Company to Hold Conference Call and Webcast
Today, Thursday, August 6, 2020, at 4:30 PM EDT
Applied DNA Sciences, Inc. (NASDAQ: APDN) (“Applied DNA” or the
"Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA
manufacturing that enables in vitro diagnostics, pre-clinical
nucleic acid-based therapeutic drug candidates, supply chain
security, anti-counterfeiting and anti-theft technology, today
announced consolidated financial results for the fiscal third
quarter and the nine months ended June 30, 2020.
“We continued during the quarter to position the Company to
serve the unmet and evolving needs for COVID-19 testing solutions
and vaccine development,” said Dr. James A. Hayward, president and
CEO of Applied DNA Sciences. “Upon the receipt of FDA Emergency Use
Authorization (“EUA”) for our Linea™ COVID-19 diagnostic assay kit
(for use with nasopharyngeal (NP) swab and anterior nasal swab
(ANS) sample collections), we put into place the foundation of our
COVID-19 diagnostics business: we established the requisite supply
chains and inventory to support anticipated growth in assay kit
demand; we formed a clinical lab subsidiary (Applied DNA Clinical
Labs) that, once certified by the State of New York, will offer
testing as a service (“TaaS”) whose potential economics to us is
more favorable than that of standalone kit sales; and we applied
for amendments to our EUA to expand the addressable market for our
kits and improve customer testing turnaround time and throughput.
We are in the marketplace today with what we believe to be a highly
sensitive and purpose-designed platform for the high-throughput
workflows found at clinical diagnostic laboratories nationally. We
are currently pursuing diagnostic kit contracts and, upon State
certification, commercial testing contracts.”
Continued Dr. Hayward, “The U.S. is facing bottlenecks in
testing capacity with supply shortages and testing backlogs at
laboratories that, together with the spike in infection numbers in
the southern and western parts of the country, suggests greater and
long-term demand for testing. We believe we are well-positioned to
deliver greater patient access to testing and increased market
penetration in the coming quarters. The recent amendments to our
EUA advance our go-to-market strategy significantly: they greatly
enhance our opportunity for commercial kit sales by increasing the
size of the installed base of RT-PCR systems upon which our kit can
run and they enable the use of automated RNA extraction robotics at
third-party labs and at Applied DNA Clinical Labs LLC, when
licensed, to increase testing throughput.
“We have also recruited our first research sponsors who have
funded the development of pooling models for the testing of
asymptomatic patients (screening testing), which we will be
presenting to FDA. We believe that our ability to sample for the
virus using the less-invasive ANS will enhance compliance among
students and asymptomatic individuals who may require multiple
rounds of testing. Several academic institutions are contemplating
COVID-19 safety programs based upon the use of our diagnostic kit
to enhance the safety of students, faculty, and staff. We have
recruited both internal and external sales infrastructures to drive
demand for our diagnostic kit.”
Commenting on the development of the Company’s vaccine
candidates co-developed with Takis S.R.L. and Evvivax S.R.L.
(collectively, “Takis Biotech”), Dr. Hayward stated, “Tests on the
linear DNA™ forms of our COVID-19 vaccine candidates provoked
seroconversion in mouse models that are consistent with prior data
from the plasmid forms of the vaccine candidates by Takis Biotech.
Our results suggest that a low-dose vaccine could be potentially
effective in providing protection while the T cell response
suggests potential long-term persistence. We believe our results in
animal models echo the effectiveness announced by some of the
COVID-19 vaccines already in human trials. We have attracted the
attention of ‘Big Pharma’ and are presently negotiating rights to
novel delivery systems and funding for sophisticated toxicology
screens done in collaboration with our partner Takis Biotech and
their network of service partners.”
With regard to the Company’s non-biological business segment,
Dr. Hayward said, “Our supply chain security segment felt the full
brunt of COVID-19 in the fiscal third quarter that resulted in a
further weakening of demand for tagging and related services across
the global supply chain chains we serve. We remain focused on
business-building in key industrial and regulated markets,
including textiles, cannabis, personal care, nutraceuticals, and
pharmaceuticals, ahead of the return of increased demand
patterns.”
Concluded Dr. Hayward, “Looking ahead, we are focused on
advancing our COVID-19 diagnostic kit and TaaS market strategy and
progressing the development of the linear DNA™ forms of our vaccine
candidates. To drive broader adoption of our kit by laboratories
and to increase TaaS opportunities, we plan additional EUA
amendments to further expand the base of RT-PCR systems relevant to
our kit and to secure the ability to conduct asymptomatic screening
testing, which we believe would confer onto us a potentially
significant commercial advantage in the marketplace. We also await
New York State certification of Applied DNA Clinical Labs LLC that
would initiate commercial testing revenues.
“In the development of our vaccine candidates, we expect to
launch toxicology screens once funding is secured followed by
higher animal studies before initiating human trials. We are
recruiting industry partners to lead on the regulatory process and
distribution with Applied DNA serving as the sole-source
manufacturer globally. With our linear DNA™ manufacturing platform,
we are differentiated not only for our ability to manufacture any
linear DNA™ form of a COVID-19 vaccine at extremely large scale,
but also for our ability to react to any new variants of the virus
with unrivaled speed.”
Recent Business
Highlights:
COVID-19
Linea™ COVID-19 SARS-CoV-2 Assay Kit
On July 31, 2020, the Company announced that the U.S. Food and
Drug Administration (FDA) had granted its second EUA amendment that
increases the size of the installed base of RT-PCR systems upon
which the Company’s diagnostic assay kit can run as well as the
speed and throughput of the laboratory process, including RNA
extraction, via a robotic platform. The EUA was granted to Applied
DNA on May 13, 2020, and the first amendment to the EUA was granted
on July 8, 2020.
The second amendment to the EUA: 1) extends the RT-PCR platform
from the Applied Biosystems (ThermoFisher Scientific) QuantStudio™
Dx to include Applied Biosystems’ QuantStudio™ 5 Real-Time PCR
system to analyze patient samples on the company’s Linea™ COVID-19
assay kit; and 2) authorized the use of the Hamilton STARlet
robotic automation in conjunction with the Omega Bio-tek MagBind®
viral RNA Express kit to speed the process of extracting viral RNA
from specimens and drive greater testing throughput.
The scope of the EUA, as amended, is expressly limited to use
consistent with the Instructions for Use by authorized
laboratories, certified under the Clinical Laboratory Improvement
Amendments of 1988 (CLIA) to perform high complexity tests. The EUA
will be effective until the declaration that circumstances exist
justifying the authorization of the emergency use of in vitro
diagnostics for detection and/or diagnosis of COVID-19 is
terminated or until the EUA’s prior termination or revocation. The
diagnostic kit has not been FDA cleared or approved, and the EUA’s
limited authorization is only for the detection of nucleic acid
from SARS-CoV-2, not for any other viruses or pathogens.
Vaccine Candidates
On July 17, 2020, Applied DNA and its vaccine development
partner, Takis Biotech, announced that linear DNA™ forms of
COVID-19 vaccine candidates under development by Takis Biotech and
manufactured by the Company yielded strong antibody and T-cell
responses even at very low doses of linear DNA™.
The Company believes that linear DNA™ vaccines offer a broad
array of potential advantages: stability during storage and
shipment, the capacity to manufacture both centrally and locally
across the globe, vaccine expression without apparent integration
into the patient’s genome, the avoidance of antibiotics, no risk of
transference of antibiotic-resistance genes, the avoidance of
bacterial vectors, high purity and simplicity of production, and
apparent high efficacy. Given the mutational proclivity of
SARS-CoV-2, and the synthetic genomic design skills of Takis
Biotech, the Company believes it could manufacture an improved
linear DNA™ vaccine within weeks of obtaining the sequence of a
mutant variant that dodged any future vaccines targeting then
dominant variants.
Applied DNA Clinical Labs LLC (“ADCL”)
On July 9, 2020, the Company announced the formation of ADCL as
a wholly-owned subsidiary dedicated to the commercial development
of its tests in virology (for the detection of COVID-19) and in
oncology (for the detection and enumeration of invasive Circulating
Tumor Cells (iCTCs) in patients with cancer).
In forming ADCL, Applied DNA is executing on a strategy to
expand its market reach through value-added services complementary
to a growing portfolio of diagnostic assays attractive to a broader
number of qualified labs.
Corporate
On June 26, 2020, the Company announced that it had joined the
Russell Microcap® Index (the “Index”) following the conclusion of
the 2020 Russell indexes annual reconstitution.
Fiscal Third Quarter 2020 Financial Results:
- Revenues decreased 79% for the third quarter of fiscal 2020 to
$432 thousand, compared with $2.1 million reported in the third
quarter of fiscal 2019, and decreased 22% from the $552 thousand
reported in the second fiscal quarter ended March 31, 2020. The
decrease in year-over-year revenues was due primarily to a decrease
in revenue from a licensing agreement in the cannabis industry of
$1.0 million, as well as cannabis feasibility pilots of $137
thousand during the three months ended June 30, 2019. The decrease
also relates to a decline in revenues of approximately $213
thousand from the government development contract award that
expired during the second half of fiscal 2019. The remaining
decrease related to a decline in product revenue as a result of
lower textile and biopharmaceutical revenue.
- Total operating expenses increased to $3.5 million for the
third fiscal quarter of 2020, compared with $3.2 million in the
prior fiscal year’s third quarter. This increase is primarily
attributable to an increase in selling, general and administrative
expenses of $182 thousand. This increase was the result of
stock-based compensation expense. There was also an increase of
approximately $95 thousand in research and development expenses,
specifically as it relates to the development of our Linea COVID-19
diagnostic assay kit.
- Net loss for the quarter ended June 30, 2020 was $3.3 million,
or $0.72 per share, compared with a net loss of $1.5 million, or
$1.55 per share, for the quarter ended June 30, 2019, and a net
loss of $3.0 million, or $0.79 per share, for the quarter ended
March 31, 2020.
- Excluding non-cash expenses, Adjusted EBITDA was negative $2.8
million and a negative $1.2 million for the quarters ended June 30,
2020 and 2019, respectively. See below for information regarding
non-GAAP measures.
Nine-Month Financial Highlights:
- Revenues for the first nine months of fiscal 2020 totaled $1.6
million, a decrease of 56% from $3.7 million from the same period
in the prior fiscal year. The decrease in revenues was due to a
decline in revenue of approximately $613 thousand associated with
the completion of a government contract award, which was completed
during the second half of fiscal 2019, as well as decreases of
approximately $1.2 million in cannabis due to a decline in
licensing and feasibility projects year over year.
- Operating expenses for the nine months ended June 30, 2020
decreased by $886 thousand or 9% for the same period last fiscal
year. The decrease is primarily attributable to a decrease in
stock-based compensation, consulting, travel and legal and
professional fees, as well as a decrease in payroll of $273
thousand.
- Net loss for the nine months ended June 30, 2020 was $8.9
million or $2.54 per share, compared with a net loss of $7.4
million or $8.46 per share for the nine months ended June 30,
2019.
- Excluding non-cash expenses and interest, Adjusted EBITDA for
the nine months ended June 30, 2020 was a negative $7.8 million as
compared to a negative $6.1 million for the same period in the
prior fiscal year. See below for information regarding non-GAAP
measures.
Fiscal Third Quarter 2020 Conference Call Information
The Company will hold a conference call and webcast to discuss
its fiscal third quarter-end 2020 results on Thursday, August 6,
2020 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/apdn200806.html
Replay (available 1 hour following the conclusion of the live
call through August 13, 2020):
- Participant Toll Free: 1-877-344-7529
- Participant Toll: 1-412-317-0088
- Participant Passcode: 10146786
Webcast replay:
https://services.choruscall.com/links/apdn200806.html
For those investors unable to attend the live call, a copy of
management’s PowerPoint presentation will be available for review
under ‘IR Calendar’ portion of the Company’s Investors web site:
https://adnas.com/molecular-based-security/investors/
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 pre-clinical nucleic acid-based
therapeutic drug candidates.
Visit adnas.com for more information. Follow us on Twitter and
LinkedIn. Join our mailing list.
The Company’s common stock is listed on NASDAQ under ticker
symbol ‘APDN’, and its publicly traded warrants are listed on OTC
under ticker symbol ‘APPDW’.
Applied DNA is a member of the Russell Microcap® Index.
Forward-Looking Statements
The statements made by Applied DNA in this press release may be
“forward-looking” in nature within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities Exchange
Act of 1934 and the Private Securities Litigation Reform 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 the possibility
of a failure to make timely payment on its outstanding secured
convertible notes and resulting enforcement by noteholders of
remedies on collateral which includes substantially all of Applied
DNA’s assets, its history of net losses, limited financial
resources, limited market acceptance, the uncertainties inherent in
research and development, future clinical data and analysis,
including whether any of Applied DNA’s or its partners vaccine
candidates will advance further in the preclinical research or
clinical trial process, including receiving clearance from the U.S.
Food and Drug Administration or equivalent foreign regulatory
agencies to conduct clinical trials and whether and when, if at
all, they will receive final approval from the U.S. FDA or
equivalent foreign regulatory agencies, the unknown ability to
manufacture the vaccine candidates in large quantities, the fact
that the safety and efficacy of the vaccine candidates has not yet
been established, the unknown ability of the vaccine candidates to
generate revenue or profit for Applied DNA, the fact that there has
never been a commercial drug product utilizing PCR-produced DNA
technology approved for therapeutic use, the unknown outcome of any
applications or requests to U.S. FDA or equivalent foreign
regulatory agencies, disruptions in the supply of raw materials and
supplies, 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 12, 2019, as amended on December 16,
2019 and on January 27, 2020, and our subsequent quarterly reports
on Form 10-Q filed on February 6, 2020, May 14, 2020 and August 6,
2020, and other reports we file with the SEC, 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 or to reflect the
occurrence of unanticipated events, unless otherwise required by
law.
APPLIED DNA SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30, 2020
September 30,
2019
ASSETS
(unaudited)
Current assets: Cash and cash equivalents
$
10,924,968
$
558,988
Accounts receivable, net of allowance of $26,131 at June 30, 2020
and $4,500 at September 30, 2019, respectively
231,192
839,951
Inventories
444,640
142,629
Prepaid expenses and other current assets
554,693
604,740
Total current assets
12,155,493
2,146,308
Property and equipment, net
750,532
226,221
Other assets: Deferred offering costs
-
109,698
Deposits
95,027
62,351
Goodwill
285,386
285,386
Intangible assets, net
688,594
734,771
Total Assets
$
13,975,032
$
3,564,735
LIABILITIES AND EQUITY (DEFICIT) Current
liabilities: Accounts payable and accrued liabilities (including
related party of $27,097 at June 30, 2020)
$
1,640,552
$
1,616,997
Promissory notes payable-current portion
376,351
-
Deferred revenue
431,214
628,993
Total current liabilities
2,448,117
2,245,990
Long term accrued liabilities
785,435
621,970
Promissory notes payable-long term portion
470,438
-
Secured convertible notes payable, related party. net of debt
issuance costs
1,492,292
1,442,497
Secured convertible notes payable, recorded at fair value
-
102,777
Total liabilities
5,196,282
4,413,234
Commitments and contingencies Applied DNA Sciences,
Inc. Stockholders’ Equity (Deficit) : Preferred stock, par value
$0.001 per share; 10,000,000 shares authorized; -0- shares issued
and outstanding as of June 30, 2020 and September 30, 2019,
respectively
-
-
Series A Preferred stock, par value $0.001 per share; 10,000,000
shares authorized; -0- issued and outstanding as of June 30, 2020
and September 30, 2019, respectively
-
-
Series B Preferred stock, par value $0.001 per share; 10,000,000
shares authorized; -0- issued and outstanding as of June 30, 2020
and September 30, 2019, respectively
-
-
Common stock, par value $0.001 per share; 500,000,000 shares
authorized; 4,968,197 and 1,207,993 shares issued and outstanding
as of June 30, 2020 and September 30, 2019, respectively
4,969
1,208
Additional paid in capital
274,493,010
255,962,922
Accumulated deficit
(265,712,717
)
(256,805,589
)
Applied DNA Sciences, Inc. stockholders’ equity (deficit):
8,785,262
(841,459
)
Noncontrolling interest
(6,512
)
(7,040
)
Total equity (deficit)
8,778,750
(848,499
)
Total liabilities and equity (deficit)
$
13,975,032
$
3,564,735
APPLIED DNA SCIENCES,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
Three Months Ended June
30,
Nine Months Ended June
30,
2020
2019
2020
2019
Revenues: Product
56,911
$
392,599
492,582
$
885,736
Service
374,605
1,660,858
1,124,926
$
2,830,511
Total revenues
431,516
2,053,457
1,617,508
3,716,247
Cost of revenues
154,804
270,883
566,417
557,508
Operating expenses: Selling, general and administrative
2,589,042
2,407,223
7,247,999
8,018,516
Research and development
814,599
719,668
2,082,043
2,080,610
Depreciation and amortization
61,865
87,315
203,469
320,039
Total operating expenses
3,465,506
3,214,206
9,533,511
10,419,165
LOSS FROM OPERATIONS
(3,188,794
)
(1,431,632
)
(8,482,420
)
(7,260,426
)
Other (expense) income: Interest expense (including related
parties interest of $26,267 and $75,577 for the three and six
months ended June 30, 2019, respectively)
(28,624
)
(38,177
)
(86,811
)
(107,206
)
Other expense, net
(72,694
)
(8,102
)
(334,527
)
(31,356
)
Loss before provision for income taxes
(3,290,112
)
(1,477,911
)
(8,903,758
)
(7,398,988
)
Provision for income taxes
-
-
-
-
NET LOSS
(3,290,112
)
(1,477,911
)
(8,903,758
)
(7,398,988
)
Less: Net loss (income) attributable to noncontrolling interest
662
-
(528
)
-
NET LOSS attributable to Applied DNA Sciences, Inc.
(3,289,450
)
(1,477,911
)
(8,904,286
)
(7,398,988
)
Deemed dividend related to warrant modifications
-
-
2,842
-
NET LOSS applicable to common stockholders
$
(3,289,450
)
$
(1,477,911
)
$
(8,907,128
)
$
(7,398,988
)
Net loss per share applicable to common stockholders-basic
and diluted
$
(0.72
)
$
(1.55
)
$
(2.54
)
$
(8.46
)
Weighted average shares outstanding-basic and diluted
4,577,997
952,835
3,512,149
874,272
APPLIED DNA SCIENCES,
INC.
CALCULATION AND RECONCILIATION
OF ADJUSTED EBITDA
(unaudited)
Calculation and Reconciliation of Consolidated
Adjusted EBITDA:
Three Month Period
Ended
June 30,
2020
2019
% ∆
Net Loss
$
(3,290,112
)
$
(1,477,911
)
Interest expense (income), net
28,624
38,177
Depreciation and amortization
61,865
87,315
Stock based compensation expense (income)
364,819
154,304
Bad debt expense
21,880
-
Total non-cash items
477,188
279,796
Consolidated Adjusted EBITDA (loss)
$
(2,812,924
)
$
(1,198,115
)
135
%
Nine Month Period
Ended
June 30,
2020
2019
% ∆
Net Loss
$
(8,903,758
)
$
(7,398,988
)
Interest expense (income), net
86,811
107,206
Depreciation and amortization
203,469
320,039
Stock based compensation expense
797,577
911,642
Bad debt expense
21,880
(8,633
)
Total non-cash items
1,109,737
1,330,254
Consolidated Adjusted EBITDA (loss)
$
(7,794,021
)
$
(6,068,734
)
28
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005850/en/
Investor contact: Sanjay M. Hurry, Applied DNA Sciences,
917.733.5573, sanjay.hurry@adnas.com Web: www.adnas.com
Twitter: @APDN
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