Predictive Oncology Reports Second Quarter 2020 Financial Results, Provides Business Update
August 13 2020 - 4:10PM
Predictive Oncology (NASDAQ: POAI), a knowledge-driven company
focused on applying artificial intelligence (“AI”) to personalized
medicine and drug discovery, today reported financial results for
the quarter ended June 30, 2020 and provided a business update.
Financial and Business Highlights of Q2
and Recent Developments
- Secured first commercial sale of its novel ovarian cancer cell
media for cancer cells collected from patient derived samples
through its TumorGenesis division
- Completed the acquisition of Quantitative Medicine (“QM”), a
biomedical analytics and computational biology company (July 2020),
in an all-stock transaction valued at approximately $1.8
million
- Completed an asset purchase agreement to acquire Soluble
Therapeutics and its HSC™ Technology along with BioDtech Inc.
- Refreshed Board of Directors with appointment of three new
independent directors
- Strengthened balance sheet with recent equity offerings.
- Management anticipates a need to raise additional capital to
support operations and near-term debt repayments
“During the second quarter we reached a major
milestone in our journey towards full commercialization with the
first sale of our novel ovarian cancer cell media to a top-rated
medical university in New England,” commented Dr. Carl Schwartz,
Predictive Oncology CEO. "This sale serves as a solid proof point
of our mission and is a significant achievement towards improving
healthcare outcomes for cancer patients. Our unique media
significantly expands the number of ovarian cancer cell types that
can be studied representing nearly 95% of all ovarian cancers, many
of which have never been cultured before now, and reduces waste in
cancer research.”
“Our acquisitions of Soluble Therapeutics and
BioDtech position us with next level capabilities that we believe
will materially advance our progress towards developing new
targeted therapies in collaborations with pharmaceutical companies
and enable meaningful expansion of revenue opportunities,” added
Dr. Schwartz. “Soluble Therapeutics assets will help us to provide
the best formulation with the highest concentration and the most
stable solution for protein and peptide-based drugs while the
acquisition of BioDtech gives us governance over its testing
solution for unmasking endotoxins. Together, we believe these
acquisitions will substantially advance the discipline of precision
medicine and accelerate our pursuit of monetizing our full
portfolio of assets.”
Dr. Schwartz continued, “We also completed our
acquisition of QM in early 2020, bringing its proven, machine
learning platform, CoRE, into our portfolio of assets in our
Helomics business and equipping us with a framework for an
end-to-end solution for precision medicine. We are encouraged by
the emerging opportunities this opens for us to further
revolutionize AI-driven predictive modeling that can be used to
accelerate the development of personalized patient treatments.”
“Our Helomics business continues to make solid
progress with our CancerQuest 2020 initiative and our collaboration
with UPMC Magee Hospital to build AI-driven predictive models for
the treatment of ovarian cancer,” added Dr. Schwartz. “Thus far, we
have received outcome data, completed the second phase of
sequencing and have begun the process to build our AI-model. We are
on track to complete the study and have our first AI-driven model
in accordance with our workplans, despite a later start date that
was triggered by a delay in funding resulting from the COVID-19
pandemic. We expect to have our first AI-driven model completed in
the second half of 2020. Just as important, we have been ramping up
our commercial outreach activities with large pharma companies to
build a pipeline of targeted opportunities ahead of model
completion.”
Dr. Schwartz concluded, “We further bolstered
our liquidity position with approximately $4.6 million in gross
proceeds from a registered direct offering of common stock, the
exercise of warrants and the issuance of additional warrants.
Although we still have significant short-term debt obligations, the
equity offerings demonstrate investor confidence, extend our cash
runway and provide working capital to continue our pursuit of
developing commercially viable solutions for large pharma. From a
governance perspective, we refreshed our board operations with the
appointment of three new independent directors, who collectively
have extensive industry, financial and business development
experience and a rich network of industry contacts that we believe
will be extremely advantageous as we execute the next steps in our
business plan.”
Second Quarter 2020 Financial
Results
Revenues were $183,000 compared with $286,000
for the second quarter of 2019. Revenues in both years were
primarily driven through the sale of Predictive Oncology’s
proprietary STREAMWAY units, of which 1 unit and 7 units were sold
in the three months ended June 30, 2020 and 2019, respectively.
Gross margin was 53% in the second quarter of
2020 compared with 59% in the 2019 period. The decrease was due to
higher costs on lower revenue in the current period compared to the
prior year period. General & administrative expenses decreased
3% to $3.2 million in the second quarter of 2020 as a result of
lower costs related to share-based compensation. Operations
expenses decreased to $521,000, compared with $1.3 million in the
second quarter of 2019.
Net loss was $3.6 million, inclusive of other
income of $1.3 million related to the revaluation of equity method
investments and gains on elimination of notes outstanding, and
interest and dividend income, compared with net income of $1.5
million for the second quarter of 2019. The second quarter of 2020
includes a gain on the revaluation of cash advances to Helomics of
$1.2 million and a gain of $6.2 million on a revaluation of equity
method investment.
Outlook
Management continues to focus its resources on
the Helomics and TumorGenesis divisions and the Company’s primary
mission of applying artificial intelligence to precision medicine,
drug discovery and the mediums used to replace rats and mice in
preliminary cancer studies. Management reaffirms that it is
focusing the majority of its resources on maximizing opportunities
within the Company’s precision medicine business.
About Predictive Oncology
Inc.
Predictive Oncology (NASDAQ: POAI) operates
through three segments (Domestic, International and other), which
contain four subsidiaries; Helomics, TumorGenesis, Skyline Medical
and Skyline Europe. Helomics applies artificial intelligence to its
rich data gathered from patient tumors to both personalize cancer
therapies for patients and drive the development of new targeted
therapies in collaborations with pharmaceutical companies.
Helomics’ CLIA-certified lab provides clinical testing that assists
oncologists in individualizing patient treatment decisions, by
providing an evidence-based roadmap for therapy. In addition to its
proprietary precision oncology platform, Helomics offers boutique
CRO services that leverage its TruTumor™, patient-derived tumor
models coupled to a wide range of multi-omics assays (genomics,
proteomics and biochemical), and an AI-powered proprietary
bioinformatics platform to provide a tailored solution to its
clients’ specific needs. Predictive Oncology’s TumorGenesis
subsidiary is developing a new rapid approach to growing tumors in
the laboratory, which essentially “fools” cancer cells into
thinking they are still growing inside a patient. Its proprietary
Oncology Discovery Technology Platform kits will assist researchers
and clinicians to identify which cancer cells bind to specific
biomarkers. Once the biomarkers are identified they can be used in
TumorGenesis’ Oncology Capture Technology Platforms which isolate
and help categorize an individual patient’s heterogeneous tumor
samples to enable the development of patient specific treatment
options. Helomics and TumorGenesis are focused on ovarian cancer.
Predictive Oncology’s Skyline Medical division markets its patented
and FDA cleared STREAMWAY System, which automates the collection,
measurement and disposal of waste fluid, including blood,
irrigation fluid and others, within a medical facility, through
both domestic and international divisions. The company has achieved
sales in five of the seven continents through both direct sales and
distributor partners. For more information, please
visit www.Predictive-Oncology.com.
Forward-Looking Statements
Portions of the narrative set for this document
that are not statements of historical or current facts are
forward-looking statements, in particular, the commercial outlook
provided above. Our actual future performance may materially differ
from that contemplated by the forward-looking statements as a
result of a variety of factors.
These factors include, in addition to those
mentioned elsewhere herein:
- We may not be able to continue operating without additional
financing;
- Current negative operating cash flows;
- The terms of any further financing, which may be highly
dilutive and may include onerous terms;
- Risks related to the 2019 merger with Helomics including; 1)
significant goodwill could result in further impairment; 2)
possible failure to realize anticipated benefits of the merger; 3)
costs associated with the merger may be higher than expected; 4)
the merger may result in the disruption of our existing businesses;
and 5) distraction of management and diversion of resources;
- Risks related to our partnerships with other companies,
including the need to negotiate the definitive agreements; possible
failure to realize anticipated benefits of these partnerships; and
costs of providing funding to our partner companies, which may
never be repaid or provide anticipated returns;
- Risks related to the transaction with Quantitative Medicine
including: 1) possible failure to realize anticipated benefits of
the transaction; 2) costs associated with the acquisition may be
higher than expected; 3) the transaction may result in the
disruption of our existing businesses; and 4) distraction of
management and diversion of resources;
- Risk that we will be unable to protect our intellectual
property or claims that we are infringing on others’ intellectual
property;
- The impact of competition;
- Acquisition and maintenance of any necessary regulatory
clearances applicable to applications of our technology;
- Inability to attract or retain qualified senior management
personnel, including sales and marketing personnel;
- Risk that we never become profitable if our product is not
accepted by potential customers;
- Possible impact of government regulation and scrutiny;
- Unexpected costs and operating deficits, and lower than
expected sales and revenues, if any;
- Adverse results of any legal proceedings;
- The volatility of our operating results and financial
condition;
- Management of growth;
- Material and adverse effects of the COVD-19 pandemic, including
impact on a significant supplier; a reduction in on-site staff at
several of our facilities, resulting in delayed production and less
efficiency; impact on sales efforts; impact on accounts receivable
and terms demanded by suppliers; and possible impact on financing
transactions; and,
- Other specific risks that may be detailed from time to time in
the Company’s reports filed with the SEC, which are available for
review at www.sec.gov.
Investor Relations Contact:
Hayden IRJames
Carbonara(646)-755-7412james@haydenir.com
-- Tables Follow –
PREDICTIVE ONCOLOGY
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS
|
June 30, 2020 |
|
December 31, 2019 |
|
(unaudited) |
|
(audited) |
ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and Cash Equivalents |
$ |
3,394,078 |
|
|
$ |
150,831 |
|
Accounts Receivable |
|
272,493 |
|
|
|
297,055 |
|
Inventories |
|
235,368 |
|
|
|
190,156 |
|
Prepaid Expense and Other
Assets |
|
426,704 |
|
|
|
160,222 |
|
Total Current Assets |
|
4,328,643 |
|
|
|
798,264 |
|
|
|
|
|
|
|
|
Fixed Assets, net |
|
2,409,721 |
|
|
|
1,507,799 |
|
Intangibles, net |
|
3,539,597 |
|
|
|
3,649,412 |
|
Lease Right-of-Use Assets |
|
1,528,150 |
|
|
|
729,745 |
|
Goodwill |
|
15,690,290 |
|
|
|
15,690,290 |
|
Total Assets |
$ |
27,496,401 |
|
|
|
22,375,510 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts Payable |
$ |
2,449,046 |
|
|
$ |
3,155,641 |
|
Notes Payable – Net of
Discounts of $282,099 and $350,426 |
|
4,412,377 |
|
|
|
4,795,800 |
|
Accrued Expenses |
|
2,649,160 |
|
|
|
2,371,633 |
|
Derivative Liability |
|
4,629,570 |
|
|
|
50,989 |
|
Deferred Revenue |
|
38,582 |
|
|
|
40,384 |
|
Lease Liability |
|
473,043 |
|
|
|
459,481 |
|
Total Current Liabilities |
|
14,651,778 |
|
|
|
10,873,928 |
|
|
|
|
|
|
|
|
Lease Liability – Net of
current portion |
|
1,055,107 |
|
|
|
270,264 |
|
Other long-term
liabilities |
|
98,358 |
|
|
|
- |
|
Total Liabilities |
|
15,805,243 |
|
|
|
11,144,192 |
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
Preferred Stock, 20,000,000
authorized inclusive of designated below |
|
|
|
|
|
|
Series B Convertible Preferred
Stock, $.01 par value, 2,300,000 shares authorized, 79,246 and
79,246 shares outstanding |
|
792 |
|
|
|
792 |
|
Series D Convertible Preferred
Stock, $.01 par value, 3,500,000 shares authorized, 0 and 3,500,000
outstanding |
|
- |
|
|
|
35,000 |
|
Series E Convertible Preferred
Stock, $.01 par value, 350 shares authorized, 0 and 258
outstanding |
|
- |
|
|
|
3 |
|
Common Stock, $.01 par value,
100,000,000 shares authorized, 13,190,787 and 4,056,652
outstanding |
|
131,908 |
|
|
|
40,567 |
|
Additional paid-in
capital |
|
102,163,864 |
|
|
|
93,653,667 |
|
Accumulated Deficit |
|
(90,605,406 |
) |
|
|
(82,498,711 |
) |
|
|
|
|
|
|
|
Total Stockholders'
Equity |
|
11,691,158 |
|
|
|
11,231,318 |
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
$ |
27,496,401 |
|
|
$ |
22,375,510 |
|
PREDICTIVE ONCOLOGY
INC.CONDENSED CONSOLIDATED STATEMENTS OF NET
LOSS(Unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Revenue |
$ |
182,784 |
|
|
$ |
286,151 |
|
|
$ |
477,727 |
|
|
$ |
541,392 |
|
Cost of goods sold |
|
85,261 |
|
|
|
118,390 |
|
|
|
177,918 |
|
|
|
192,106 |
|
Gross margin |
|
97,523 |
|
|
|
167,761 |
|
|
|
299,809 |
|
|
|
349,286 |
|
|
|
|
|
|
|
|
|
General and administrative
expense |
|
3,211,817 |
|
|
|
3,310,368 |
|
|
|
6,040,293 |
|
|
|
4,808,314 |
|
Operations expense |
|
521,116 |
|
|
|
1,271,258 |
|
|
|
1,069,869 |
|
|
|
1,737,824 |
|
Sales and marketing expense |
|
133,015 |
|
|
|
685,029 |
|
|
|
397,424 |
|
|
|
1,239,245 |
|
Total operating loss |
|
(3,768,425 |
) |
|
|
(5,098,894 |
) |
|
|
(7,207,777 |
) |
|
|
(7,436,097 |
) |
|
|
|
|
|
|
|
|
Gain on revaluation of cash
advances to Helomics |
|
- |
|
|
|
1,222,244 |
|
|
|
- |
|
|
|
1,222,244 |
|
Other income |
|
52,965 |
|
|
|
(3,223 |
) |
|
|
52,968 |
|
|
|
50,209 |
|
Other expense |
|
(729,837 |
) |
|
|
(607,343 |
) |
|
|
(1,846,912 |
) |
|
|
(1,157,711 |
) |
Gain (loss) on derivative
instruments |
|
(422,081 |
) |
|
|
(211,940 |
) |
|
|
(394,974 |
) |
|
|
(231,348 |
) |
Gain on notes receivables
associated with asset purchase |
|
1,290,000 |
|
|
|
- |
|
|
|
1,290,000 |
|
|
|
- |
|
Loss on equity method
investment |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
439,637 |
|
Gain on revaluation of equity
method in investment |
|
- |
|
|
|
6,164,260 |
|
|
|
- |
|
|
|
6,164,260 |
|
Net income (loss) |
$ |
(3,577,378 |
) |
|
$ |
1,465,104 |
|
|
$ |
(8,106,695 |
) |
|
$ |
(1,828,080 |
) |
Deemed dividend on Series E
Convertible Preferred Stock |
|
- |
|
|
|
20,398 |
|
|
|
- |
|
|
|
20,398 |
|
Net income (loss) attributable to
common shareholders per common shares-basic and diluted |
$ |
(3,577,378 |
) |
|
$ |
1,444,706 |
|
|
$ |
(8,106,695 |
) |
|
$ |
(1,848,478 |
) |
|
|
|
|
|
|
|
|
Gain (loss) per common share
basic |
$ |
(0.36 |
) |
|
$ |
0.49 |
|
|
$ |
(1.10 |
) |
|
$ |
(0.81 |
) |
Gain (loss) per common share
diluted |
|
(0.36 |
) |
|
|
0.24 |
|
|
|
(1.10 |
) |
|
|
(0.81 |
) |
|
|
|
|
|
|
|
|
Weighted average shared used in
computation - basic |
|
9,838,152 |
|
|
|
2,960,937 |
|
|
|
7,362,240 |
|
|
|
2,274,754 |
|
Weighted average shared used in
computation - diluted |
|
9,838,152 |
|
|
|
6,007,078 |
|
|
|
7,362,240 |
|
|
|
2,274,754 |
|
|
|
|
|
|
|
|
|
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