of $215 thousand and depreciation and amortization of $186 thousand.
Net loss applicable to common stockholders for the quarter ended June 30, 2021, was $3.5 million, or $0.46 per share, compared with a net loss of $3.3 million, or $0.72 per share, for the quarter ended June 30, 2020.
Excluding non-cash expenses, Adjusted EBITDA was negative $2.8 million for both the quarters ended June 30, 2021, and 2020. See below for information regarding non-GAAP measures.
Cash and cash equivalents stood at $12.2 million on June 30, 2021, compared to $7.8 million as of September 30, 2020.
Nine-Month Financial Highlights:

Revenues increased 270% for the first nine-months of fiscal 2021 to $6.0 million, compared with $1.6 million reported in the same period of the prior fiscal year. The increase in revenues year over year was due primarily to an increase in service revenues of approximately $2.7 million and an increase of $1.7 million in product revenues. The increase in service revenue was primarily from revenues derived from our safeCircle COVID-19 surveillance testing. The increase in product revenue was mainly attributable to an increase in sales of our Linea Assay Kit.
Total operating expenses increased to $13.5 million for the first nine-months of fiscal 2021, compared with $9.5 million in the same period of the prior fiscal year. This increase is primarily attributable to an increase in payroll of $790 thousand relating to additional headcount to staff at ADCL. The increase in operating expenses also related to an increase in stock-based compensation expense of $834 thousand primarily relating to officer stock option grants that vested immediately. The increase also relates to increases in research and development expenses of $570 thousand and depreciation and amortization of $341 thousand.
Net loss applicable to common stockholders for the nine-months ended June 30, 2021, was $9.8 million, or $1.45 per share, compared with a net loss of $8.9 million, or $2.54 per share, for the first six months of fiscal 2020.
Excluding non-cash expenses, Adjusted EBITDA was negative $6.7 million for the first nine months of fiscal 2021, compared to negative $7.8 million for the same period in the prior fiscal year. See below for information regarding non-GAAP measures.
Fiscal Third Quarter 2021 Conference Call Information

The Company will hold a conference call and webcast to discuss its fiscal third quarter-end 2021 results on Thursday, August 12, 2021, 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, 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: View Source

Telephonic replay (available 1 hour following the conclusion of the live call through August 19, 2021):

Participant Toll Free: 1-877-344-7529
Participant Toll: 1-412-317-0088
Participant Passcode: 10158254
The webcast and accompanying PowerPoint presentation will be archived on the ‘IR Calendar and Corporate Presentations’ page listed under the Investor Relations drop-down menu on the Company’s website.

About safeCircle

ADCL’s high throughput pooled testing program, known as safeCircle, utilizes frequent, high-sensitivity pooled testing to help prevent virus spread by quickly identifying infections within a community, school, or workplace. safeCircle provides rapid results using real-time PCR (RT-PCR) testing.

Click through to learn more about how safeCircle can help your community, school, and workplace: safeCircle

About Linea COVID-19 Assay Kit and Linea SARS-CoV-2 Mutation Panel

The Linea COVID-19 Assay Kit is a real-time RT-PCR test intended for the qualitative detection of nucleic acid from SARS-CoV-2 in respiratory specimens including anterior nasal swabs, self-collected at a healthcare location or collected by a healthcare worker, and nasopharyngeal and oropharyngeal swabs, mid-turbinate nasal swabs, nasopharyngeal washes/aspirates or nasal aspirates, and bronchoalveolar lavage (BAL) specimens collected by a healthcare worker from individuals who are suspected of COVID-19 by their healthcare provider (HCP). The test is also intended for use with anterior nasal swab specimens that are self-collected in the presence of an HCP from individuals without symptoms or other reasons to suspect COVID-19 when tested at least weekly and with no more than 168 hours between serially collected specimens.

The scope of the Linea COVID-19 Assay Kit EUA, as amended, is expressly limited to use consistent with the Instructions for Use by authorized laboratories, certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) to perform high complexity tests. The EUA will be effective until the declaration that circumstances exist justifying the authorization of the emergency use of in vitro diagnostics for detection and/or diagnosis of COVID-19 is terminated or until the EUA’s prior termination or revocation. The diagnostic kit has not been FDA cleared or approved, and the EUA’s limited authorization is only for the detection of nucleic acid from SARS-CoV-2, not for any other viruses or pathogens.

The Linea SARS-CoV-2 Mutation Panel (formally SGS Mutation Panel) (the "Linea Mutation Panel") is for Research Use Only (RUO) and shall not be used for clinical diagnostic purposes. The Linea Mutation Panel has not been approved or authorized to diagnose, ameliorate and/or detect any disease by any U.S. or international regulatory authority.