The following discussion of our financial condition and results of operations
should be read in conjunction with our unaudited condensed consolidated
financial statements and related notes and other financial information included
elsewhere herein. This information should also be read in conjunction with our
audited historical consolidated financial statements which are included in our
Form 10-K for the fiscal year ended
Business Overview
We are a clinical stage biotechnology company devoted to discovering and
developing innovative therapies using human parthenogenetic stem cells to treat
severe diseases of the central nervous system, joints and liver. Our lead
product candidate, ISC-hpNSC is designed to treat Parkinson's Disease, traumatic
brain injury and ischemic stroke. ISC-hpNSC-based therapy is in phase I clinical
trials for Parkinson's disease, while therapies for traumatic brain injury and
ischemic stroke are in preclinical stages. We have additional product candidates
in development for osteoarthritis and metabolic liver diseases. We currently
intend to commercialize our products directly or through collaborations. None of
our product candidates have been approved for sale in
Our products are based on multi-decade experience with human cell culture and a
proprietary type of pluripotent stem cells, human parthenogenetic stem cells
("hpSCs"). Our hpSCs are comparable to human embryonic stem cells ("hESCs") in
that they have the potential to be differentiated into many different cells in
the human body. However, the derivation of hpSCs does not require the use of
fertilized eggs or the destruction of viable human embryos and also offers the
potential for the creation of immune-matched cells and tissues that are less
likely to be rejected following transplantation. Our collection of hpSCs, known
as UniStemCell™, currently consists of 15 stem cell lines. We have facilities
and manufacturing protocols that comply with the requirements of Good
Manufacturing Practice (GMP) standards as promulgated by the
We have generated aggregate product sales revenues from our Biomedical and
Anti-aging commercial businesses of
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COVID-19 Pandemic
The impact of the COVID-19 pandemic has been and will likely continue to be
extensive in many aspects of society, which has resulted in and will likely
continue to result in significant disruptions to the global economy, as well as
businesses and capital markets around the world. Impacts to our business have
included reduced occupancy of portions of our manufacturing facilities, and
disruptions or restrictions on our employee's ability to travel to such
manufacturing facilities which caused minor delays in manufacturing. Our
manufacturing facilities continue to operate as they are deemed essential
suppliers in accordance with laws applicable to
Therapeutic Market - Clinical Applications of hpSCs for Disease Treatments
With respect to therapeutic research and product candidates, we focus on applications where cell and tissue therapy is already proven but where there is an insufficient supply of safe and functional cells or tissue. We believe that the most promising potential clinical applications of our technology are Parkinson's disease ("PD") traumatic brain injury ("TBI") and stroke. Using our proprietary technologies and know-how, we are creating neural stem cells from hpSCs as a potential treatment of PD, TBI and stroke.
Our most advanced project is the neural stem cell program for the treatment of
Parkinson's disease. In 2013 we published in Nature Scientific Reports the basis
for our patent on a new method of manufacturing neural stem cells which is used
to produce the clinical-grade cells necessary for future clinical studies and
commercialization. In 2014 we completed the majority of the preclinical research
establishing the safety profile of NSC in various animal species including
non-human primates. In
We announced successful completion of the dose escalating phase 1 clinical trial
in
In
In
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in our Parkinson's disease clinical trial, ISC-hpNSC®, significantly improved TBI-associated motor, neurological, and cognitive deficits without any safety issues.
Anti-Aging Cosmetic Market - Skin Care Products
Our wholly-owned subsidiary LSC develops, manufactures and sells anti-aging skin care products based on two core technologies: encapsulated extract derived from hpSC and specially selected targeted small molecules. LSC's products include:
•ProPlus Advanced Defense Complex •ProPlus Advanced Recovery Complex •ProPlus Eye Firming Complex •ProPlus Neck Firming Complex • ProPlus Advanced Aquoues Treatment • ProPlus Collagen Booster (Advanced Molecular Serum) • ProPlus Elastin Booster • ProPlus Brightening Toner
LSC's products are regulated as cosmetics. LSC's products are sold domestically through a branded website, Amazon, and ecommerce partners.
Biomedical Market - Primary Human Cell Research Products
Our wholly-owned subsidiary LCT develops, manufactures and commercializes
approximately 200 human cell culture products, including frozen human "primary"
cells and the reagents (called "media") needed to grow, maintain and
differentiate the cells. LCT's scientists have used a standardized, methodical,
scientific approach to basal medium optimization to systematically produce
optimized products designed to culture specific human cell types and to elicit
specific cellular behaviors. These techniques can also be used to produce
products that do not contain non-human animal proteins, a feature desirable to
the research and therapeutic markets. Each LCT cell product is quality tested
for the expression of specific markers (to assure the cells are the correct
type), proliferation rate, viability, morphology and absence of pathogens. Each
cell system also contains associated donor information and all informed consent
requirements are strictly followed. LCT's research products are marketed and
sold by its internal sales force, OEM partners and LCT brand distributors in
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended March 31, 2022 2021 $ Change % Change (dollar in thousands) Product sales, net$ 2,020 $ 1,658 $ 362 22 % Cost of sales 725 615 110 18 % As a % of revenues 36 % 37 % Research and development 137 215 (78 ) -36 % Selling and marketing 301 347 (46 ) -13 % General and administrative 832 1,048 (216 ) -21 % Other expense - related party (34 ) (32 ) (2 ) 6 % Net loss$ (9 ) $ (599 ) $ 590 -98 % As a % of revenues 0 % -36 % 22
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Product Sales, net
Product sales revenue for the three months ended
Cost of Sales
Cost of sales for the three months ended
Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company's products, as well as related direct materials, general laboratory supplies and an allocation of overhead. We aim to continue refining our manufacturing processes and supply chain management to improve the cost of sales as a percentage of revenue for both LCT and LSC.
Research and Development Expenses
Research and development expenses for the three months ended
Selling and Marketing Expenses
Selling and marketing expenses for the three months ended
General and Administrative Expenses
General and administrative expenses for the three months ended
Liquidity and Capital Resources
The Company enters into contracts in the normal course of business with various third-party consultants and contract research organizations ("CRO") for preclinical research, clinical trials and manufacturing activities. These contracts generally provide for termination upon notice. Actual expenses associated with these arrangements may be higher or lower due to various reasons, including but not limited to, progress of our development products, enrollment in clinical trials, and product and personnel delays due to COVID. Other short-term and long terms commitments that would affect liquidity include lease obligations as well as related party debt repayments.
As of
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we had cash of approximately
Licensed patents
The Company has a minimum annual license fee of
Cash Flows
Comparison of the Three Months Ended
The following table provides information regarding our cash flows for the three
months ended
Three Months EndedMarch 31, 2022 2021
Net cash used in operating activities
- (2 ) Net cash provided by financing activities 250 824 Net increase in cash$ 227 $ 428 Operating Cash Flows
For the three months ended
For the three months ended
Investing Cash Flows
Net cash used in investing activities for the three months ended
Financing Cash Flows
Net cash provided by financing activities for the three months ended
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Funding Requirements
Management continues to evaluate various financing sources and options to raise working capital to help fund our current research and development programs and operations. We will need to obtain significant additional capital from equity and/or debt financings, license arrangements, grants and/or collaborative research arrangements to sustain our operations and develop products. Unless we obtain additional financing, we do not have sufficient cash on hand to sustain our operations at least through one year after the issuance date. The timing and degree of any future capital requirements will depend on many factors, including:
• the accuracy of the assumptions underlying our estimates for capital needs; • the extent that revenues from sales of LSC and LCT products cover the related costs and provide capital; • scientific progress in our research and development programs; • the magnitude and scope of our research and development programs and our ability to establish, enforce and maintain strategic arrangements for research, development, clinical testing, manufacturing and marketing; • our progress with preclinical development and clinical trials; • the extent to which third party interest in Company's research and commercial products can be realized through effective partnerships; • the time and costs involved in obtaining regulatory approvals; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; • the number and type of product candidates that we pursue; and • the development of major public health concerns, including COVID-19 or other pandemics arising globally, and the current and future impact that such concerns may have on our operations and funding requirements.
Our failure to raise capital or enter into applicable arrangements when needed would have a negative impact on our financial condition. Additional debt financing may be expensive and require us to pledge all or a substantial portion of its assets. Further, if additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of its technologies, product candidates or products that we would otherwise seek to develop and commercialize on its own. If sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of its product initiatives.
We currently have no revenue generated from our principal operations in therapeutic and clinical product development through research and development efforts. There can be no assurance that we will be successful in maintaining our normal operating cash flow and obtaining additional funds and that the timing of our capital raising or future financing will result in cash flow sufficient to sustain our operations at least through one year after the issuance date.
Based on the factors above, there is substantial doubt about our ability to continue as a going concern. The consolidated financial statements were prepared assuming that we will continue to operate as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Management's plans in regard to these matters are focused on managing our cash flow, the proper timing of our capital expenditures, and raising additional capital or financing in the future.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results
of operations are based on our condensed consolidated financial statements,
which have been prepared in accordance with generally accepted accounting
principles in
Our estimates are based on our historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and amount of expense recognized that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We evaluate our estimates and assumptions on an ongoing basis. The effects of
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material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of the change in estimates.
There have been no material changes to our critical accounting policies and
estimates during the three months ended
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 1 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Contractual Obligations and Commitments
There have been no material changes to our contractual obligations and
commitments outside the ordinary course of business during the three months
ended
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