NEXGEL, Inc. (“NEXGEL” or the “Company”) (NASDAQ: “NXGL”), a
leading provider of ultra-gentle, high-water-content hydrogel
products for healthcare and consumer applications, today announced
financial results for the first quarter ended March 31, 2023.
Adam Levy, NEXGEL’s Chief Executive Officer,
commented, “For the first quarter we delivered 56.6% revenue growth
year-over-year, driven by increased sales in contract manufacturing
and branded consumer products. We also started to see contribution
in March from our new joint venture with CG Labs. During the
quarter, we launched several new products and invested
strategically in sales and marketing to support those launches. We
are already starting to see the financial returns from these
investments in the second quarter, as well as from our new JV.”
Mr. Levy continued, “Based on the dynamic
changes to our business, which include the March 1 joint venture, I
feel it’s important to provide a one-time exception to our policy
of not providing guidance. Based on these developments and our
progress to date, we are projecting $1.0 million in revenue for the
second quarter of 2023, an increase of 78.2% year-over-year.
Complementing this, we had approximately $5.8 million in cash and
cash equivalents at quarter-end, which gives us sufficient runway
to operate and the ability to be opportunistic about further
potential investments to accelerate our growth.”
First Quarter 2023 Operational
Highlights
- Acquired a 50% interest in a newly
formed joint venture (“JV”), CG Converting and Packaging, LLC, with
C.G. Laboratories Inc. (“CG Labs”) for its converting and packaging
business.
- Executed a supply agreement with a
large new customer relating to a new consumer product.
- Launched advertising and marketing
initiative, which has increased branded product sales.
First Quarter
2023 Financial
Highlights
For the first quarter of 2023, revenue totaled
$620 thousand and increased by $224 thousand, or 56.6%, compared to
$396 thousand for the same period the year prior. The increase in
overall revenues was primarily due to sales growth in both contract
manufacturing and branded products. Revenue during the first
quarter of 2023 includes one full month of revenue contribution
from the Company’s newly formed joint venture with C.G.
Laboratories.
Gross loss for the first quarter of 2023 was $57
thousand, compared to a gross loss of $22 thousand for the same
prior year period. The increase in the loss was mainly due to the
increased manufacturing of promotional materials and customer
product samples to support our new product line growth. Gross
margin loss was approximately 9.2% for the three months ended March
31, 2023, compared to a gross margin loss of 5.6% for the three
months ended March 31, 2022.
Cost of revenues was $677 thousand for the
quarter ended March 31, 2023, compared to $418 thousand for the
quarter ended March 31, 2022.
Total operating expenses, including R&D and
SG&A expenses, increased to $826 thousand for the three months
ended March 31, 2023, compared to $790 thousand for the prior year
period. The increase in the current year was attributable to new
product line growth as well as an increase in compensation and
benefits, Advertising and Marketing, and professional fees. This
was partially offset by lower investor and shareholder services
expenses, related to our 2021 uplisting to the Nasdaq.
Net loss for the quarter ended March 31, 2023,
improved to $814 thousand or $0.15 per basic and diluted share,
compared to net loss of $1.8 million or $0.33 per basic and diluted
share for the same period in 2022.
As of March 31, 2023, NEXGEL had approximately
$5.8 million of cash and cash equivalents and marketable
securities, which includes an investment in U.S. treasuries of $5
million.
As of March 31, 2023, NEXGEL had 5,614,028
shares of common stock outstanding.
2023 Second Quarter
OutlookNEXGEL currently expects to report second quarter
2023 revenue of $1.0 million, driven by organic growth of existing
direct-to-consumer products, the first full quarter of sales from
its recent new product launches and a full quarter benefit from its
new joint venture with CG Labs.
NEXGEL First Quarter 2023 Financial
Results Conference CallManagement will host a conference
call and webcast today at 4:30 p.m. Eastern Time to discuss its
operational and financial results for the first quarter 2023.
Date: May 15, 2023Time: 4:30
P.M. ETLive Call: +1-888-886-7786 or
+1-416-764-8658Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1609433&tp_key=21ca2e040e
For interested individuals unable to join the
conference call, a replay will be available through May 22, 2023,
at +1-844-512-2921 or +1-412-317-6671. Participants must use the
following code to access the replay of the call: 37834998. An
archived version of the webcast will also be available on NEXGEL’s
Investor Relations site: https://ir.nexgel.com/.
About NEXGEL, INC.NEXGEL is a
leading provider of ultra-gentle, high-water-content hydrogels for
healthcare and consumer applications. Based in Langhorne, Pa., the
Company has developed and manufactured electron-beam, cross-linked
hydrogels for over two decades. NEXGEL has formulated more than 200
different combinations to bring natural ingredients to gentle skin
patches that can be worn for long periods of time with little to no
irritation.
Forward-Looking Statement
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) (which Sections were
adopted as part of the Private Securities Litigation Reform Act of
1995). Statements preceded by, followed by or that otherwise
include the words “believe,” “anticipate,” “estimate,” “expect,”
“intend,” “plan,” “project,” “prospects,” “outlook,” and similar
words or expressions, or future or conditional verbs, such as
“will,” “should,” “would,” “may,” and “could,” are generally
forward-looking in nature and not historical facts. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company's
actual results, performance, or achievements to be materially
different from any anticipated results, performance, or
achievements for many reasons including the impact of the COVID-19
pandemic. The Company disclaims any intention to, and undertakes no
obligation to, revise any forward-looking statements, whether as a
result of new information, a future event, or otherwise. For
additional risks and uncertainties that could impact the Company's
forward-looking statements, please see the Company's Annual Report
on Form 10-K for the year ended December 31, 2021, including but
not limited to the discussion under “Risk Factors” therein, which
the Company filed with the SEC and which may be viewed at
http://www.sec.gov/.
Investor
Contacts:Valter
Pinto, Managing DirectorKCSA Strategic
Communications212.896.1254valter@kcsa.com
Media
Contacts:Kelly
KnobeckDirector of Consumer Productsinfo@nexgel.com
NEXGEL, INCCONDENSED
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2023
AND DECEMBER 31, 2022 (Unaudited)(in
thousands, except share and per share data)
|
|
March 31,2023 |
|
|
December 31,2022 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
787 |
|
|
$ |
1,101 |
|
Marketable securities |
|
|
5,016 |
|
|
|
5,508 |
|
Accounts receivable, net |
|
|
380 |
|
|
|
222 |
|
Inventory |
|
|
968 |
|
|
|
502 |
|
Prepaid expenses and other current assets |
|
|
129 |
|
|
|
172 |
|
Total current assets |
|
|
7,280 |
|
|
|
7,505 |
|
Goodwill |
|
|
311 |
|
|
|
311 |
|
Intangibles,
net |
|
|
16 |
|
|
|
20 |
|
Property and
equipment, net |
|
|
1,282 |
|
|
|
721 |
|
Operating
lease - right of use asset |
|
|
2,022 |
|
|
|
1,737 |
|
Other
assets |
|
|
95 |
|
|
|
63 |
|
Total assets |
|
$ |
11,006 |
|
|
$ |
10,357 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
987 |
|
|
$ |
265 |
|
Accrued expenses and other current liabilities |
|
|
112 |
|
|
|
130 |
|
Notes payable, current portion |
|
|
15 |
|
|
|
15 |
|
Warrant liability |
|
|
176 |
|
|
|
242 |
|
Operating lease liability, current portion |
|
|
232 |
|
|
|
207 |
|
Total current liabilities |
|
|
1,522 |
|
|
|
859 |
|
Operating lease liability, net of current portion |
|
|
1,864 |
|
|
|
1,593 |
|
Notes payable, net of current portion |
|
|
266 |
|
|
|
268 |
|
Total liabilities |
|
|
3,652 |
|
|
|
2,720 |
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies (Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001 per share, 5,000,000 shares
authorized, no shares issued and outstanding |
|
|
- |
|
|
|
- |
|
Common stock, par value $0.001 per share, 25,000,000 shares
authorized; 5,614,028 and 5,577,916 shares issued and outstanding
as of March 31, 2023 and December 31, 2022, respectively |
|
|
6 |
|
|
|
6 |
|
Additional
paid-in capital |
|
|
19,213 |
|
|
|
19,189 |
|
Accumulated
deficit |
|
|
(12,372 |
) |
|
|
(11,558 |
) |
Total NexGel
stockholders’ equity |
|
|
6,847 |
|
|
|
7,637 |
|
Non-controlling interest in joint venture |
|
|
507 |
|
|
|
- |
|
Total
stockholders’ equity |
|
|
7,354 |
|
|
|
7,637 |
|
Total
liabilities and stockholders’ equity |
|
$ |
11,006 |
|
|
$ |
10,357 |
|
NEXGEL, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE THREE
MONTHS ENDED MARCH 31, 2023 AND
2022(Unaudited)(in thousands, except
share and per share data)
|
|
Three months
ended |
|
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
Revenues, net |
|
$ |
620 |
|
|
$ |
396 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
677 |
|
|
|
418 |
|
|
|
|
|
|
|
|
|
|
Gross
loss |
|
|
(57 |
) |
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
Research and
development |
|
|
29 |
|
|
|
24 |
|
Selling,
general and administrative |
|
|
797 |
|
|
|
766 |
|
Total
operating expenses |
|
|
826 |
|
|
|
790 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(883 |
) |
|
|
(812 |
) |
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
Interest
income (expense), net |
|
|
(1 |
) |
|
|
(744 |
) |
Loss on debt
extinguishment |
|
|
- |
|
|
|
(150 |
) |
Changes in
fair value of warrant liability and warrant modification
expense |
|
|
66 |
|
|
|
(130 |
) |
Gain on
investment in marketable securities |
|
|
7 |
|
|
|
|
|
Other
income |
|
|
4 |
|
|
|
- |
|
Total other
income (expense), net |
|
|
76 |
|
|
|
(1,024 |
) |
Loss before
income taxes |
|
|
(807 |
) |
|
|
(1,836 |
) |
Income tax
expense |
|
|
— |
|
|
|
— |
|
Net
loss |
|
|
(807 |
) |
|
|
(1,836 |
) |
Less: Income
attributable to non-controlling interest in joint venture |
|
|
7 |
|
|
|
— |
|
Net loss
attributable to NexGel stockholders |
|
$ |
(814 |
) |
|
$ |
(1,836 |
) |
Net loss per
common share - basic |
|
$ |
(0.15 |
) |
|
$ |
(0.33 |
) |
Net loss per
common share - diluted |
|
$ |
(0.15 |
) |
|
$ |
(0.33 |
) |
Weighted
average shares used in computing net loss per common share -
basic |
|
|
5,586,326 |
|
|
|
5,572,234 |
|
NEXGEL, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)(in thousands)
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Operating
Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(814 |
) |
|
$ |
(1,836 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Income attributable to non-controlling interest in joint
venture |
|
|
7 |
|
|
|
- |
|
Depreciation and amortization |
|
|
31 |
|
|
|
28 |
|
Changes in ROU asset and operating lease liability |
|
|
11 |
|
|
|
10 |
|
Share-based compensation |
|
|
24 |
|
|
|
55 |
|
Gain on investment in marketable securities |
|
|
7 |
|
|
|
- |
|
Changes in fair value of warrant liability and warrant
modification |
|
|
(66 |
) |
|
|
130 |
|
Amortization of deferred financing costs |
|
|
- |
|
|
|
741 |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(158 |
) |
|
|
77 |
|
Inventory |
|
|
(466 |
) |
|
|
11 |
|
Prepaid expenses and other assets |
|
|
11 |
|
|
|
(90 |
) |
Accounts payable |
|
|
722 |
|
|
|
(71 |
) |
Accrued expenses and other current liabilities |
|
|
(18 |
) |
|
|
(2 |
) |
Net Cash
Used in Operating Activities |
|
|
(709 |
) |
|
|
(797 |
) |
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
Proceeds from sales of marketable securities |
|
|
485 |
|
|
|
— |
|
Capital expenditures |
|
|
(88 |
) |
|
|
— |
|
Net Cash
Provided by Investing Activities |
|
|
397 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
Principle payment of notes payable |
|
|
(2 |
) |
|
|
(2,033 |
) |
Net Cash
Used in Financing Activities |
|
|
(2 |
) |
|
|
(2,033 |
) |
Net
Decrease in Cash |
|
|
(314 |
) |
|
|
(2,830 |
) |
Cash – Beginning of period |
|
|
1,101 |
|
|
|
13,350 |
|
Cash – End of period |
|
$ |
787 |
|
|
$ |
10,520 |
|
Supplemental Disclosure of Cash Flows Information |
|
|
|
|
|
|
|
|
Cash paid
during the year for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
— |
|
|
$ |
— |
|
Taxes |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Supplemental
Non-cash Investing and Financing activities |
|
|
|
|
|
|
|
|
Property and equipment contributed as capital investment to JV |
|
$ |
500 |
|
|
$ |
— |
|
ROU asset and operating lease liabilities recognized upon
consolidation of JV |
|
$ |
334 |
|
|
$ |
— |
|
NexGel (NASDAQ:NXGL)
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NexGel (NASDAQ:NXGL)
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