-Submits Drug Master File to FDA for
Administrative Review-
-Signs $2.5 Million in Non-Textile
Contracts-
-Company to Hold Conference Call and Webcast
Today, Thursday, May 3, 2018 at 4:30 PM ET-
Applied DNA Sciences, Inc. (NASDAQ: APDN) (“Applied DNA” or the
"Company"), announced financial results for the fiscal 2018 second
quarter ended March 31, 2018.
“Our fiscal second quarter performance reflects our continuing
ability to monetize our molecular taggant technology platform
to drive top-line growth while also progressing nascent
opportunities that offer a path to greater annual recurring
revenues,” stated Dr. James A. Hayward, chairman, president and CEO
of Applied DNA. “Our activities in the quarter reflect the growing
applicability of our technology platform to multiple business
verticals and its continued adoption that is fueling an expansion
of our pipeline of revenue opportunities. During the quarter we
continued to grow our business while controlling costs and have
reduced our monthly burn by 6% on average since the beginning of
the fiscal year.
“This fiscal quarter saw the largest
non-textile/non-governmental deal flow in the Company’s history
with the signing of multiple pre-commercial contracts worth
approximately $2.5 million in their aggregate over their terms. We
secured a pre-commercial contract with TheraCann International
Benchmark Corporation (“TheraCann”) to develop molecular tracking
systems for legal cannabis worldwide. We signed definitive
agreements that include milestone and royalty payments with
Colorcon, Inc. (“Colorcon”) that will enable us to penetrate the
global pharmaceutical and nutraceutical industry.”
Continued Dr. Hayward, “Our Colorcon agreements are particularly
noteworthy as they give us the opportunity to accelerate revenue
from the pharmaceutical industry. We can now leverage Colorcon’s
significant sales presence globally to access the worldwide
pharmaceutical and nutraceutical market for solid oral dose
tablets. With Colorcon, together with our partnership with
Videojet, and supplemented by the recent signing of a Memorandum of
Understanding with ACG for the marking of oral dose capsules, we
can offer what we believe to be the first multi-layered supply
chain traceability and security solution for the industry at a time
when pharmaceutical manufacturers and other supply chain
stakeholders are moving to comply with the U.S. Food & Drug
Administration’s Drug Supply Chain Security Act and its November
2018 serialization enforcement deadline.”
Concluded, Dr. Hayward, “Looking ahead to the second-half of the
fiscal year, we believe the seasonality inherent in our cotton
business should catalyze revenue as we expect to deliver taggant to
mark U.S. cotton under our multi-year supply agreement. Longer
term, we believe our business development and pre-commercial
activities create revenue opportunity across several markets. In
particular, we see substantial opportunities in synthetic textiles,
where the total addressable market is seven times greater than the
cotton market, and biopharma, where we believe our ability to
quickly manufacture ultra-pure DNA in bulk can be a game-changer
for the industry. We have recently demonstrated the ability to use
our linear DNA in transfection models that may allow for commercial
expression of repaired or improved genes in humans, animals and
plants, resolving what we believe to be one of the most significant
hurdles slowing the implementation of DNA vaccines, gene therapy
and personalized medicine – the availability of large-scale linear
DNA as an alternative to less desirable plasmid DNA."
Fiscal Second Quarter Financial Results:
- Revenues increased 15% for the second
quarter of fiscal 2018 to just over $1.0 million, compared with
$905 thousand reported in the second quarter of fiscal 2017, and
increased 61% over revenues of $648 thousand for the fiscal first
quarter ended December 31, 2017. The year-over-year and
quarter-over-quarter increase in revenues is primarily attributable
to an increase in revenues from a government contract award, as
well as an increase in feasibility pilots in leather and cannabis
industries. These increases were offset by a decrease in cotton
textile revenues.
- Deferred revenue increased to $1.2
million as of March 31, 2018 as compared to $351 thousand at
September 30, 2017. The reason for this increase is fees paid for a
variety of contracts that include specific milestones and therefore
were not able to be fully recognized as revenue during the quarter
ended March 31, 2018.
- Total operating expenses were $2.8
million, compared with $4.0 million in the prior year’s quarter, a
decrease of approximately 30%. The decrease in year-over-year total
operating expenses is primarily attributable to a decrease in stock
based compensation expense of $823 thousand, as well as decreases
in legal, payroll and advertising and marketing costs.
- Net loss for the quarter ended March
31, 2017 was $2.1 million, or $0.07 per share, compared with a net
loss of $3.4 million, or $0.13 per share for the same period in the
prior fiscal year and a net loss of $3.2 million, or $0.12 per
share for the first fiscal quarter ended December 31, 2017.
- Excluding non-cash expenses, Adjusted
EBITDA for the quarter ended March 31, 2018 was negative $2.3
million, compared to negative Adjusted EBITDA of $2.7 million for
the same quarter last fiscal year and negative Adjusted EBITDA of
$2.8 million in the prior fiscal quarter. See below for information
regarding non-GAAP measures.
Six-Month Financial Highlights:
- Revenues for the first six months of
fiscal 2018 totaled $1.7 million, a decline of 6% from the same
period in the prior fiscal year. The decrease in revenues was
due to a decrease in cotton textile revenue, offset by increases in
service revenue related to a government contract award as well as
feasibility studies in leather and cannabis industries.
- Operating expenses for the six months
ended March 31, 2018 decreased by $2.3 million or 27% for the same
period last fiscal year. The decrease is primarily attributable to
a decrease in stock based compensation, offset by an increase in
R&D due to the government contract award.
- Net loss for the six months ended March
31, 2018 was $5.3 million or $0.18 per share, compared with a net
loss of $7.4 million or $0.29 per share for the six months ended
March 31, 2017.
- Excluding non-cash expenses and
interest, Adjusted EBITDA remained flat for the six months ended
March 31, 2018 and March 31, 2017 at a negative $5.1 million. See
below for information regarding non-GAAP measures.
Recent Operational Highlights:
- Today, the Company announced WestPoint
Home, LLC (WPH) as its newest CertainT Platform licensee. WPH will
use the CertainT Platform for source verification of r-PET and PET
materials used in duvets, towels, sheets, pillow cases, bed skirts,
shams, and decorative pillow products for the hospitality market.
Pursuant to the operative agreements, the Company will be paid a
fixed cash amount plus product-based royalties on every tagged item
sold.
- On May 1, Applied DNA announced the
successful completion of its leather tagging feasibility pilot with
BLC Leather Technologies Centre Ltd. The pilot proved that the
Company’s technology can be used in the harsh leather-production
environment to provide forensic traceability for leather from farm
to shop. The Company is working to secure funded scale-up trials of
tagged leather for Puma, Clarks, Scottish Leather Group, Tong Hong
Tanneries, among other sponsors.
- On April 27, the Company filed its Drug
Master File (DMF) with the Food and Drug Administration (FDA) and
its DMF is now available for Administrative Review by the FDA. The
Company expects its DMF will be referenced by the DMF filed for
Colorcon’s tablet coatings. Both DMFs will be reviewed by FDA once
a pharmaceutic company files documents seeking approval for
DNA-tagging.
- On April 10, the Company debuted its
security print platform featuring the Videojet 1860M continuous
inkjet printer. The platform, which now features two qualified
DNA-impregnated inks – black and invisible – provides forensic
traceability of products and packaging, carrying such claims
documented by certifying bodies of origin, authenticity,
provenance, quality or sustainability, on any production line on
which continuous inkjet printing is utilized. Applicable industries
include pharmaceuticals, biopharma, medical devices, food and
beverage, aerospace/defense and industrial parts.
- On April 5, Applied DNA announced that
it had signed definitive agreements with Colorcon for the use of
the Company’s SigNature® molecular tags in Colorcon’s product
offerings and access to the Company’s associated authentication
technologies for application in the pharmaceutical and
nutraceutical markets.As part of the agreements, Applied DNA will
supply taggant and authentication materials to Colorcon in exchange
for milestone payments and long-term royalties on the sale of
Colorcon products incorporating the Company’s molecular tags and on
the sale of related authentication services. The first of two
milestone payments was paid to Applied DNA just subsequent to the
signing of the Agreements with the second milestone payment due
upon initial approval by a regulatory authority for application in
a solid oral dose pharmaceutical or nutraceutical product.
- On March 23, the Company announced that
it has fulfilled an order for its SigNature® molecular tags to
track granular fertilizer destined for delivery by Rosier
S.A. to Turkey and several African countries. This was
the first order for marked fertilizer from Rosier following the
successful completion of a large-scale pilot project with Rosier
completed in August 2017.
- On February 27, Applied DNA announced
its collaboration with American & Efird (A&E), one of the
world’s leading manufacturers and distributors of industrial and
consumer sewing thread, embroidery thread, and technical textiles,
to utilize its CertainT® platform to develop secure
sewing threads for brand protection. Applied DNA’s collaboration
with A&E represents execution on the Company’s growth strategy
to expand its base of business in its core markets and broaden the
application of it molecular tagging technology platform in adjacent
markets.
- On February 26, the Company announced
that it signed a Memorandum of Understanding with ACG to allow ACG
to develop molecularly-tagged empty hard-shell capsules to its
customers to enhance product traceability and authentication. ACG
is one of the world’s largest pharmaceutic and nutraceutical
capsule manufacturers.
- On February 22, Applied DNA further
strengthened its cotton genotyping and traceability patent
portfolio with the receipt of a notice of allowance for its U.S.
patent application that bolsters the Company’s fiberTyping
technology. FiberTyping, together with the Company’s SigNature T
molecular tags, provide immutable forensic-level identity and
traceability to its cotton customers, brand-owners and
retailers.
- On January 25, the Company announced
that it signed an initial two-year, $1 million contract with
TheraCann for the integration of Applied DNA’s SigNature molecular
tagging and testing technology into TheraCann’s blockchain-based,
seed-to-sale Enterprise Resource Platform (ERP) for legal cannabis
operations. Applied DNA subsequently announced that it had
generated successful initial results in its ability to detect its
DNA taggant throughout all points in the legal cannabis supply
chain.
- On January 23, Applied DNA announced
the establishment of a Central DNA Testing Laboratory in Ahmedabad,
India, to provide full forensic authentication services. The
laboratory supports the Company’s growing global textile business
in the Asia-Pacific region with expansion capability for other
supply chains present in the region, such as fertilizer and
pharmaceuticals.
Fiscal Second Quarter 2018 Conference Call
Information
The Company will hold a conference call and webcast to discuss
its fiscal second quarter 2018 results on Thursday, May 3, 2018 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, due to the
large number of expected participants, 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:
https://services.choruscall.com/links/apdn180503.html
Replay (available 1 hour following the conclusion of the live
call through May 4, 2018):
- Participant Toll Free:
1-877-344-7529
- Participant Toll: 1-412-317-0088
- Participant Passcode: 10119469
- Webcast replay:
https://services.choruscall.com/links/apdn180503.html
Information about Non-GAAP Financial Measures
As used herein, “GAAP” refers to accounting principles generally
accepted in the United States of America. To supplement our
condensed consolidated financial statements prepared and presented
in accordance with GAAP, this earnings release includes Adjusted
EBITDA, which is a non-GAAP financial measure as defined in Rule
101 of Regulation G promulgated by the Securities and Exchange
Commission. Generally, a non-GAAP financial measure is a numerical
measure of a company’s historical or future performance, financial
position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
GAAP. The presentation of this non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information presented in accordance
with GAAP. We use this non-GAAP financial measure for internal
financial and operational decision making purposes and as a means
to evaluate period-to-period comparisons of the performance and
results of operations of our core business. Our management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding the performance of our business
by excluding non-cash expenses that may not be indicative of our
recurring operating results. We believe this non-GAAP financial
measure is useful to investors as they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making.
“EBITDA”- is defined as earnings (loss) before interest expense,
income tax expense and depreciation and amortization expense.
“Adjusted EBITDA”- is defined as EBITDA adjusted to exclude (i)
stock-based compensation and (ii) other non-cash expenses.
About Applied DNA Sciences
Applied DNA is a provider of molecular technologies that enable
supply chain security, anti-counterfeiting and anti-theft
technology, product genotyping and DNA mass production for
diagnostics, personalized medicine and therapeutics.
Applied DNA makes life real and safe by providing innovative,
molecular-based technology solutions and services that can help
protect products, brands, entire supply chains, and intellectual
property of companies, governments and consumers from theft,
counterfeiting, fraud and diversion. The proprietary DNA-based
"CertainT®" platform can be used to identify, tag, test, and track
products, to help assure authenticity, origin, traceability,
sustainability and quality of products.
SigNature® DNA describes the core technology ingredient that is
at the heart of a family of uncopiable, security and authentication
solutions, targeted a wide range of industries, including but not
limited to, pharmaceuticals and nutraceuticals, textiles and
defense materials and DNAnet®, for anti-theft and loss prevention,
and digitalDNA®, providing powerful track-and-trace. Our
products provide a forensic chain of evidence in large commercial
ecosystems
Visit adnas.com for more information. Follow us
on Twitter and LinkedIn. Join our mailing
list.
Forward Looking Statements
The statements made by Applied DNA in this press release may be
"forward-looking" in nature within the meaning of the Private
Securities Litigation Act of 1995. Forward-looking statements
describe Applied DNA's future plans, projections, strategies and
expectations, and are based on assumptions and involve a number of
risks and uncertainties, many of which are beyond the control of
Applied DNA. Actual results could differ materially from those
projected due to our lack of significant revenues, limited
financial resources, limited market acceptance, history of net
losses, market competition, risk of not obtaining regulatory
approval and various other factors detailed from time to time in
Applied DNA's SEC reports and filings, including our Annual Report
on Form 10-K filed on December 28, 2017 and our subsequent
quarterly reports on Form 10-Q filed on February 8, 2018 and May 3,
2018, which are available at www.sec.gov. Applied DNA
undertakes no obligation to update publicly any forward-looking
statements to reflect new information, events or circumstances
after the date hereof to reflect the occurrence of
unanticipated events, unless otherwise required by law.
- Financial Tables Follow -
APPLIED DNA SCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
March 31,2018
September 30,2017
(unaudited) ASSETS Current assets: Cash and cash equivalents $
3,709,402 $ 2,959,781 Accounts receivable, net of allowance of
$10,000 at March 31, 2018 and September 30, 2017, respectively
1,525,715 2,587,969 Inventories 293,838 326,468 Prepaid
expenses and other current assets 575,414 366,954
Total current assets 6,104,369 6,241,172 Property and
equipment, net 550,907 523,688 Other assets: Deposits 62,437
61,626 Goodwill 285,386 285,386 Intangible assets, net
930,444 1,042,076 Total Assets $ 7,933,543 $
8,153,948 LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: Accounts payable and accrued liabilities $
1,022,077 $ 944,133 Deferred revenue 1,204,351
351,735 Total current liabilities 2,226,428
1,295,868 Commitments and contingencies Stockholders’
Equity Preferred stock, par value $0.001 per share; 10,000,000
shares authorized; -0- shares issued and outstanding as of March
31, 2018 and September 30, 2017 — — Series A Preferred stock, par
value $0.001 per share, 10,000,000 shares authorized; -0- issued
and outstanding as of March 31, 2018 and September 30, 2017 — —
Series B Preferred stock, par value $0.001 per share, 10,000,000
shares authorized; -0- issued and outstanding as of March 31, 2018
and September 30, 2017 — — Common stock, par value $0.001 per
share; 500,000,000 shares authorized; 30,112,057 and 27,377,057
shares issued and outstanding as of March 31, 2018 and September
30, 2017, respectively 30,112 27,377 Additional paid in capital
247,680,080 243,503,858 Accumulated deficit (242,003,077)
(236,673,155) Total stockholders’ equity 5,707,115
6,858,080 Total Liabilities and Stockholders’ Equity
$ 7,933,543 $ 8,153,948
APPLIED DNA SCIENCES, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended March 31, Six Months Ended March 31, 2018
2017 2018 2017 Revenues: Product revenues $ 486,341 $
689,188 $ 836,474 $ 1,393,605 Service revenues 557,605
216,185 855,149 414,776 Total revenues
1,043,946 905,373 1,691,623 1,808,381
Cost of revenues 372,153 297,372 703,593
572,204 Operating expenses: Selling, general and
administrative 1,996,604 3,230,371 4,589,759 7,131,288 Research and
development 669,813 635,893 1,409,880 1,154,521 Depreciation and
amortization 145,280 163,368 302,928
325,345 Total operating expenses 2,811,697
4,029,632 6,302,567 8,611,154 LOSS FROM
OPERATIONS (2,139,904) (3,421,631) (5,314,537) (7,374,977)
Other income (expense): Interest income, net - 1,204 - 2,535 Other
(expense) income , net (6,305) (8,429) (15,385) (17,798)
Loss before provision for income taxes (2,146,209) (3,428,856)
(5,329,922) (7,390,240) Provision for income taxes —
— — — NET LOSS $ (2,146,209) $
(3,428,856) $ (5,329,922) $ (7,390,240) Net loss per
share-basic and diluted $ (0.07) $ (0.13) $ (0.18) $ (0.29)
Weighted average shares outstanding- Basic and diluted
30,112,057 26,351,483 28,879,804 25,886,892
APPLIED DNA SCIENCES, INC.
CALCULATION AND RECONCILIATION OF
ADJUSTED EBITDA
(Unaudited)
Three Months Ended March 31,
Six Months Ended March 31, 2018 2017 2018
2017 Net Loss $ (2,146,209) $ (3,428,856) $
(5,329,922) $ (7,390,240) Interest (income) expense, net - (1,204)
- (2,535) Depreciation and amortization 145,280 163,368 302,928
325,345 Stock based compensation (285,045) 537,904 (53,932)
1,995,924 Bad debt expense 17,117 15,601
17,117 21,247 Total non-cash items (122,648)
715,669 266,113 2,339,981 Consolidated
Adjusted EBITDA (loss) (2,268,857) (2,713,187)
(5,063,809) (5,050,259)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180503006461/en/
Investors:LHA Investor RelationsSanjay M. Hurry,
212-838-3777shurry@lhai.comWeb:
www.adnas.comTwitter: @APDN
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