Societal CDMO, Inc. (“Societal”; NASDAQ: SCTL), a contract
development and manufacturing organization (CDMO) dedicated to
solving complex formulation and manufacturing challenges primarily
in small molecule therapeutic development, today reported financial
results for the second quarter and six months ended June 30,
2023.
“The second quarter was a highly productive
period. During the quarter, we continued to aggressively
pursue and win new business, as well as expand multiple programs
with existing customers. The scope of these new projects span
early stage process development, to cGMP manufacturing, to
fill/finish, and beyond. We believe the demand for this broad
range of services highlights a growing customer recognition of
Societal as a start-to-finish partner,” said David Enloe, chief
executive officer of Societal.
“And we continue to expand our capabilities in
an effort to address new and growing markets. To that end,
the company recently announced that it has secured a license to
manufacture in support of psychedelic drug development. This
strategic expansion is a natural fit for the company based on our
decades of experience in manufacturing and handling controlled
substances. We believe this unique experience positions
Societal well to address the emerging psychedelic therapy sector as
well as the growing number of ongoing and planned clinical trials
in this area. We are currently in discussions with drug
manufacturers engaged in the psychedelic area and we look forward
to our work in this new and exciting area.
“However, the period was not without challenges,
as our customers continue to face an unfavorable financing
environment. While we do not believe that our topline
year-end revenue guidance will be impacted by these market factors,
we do believe that our EBITDA guidance requires revision. We
had previously guided to a 2023 full year EBITDA of between $15 and
$18 million. Today we are revising this guidance to between
$12 and $15 million.
“Despite today’s financing environment, it is
important to emphasize that Societal’s operations and business
fundamentals remain solid. Subsequent to the quarter end, we
further stabilized our position by successfully renegotiating our
debt and certain covenants to provide a stronger balance sheet
today and greater financial flexibility for the future.
“As we look forward to the second half of the
year, we have a superb team in place, a strong pipeline of customer
projects, and a broad range of capabilities that continues to grow
to meet new and expanding areas of demand. In short, we
believe our organization is well positioned to weather today’s
temporary financing headwinds and excel in the markets ahead.”
Second Quarter 2023 and Other Recent
Developments
New and expanded customer
projects. During the quarter, the company signed $5.3
million in sales by adding one new customer and expanding project
agreements across 19 existing programs, all while maintaining the
company’s sales win rate at levels similar to the same period in
2022. The new business includes formulation and analytical method
development, cGMP manufacturing, stability studies, packaging and
logistics services.
Secured Schedule 1 Controlled Substance
Manufacturing License from Drug Enforcement Agency; Allows
Expansion into Manufacture of Psychedelic Drug Products.
Subsequent to the quarter end, the company announced that it has
completed key regulatory requirements, and received U.S. Drug
Enforcement Agency (DEA) approval to add certain Schedule 1
psychedelic compounds to its controlled substance manufacturing
registration. These compounds expand upon the Schedule 2
manufacturing registration that the company has held with the DEA
for over 20 years. Importantly, Societal is now able to
expand its capabilities into the psychedelic drug development
market without committing any additional capital investment.
The company is excited to support this emerging and growing market
and is currently in discussions with drug manufacturers engaged in
the psychedelic area.
Successfully Renegotiated Debt
Terms. In light of the unfavorable financing environment
currently faced by many of the company’s customers, Societal took
proactive steps to improve its balance sheet. Subsequent to the
quarter end, the company renegotiated its debt structure and
certain covenants with its creditors to provide the company with
additional financial optionality. Specifically, among other
benefits, the new terms defer previous mandatory payments, reduce
certain payments, and lower certain minimum liquidity and fixed
charge coverage ratios. The company is very pleased with the
outcome of this effort and the additional financial flexibility
secured.
Financial Results for the Three Months
Ended June 30, 2023
Revenues for the quarter ended June 30,
2023, were $21.8 million, compared to $23.2 million for the
comparable 2022 period. The decrease of $1.4 million was primarily
driven by a decrease in revenue from the company’s largest
commercial customer, Teva, due to a scheduled shutdown of the
company’s packaging line to implement the upgrades required to
comply with new serialization aggregation compliance standards. In
addition, the manufacturing revenue associated with then new
customer, InfectoPharm’s, inventory-build during the second quarter
of 2022, was greater than the normalized quarterly revenue recorded
in the second quarter of 2023. These reductions in revenue were
partially offset by increased pre-commercial development revenues
from the company’s clinical trial materials and technology transfer
projects. The company expects the delayed Teva orders to recover in
the short-term supported by the continued pull through in demand
resulting from market share gains against the sole competitor for
the Verapamil SR products.
Cost of sales for the quarter ended
June 30, 2023, was $17.3 million compared to $17.5 million for
the comparable period of 2022. The decrease of $0.2 million was
primarily due to lower commercial manufacturing revenue based on
the timing of the serialization aggregation compliance project
offset by higher fixed costs primarily to support the newly
installed aseptic fill/finish line that has expanded the company’s
capabilities.
Selling, general and administrative expenses for
the second quarter of 2023 of $5.3 million was consistent with the
comparable prior year period of $5.2 million.
Interest expense was $2.3 million for the three
months ended June 30, 2023, a decrease compared to $3.4
million for the comparable period of 2022. The decrease of $1.1
million was primarily due to a significantly reduced amount of
aggregate principal and lower interest rates under the company's
refinanced debt as compared to the borrowings outstanding during
the period ended June 30, 2022.
For the quarter ended June 30, 2023, the
company recorded a net loss of $3.2 million or $0.04 per diluted
share, as compared to a net loss of $3.1 million or $0.06 per
diluted share, for the comparable period of 2022. EBITDA, as
adjusted* for the period was $2.8 million compared to $4.0 million
in the prior year period. The $1.2 million decrease in EBITDA is
primarily due to lower revenue during the period.
Financial Results for the Six Months
Ended June 30, 2023
Revenue for the six months ended June 30,
2023, was $43.3 million, compared to $44.3 million for 2022. The
decrease of $1.0 million in revenue was primarily driven by the
decreases in revenues from Teva and InfectoPharm, which were
partially offset by an increase in pre-commercial development
revenues, as described above.
Cost of sales for the six months ended
June 30, 2023, was $36.6 million, compared to $33.6 million in
2022. The cost of sales increase of $3.0 million was primarily due
to mix of revenue and related fixed cost absorption, including
increased costs associated with the new aseptic fill/finish line
that has expanded the company’s capabilities and increased material
costs.
Selling, general and administrative expenses for
the six months ended June 30, 2023, were $9.9 million,
compared to $10.9 million in 2022. The decrease of $1.0 million was
primarily related to lower public company costs and administrative
costs than the prior year.
Interest expense was $4.4 million and $6.8
million for the first six months of 2023 and 2022, respectively.
The decrease of $2.4 million was primarily due to a significantly
reduced amount of aggregate principal and lower interest rates
under the company's refinanced debt as compared to the borrowings
outstanding during the period ended June 30, 2022.
For the six months ended June 30, 2023,
Societal reported a net loss of $7.9 million, or $0.09 per diluted
share, compared to a net loss of $7.4 million, or $0.13 per diluted
share, for 2022. EBITDA, as adjusted* for the first six months was
$3.4 million compared to $6.8 million in the prior year period. The
$3.4 million decrease in EBITDA is primarily due to mix of revenue
and related fixed cost absorption offset by reduced selling,
general and administrative costs.
* EBITDA, as adjusted is non-GAAP financial
measure (see reconciliation of non-GAAP financial measures at the
end of this release).
Non-GAAP Financial Measures
To supplement Societal’s financial results
determined by U.S. generally accepted accounting principles
(“GAAP”), the company monitors certain non-GAAP information for the
business, including EBITDA, as adjusted. The company believes that
these non-GAAP financial measures are helpful in understanding the
business as they are useful to investors in allowing for greater
transparency of supplemental information used by management. These
measures are used by investors, as well as management in assessing
the company’s performance. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, reported
GAAP results. Further, non-GAAP financial measures, even if
similarly titled, may not be calculated in the same manner by all
companies, and therefore should not be compared. Please see the
section of this press release titled “Reconciliation of GAAP to
Non-GAAP Financial Measures” for a reconciliation of any non-GAAP
financial measures to their most directly comparable GAAP
measures.
Webcast
Societal management will be hosting a webcast
today, August 14, 2023, beginning at 4:30 p.m. ET. The webcast may
be accessed via "Investor Events" in the Investor section of the
company's website, https://ir.societalcdmo.com/events. An archived
webcast will be available on the company's website approximately
two hours after the event and will be available for 30 days.
About Societal CDMO
Societal CDMO (NASDAQ: SCTL) is a bi-coastal
contract development and manufacturing organization (CDMO) with
capabilities spanning pre-Investigational New Drug (IND)
development to commercial manufacturing and packaging for a wide
range of therapeutic dosage forms with a primary focus on small
molecules. With an expertise in solving complex manufacturing
problems, Societal is a leading CDMO providing therapeutic
development, end-to-end regulatory support, clinical and commercial
manufacturing, aseptic fill/finish, lyophilization, packaging and
logistics services to the global pharmaceutical market.
In addition to our experience in handling DEA
controlled substances and developing and manufacturing
modified-release dosage forms, Societal has the expertise to
deliver on our clients’ pharmaceutical development and
manufacturing projects, regardless of complexity level. We do all
of this in our best-in-class facilities, which total 145,000 square
feet, in Gainesville, Georgia and San Diego, California.
Societal CDMO: Bringing Science to Society. For
more information about Societal’s customer solutions, visit
societalcdmo.com.
Cautionary Statement Regarding Forward
Looking Statements
This press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements, among other things, relate to the company’s
financial guidance; expectations regarding customer ordering
patterns; ability to manage costs and to achieve its financial
goals; to operate under lending covenants; and to maintain
relationships with CDMO commercial partners and develop additional
commercial partnerships. The words "anticipate", "believe",
"correlate", "could", "estimate", “upcoming”, "expect", "intend",
"may", "plan", "predict", "project", "will" and similar terms and
phrases may be used to identify forward-looking statements in this
press release. Our operations involve risks and uncertainties, many
of which are outside our control, and any one of which, or a
combination of which, could materially affect our results of
operations and whether the forward-looking statements ultimately
prove to be correct. Factors that could cause the company’s actual
outcomes to differ materially from those expressed in or underlying
these forward-looking statements include, but are not limited to,
unstable market and macroeconomic conditions, including any adverse
impact on the customer ordering patterns or inventory rebalancing
or disruption in raw materials or supply chain; demand for the
company’s services, which depends in part on customers’ research
and development funding, their clinical plans and the market
success of their products; customers' changing inventory
requirements and manufacturing plans; customers and prospective
customers decisions to move forward with the company’s
manufacturing services; the average profitability, or mix, of the
products the company manufactures; the company’s ability to enhance
existing or introduce new services in a timely manner; the
Company’s ability to close its previously announced land sale
transaction on the anticipated timeline; fluctuations in the costs,
availability, and suitability of the components of the products the
company manufactures, including active pharmaceutical ingredients,
excipients, purchased components and raw materials, or the
company’s customers facing increasing or new competition; the
Company’s ability to collect on customers’ receivable balances; the
extent to which health epidemics and other outbreaks of
communicable diseases could disrupt our operations; and other risks
and uncertainties discussed in our filings with the Securities and
Exchange Commission at www.sec.gov. These forward-looking
statements are based on information currently available to us, and
we assume no obligation to update any forward-looking statements
except as required by applicable law.
SOCIETAL CDMO, INC. AND
SUBSIDIARIESSummary of Operating Results(Unaudited)
|
Three months ended June 30, |
|
|
|
|
|
|
|
(dollars in thousands,
except per share amounts) |
2023 |
|
|
2022 |
|
|
Change |
|
|
% |
|
Revenue |
$ |
21,799 |
|
|
$ |
23,152 |
|
|
$ |
(1,353 |
) |
|
|
-6 |
% |
Cost of
sales |
|
17,327 |
|
|
|
17,470 |
|
|
|
(143 |
) |
|
|
-1 |
% |
Gross margin |
|
21 |
% |
|
|
25 |
% |
|
|
|
Selling,
general and administrative expenses |
|
5,272 |
|
|
|
5,160 |
|
|
|
112 |
|
|
|
2 |
% |
Amortization of intangible assets |
|
168 |
|
|
|
220 |
|
|
|
(52 |
) |
|
|
-24 |
% |
Total operating expenses |
|
22,767 |
|
|
|
22,850 |
|
|
|
(83 |
) |
|
|
0 |
% |
Operating (loss) income |
|
(968 |
) |
|
|
302 |
|
|
|
(1,270 |
) |
|
|
-421 |
% |
Interest expense |
|
(2,314 |
) |
|
|
(3,430 |
) |
|
|
1,116 |
|
|
|
-33 |
% |
Interest income |
|
109 |
|
|
|
9 |
|
|
|
100 |
|
|
|
1111 |
% |
Loss
before income taxes |
|
(3,173 |
) |
|
|
(3,119 |
) |
|
|
(54 |
) |
|
|
2 |
% |
Income tax expense |
|
39 |
|
|
|
— |
|
|
|
39 |
|
|
n/a |
|
Net
loss |
$ |
(3,212 |
) |
|
$ |
(3,119 |
) |
|
$ |
(93 |
) |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share, diluted |
$ |
(0.04 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.02 |
|
|
|
-33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA,
as adjusted* |
$ |
2,826 |
|
|
$ |
3,995 |
|
|
$ |
(1,169 |
) |
|
|
-29 |
% |
|
Six months ended June 30, |
|
|
|
|
|
|
|
(dollars in thousands,
except per share amounts) |
2023 |
|
|
2022 |
|
|
Change |
|
|
% |
|
Revenue |
$ |
43,326 |
|
|
$ |
44,346 |
|
|
$ |
(1,020 |
) |
|
|
-2 |
% |
Cost of
sales |
|
36,606 |
|
|
|
33,584 |
|
|
|
3,022 |
|
|
|
9 |
% |
Gross margin |
|
16 |
% |
|
|
24 |
% |
|
|
|
Selling,
general and administrative expenses |
|
9,934 |
|
|
|
10,870 |
|
|
|
(936 |
) |
|
|
-9 |
% |
Amortization of intangible assets |
|
352 |
|
|
|
441 |
|
|
|
(89 |
) |
|
|
-20 |
% |
Total operating expenses |
|
46,892 |
|
|
|
44,895 |
|
|
|
1,997 |
|
|
|
4 |
% |
Operating loss |
|
(3,566 |
) |
|
|
(549 |
) |
|
|
(3,017 |
) |
|
|
550 |
% |
Interest expense |
|
(4,459 |
) |
|
|
(6,848 |
) |
|
|
2,389 |
|
|
|
-35 |
% |
Interest income |
|
240 |
|
|
|
14 |
|
|
|
226 |
|
|
|
1614 |
% |
Loss
before income taxes |
|
(7,785 |
) |
|
|
(7,383 |
) |
|
|
(402 |
) |
|
|
5 |
% |
Income tax expense |
|
111 |
|
|
|
— |
|
|
|
111 |
|
|
n/a |
|
Net
loss |
$ |
(7,896 |
) |
|
$ |
(7,383 |
) |
|
|
(513 |
) |
|
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share, diluted |
$ |
(0.09 |
) |
|
$ |
(0.13 |
) |
|
$ |
0.04 |
|
|
|
-31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA,
as adjusted* |
$ |
3,435 |
|
|
$ |
6,756 |
|
|
$ |
(3,321 |
) |
|
|
-49 |
% |
* EBITDA, as adjusted, is a non-GAAP financial measure (see
reconciliation of non-GAAP financial measures at the end of this
release).
SOCIETAL CDMO, INC. AND
SUBSIDIARIESReconciliation of GAAP to Non-GAAP
Measures(Unaudited)
To supplement the company’s financial results
determined by U.S. generally accepted accounting principles
(“GAAP”), the company has disclosed in the tables below the
following non-GAAP information about EBITDA, as adjusted.
EBITDA, as adjusted, is net income or loss as
determined under GAAP excluding interest expense, income tax
expense, depreciation, amortization, non-cash stock-based
compensation, costs related to the acquisition and integration of
IriSys, and costs related to the debt refinancing.
The company believes that non-GAAP financial
measures, such as EBITDA, as adjusted, are helpful in understanding
its business as it is useful to investors in allowing for greater
transparency of supplemental information used by management.
EBITDA, as adjusted is used by investors, as well as management in
assessing the company’s performance. Non-GAAP financial measures
should be considered in addition to, but not as a substitute for,
reported GAAP results. Further, non-GAAP financial measures, even
if similarly titled, may not be calculated in the same manner by
all companies, and therefore should not be compared.
Second quarter and year to date
results
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
(amounts in thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net loss (GAAP) |
$ |
(3,212 |
) |
|
$ |
(3,119 |
) |
|
$ |
(7,896 |
) |
|
$ |
(7,383 |
) |
Interest expense, net |
|
2,205 |
|
|
|
3,421 |
|
|
|
4,219 |
|
|
|
6,834 |
|
Income tax expense |
|
39 |
|
|
|
— |
|
|
|
111 |
|
|
|
— |
|
Depreciation |
|
2,033 |
|
|
|
1,802 |
|
|
|
3,938 |
|
|
|
3,594 |
|
Amortization of intangible
assets |
|
168 |
|
|
|
220 |
|
|
|
352 |
|
|
|
441 |
|
Stock-based compensation |
|
1,593 |
|
|
|
1,408 |
|
|
|
2,637 |
|
|
|
2,887 |
|
Refinancing, deal and
integration costs (a) |
|
— |
|
|
|
263 |
|
|
|
74 |
|
|
|
383 |
|
EBITDA, as adjusted |
$ |
2,826 |
|
|
$ |
3,995 |
|
|
$ |
3,435 |
|
|
$ |
6,756 |
|
2023 guidance compared to 2022 full year
results
|
Year ending / ended December 31, |
|
(amounts in thousands) |
2023 |
|
|
2022 |
|
|
(estimate) |
|
|
|
|
Net loss
(GAAP) |
$(10,700) - (7,700) |
|
|
$ |
(19,881 |
) |
Interest expense, net |
|
8,600 |
|
|
|
14,059 |
|
Income tax expense |
|
200 |
|
|
|
1,105 |
|
Depreciation |
|
8,100 |
|
|
|
7,413 |
|
Amortization of intangible
assets |
|
700 |
|
|
|
905 |
|
Stock-based compensation |
|
5,000 |
|
|
|
5,426 |
|
Refinancing, deal and
integration costs (a) |
|
100 |
|
|
|
7,774 |
|
EBITDA, as adjusted |
$12,000 - 15,000 |
|
|
$ |
16,801 |
|
a) Costs related to the December 2022 debt
refinancing and the acquisition and integration of IriSys.
Contacts
Stephanie Diaz (Investors)
Vida Strategic Partners
(415) 675-7401
sdiaz@vidasp.com
Tim Brons (Media)
Vida Strategic Partners
(415) 675-7402
tbrons@vidasp.com
Ryan D. Lake (CFO)
Societal CDMO
(770) 531-8365
ryan.lake@societalcdmo.com
Societal CDMO (NASDAQ:SCTL)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Societal CDMO (NASDAQ:SCTL)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024