On February 11, 2021 Applied DNA Sciences, Inc. (NASDAQ: APDN) (the "Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA manufacturing, reported consolidated financial results for the quarter ended December 31, 2020 (Press release, Applied DNA Sciences, FEB 11, 2021, View Source [SID1234574928]).
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"The first quarter marked a very strong start to the fiscal year, reflecting burgeoning demand for our COVID-19 diagnostics and surveillance testing offerings (cumulatively "our COVID-19 testing business"). Our revenue performance was driven primarily by new client acquisitions for safeCircle, our pooled surveillance testing service, the full benefit of which we believe will be evident in our March 31, 2021 quarter. We also began to deliver quantities of our Linea COVID-19 Assay Kit (the "Assay Kit") and from which we anticipate recurring orders under the existing contract," said Dr. James A. Hayward, president and CEO, Applied DNA Sciences. "Our emphasis remains on client acquisition, and, to that end, safeCircle business momentum has continued into the March quarter both organically and through CLEARED4, our channel partner, with whom we now enjoy a fourth joint customer. From a COVID-19 testing capacity perspective, we believe we can capably manage demand for safeCircle we see on the horizon and are prepared to deploy additional equipment and further automation beyond that.
"We also began to develop genomic surveillance as a third application of our Assay Kit to potentially expand our COVID-19 testing business. Whereas safeCircle tests within populations for SARS-CoV-2 positivity generally, genomic surveillance seeks to monitor positivity specifically for certain SARS-CoV-2 variants to inform public health decisions. We recently confirmed via in silico analysis and in the field that the unique design of our Assay Kit gives it the ability to discriminate positive virus infections for the presence of certain SARS-CoV-2 variants, some of which that have increased transmissibility. Given the limited gene sequencing capacity available nationally with which to confirm the presence of a variant, variant spread can go, and likely is going, undetected. We have discussions underway with the Departments of Health of multiple States on how our Assay Kit can be utilized to help them implement broader genomic surveillance while variants are less prevalent in the national population and action can be taken against them. We have already received several, initial orders for genomic surveillance from certified laboratories.
"Our Assay Kit’s ability to discriminate for certain variants is also relevant to our safeCircle service that seeks to keep safe and healthy an under-vaccinated populace now also being beset by variants. With a unique test and service offering, an evolving virological threat to which we can help public health officials craft a response, and upon CLEP-CLIA-certification of our diagnostic laboratory, which we continue to progress, we believe we are primed for continued growth in our COVID-19 testing business."
Continued Dr. Hayward, "Looking beyond the pandemic, we continue to advance our long-term strategy to establish our LinearDNA manufacturing platform as a potentially disruptive alternative to plasmid DNA that is used in the manufacture of all nucleic acid-based therapies. We are in the early stages of the assessment of a cGMP (Current Good Manufacturing Practice) production capacity and capability within our LinearRx subsidiary that directly speaks to the maturation of our preclinical CRO (contract research organization) pipeline. Our customers have made clear their expectation for us to support them as a CMO (contract manufacturing organization) and under cGMP conditions for when they initiate animal trials of their therapeutic candidates. The expected initiation of our linear DNA veterinary COVID-19 vaccine trial is in furtherance of our long-term strategy and sets a path to having a therapeutic in the market with an animal health partner."
Concluded Dr. Hayward, "Our supply chain security business is beginning to show early signs of a recovery. COVID-19 has made companies more focused on the need to secure their supply chains and made consumers and brand builders more aware of their exposure to counterfeiting and diversion. We believe that the year lost to the pandemic has created a backlog of demand for our CertainT platform across several end-markets, including textiles, nutraceuticals, and cannabis."
Fiscal First Quarter 2021 Financial Results:
Revenues increased 155% for the first quarter of fiscal 2021 to $1.6 million, compared with $634 thousand reported in the same period of the prior fiscal year and increased 415% from $314 thousand for the fourth quarter of fiscal 2020. The increase in revenues year over year was due primarily to an increase in service revenues of approximately $670 thousand and an increase of $312 thousand in product revenues. The increase in service revenue was primarily from revenues derived from our COVID-19 surveillance testing. The increase in product revenue was mainly attributable to an increase of approximately $395 thousand in sales of our Assay Kit.
Total operating expenses increased to $4.3 million for the first fiscal quarter of 2021, compared with $3.0 million in the prior fiscal year’s first quarter. This increase is primarily attributable to an increase in payroll of $748 thousand. The increase in payroll relates to an increase for officer bonuses of $341 thousand, as well as additional headcount to staff our Applied DNA Clinical Labs subsidiary. The increase in operating expenses also related to an increase in stock-based compensation expense of $367 thousand relating to officer and employee stock option grants that vested immediately.
Net loss applicable to common stockholders for the quarter ended September 30, 2020 was $4.8 million, or $0.88 per share, compared with 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 $2.4 million for the quarters ended December 31, 2020 and 2019, respectively. See below for information regarding non-GAAP measures.
Cash and cash equivalents stood at $4.2 million on December 31, 2020. Subsequent to the end of the fiscal quarter, the Company received approximately $15 million in gross proceeds from a registered direct offering. Cash and cash equivalents on January 31, 2021 was approximately $16.5 million.
Fiscal First Quarter 2021 Conference Call Information
The Company will hold a conference call and webcast to discuss its fiscal first quarter-end 2021 results on Thursday, February 11,2021 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.
For those investors unable to attend the live call, the webcast and accompanying PowerPoint presentation will also be archived on the ‘IR Calendar’ page listed under the Investor Relations drop-down menu on the Company’s website.