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 Select™ 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
June 30,
|
|
Six months ended
June 30,
|
|
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
per share, basic and diluted
|
$
(0.51)
|
|
$
(0.38)
|
|
$
(0.84)
|
|
$
(0.70)
|
Weighted-average shares
used in calculating
net loss per share, basic and diluted
|
98,900,780
|
|
67,985,664
|
|
87,394,201
|
|
67,842,372
|
PhenomeX
Inc.
Condensed
Consolidated Balance Sheets (Unaudited)
(In
thousands)
|
|
Assets
|
June 30,
2023
|
|
December 31,
2022
|
|
|
|
|
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.
Reconciliation of GAAP to Non-GAAP financial
measures
|
(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
reserve
|
1,742
|
|
—
|
|
1,742
|
|
NM
|
Amortization inventory
step up
from IsoPlexis acquisition
|
939
|
|
—
|
|
939
|
|
NM
|
Amortization intangible
assets
acquired in IsoPlexis acquisition
|
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