Precision Therapeutics Inc. (NASDAQ:AIPT) Q1 2019 Earnings Conference Call May 15, 2019 4:30 PM ET
Scott Gordon - Investor Relations, CORE IR
Carl Schwartz - President and Chief Executive Officer
Bob Myers - Chief Financial Officer
Conference Call Participants
Good afternoon, and welcome to the Precision Therapeutics Earnings Conference Call for the First Quarter Ended March 31, 2019. All participants will be in a listen-only mode. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A replay of the call will be available approximately one hour after the end of the call through June 15, 2019.
I would now like to turn the conference call over to Scott Gordon, President of CORE IR, the company's investor relations firm. Please go ahead, sir.
Thank you, Jamie, and thank you all for joining today's conference call to discuss Precision Therapeutics corporate developments and financial results for the first quarter ended March 31, 2019.
With us today are Dr. Carl Schwartz, company's Chief Executive Officer; and Bob Myers, the company's Chief Financial Officer. At 4:05 P.M. Eastern Time today, Precision Therapeutics released financial results for the first quarter ended March 31, 2019. If you have not received Precision Therapeutics' earnings release, please visit the Investors page at www.precisiontherapeutics.com.
During the course of this conference call, the company will be making forward-looking statements. The company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. This includes any projections of earnings, revenues, cash or other statements relating to the company's future financial results. Any statements about plans, strategies or objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding anticipated new relationships or agreements, any statements regarding expectations for the success of the company's products and services in the U.S. and international markets, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing.
These statements are based on expectations and assumptions as of the date of this conference call and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the section of today's press release titled Cautionary Note on forward-looking statements and in the public periodic reports the company files with the Securities and Exchange Commission. Investors or potential investors should read these risks.
Precision Therapeutics assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. It is now my pleasure to turn the call over to Dr. Carl Schwartz, CEO of Precision Therapeutics. Dr. Schwartz?
Welcome and thank you for joining today's conference call to discuss the Precision Therapeutics financial results and corporate developments for the quarter-ended March 31, 2019. I'm pleased to report that we have begun 2019 with some notable accomplishments that position Precision for excellence in the coming quarters.
With our completion of the Helomics merger, which is now become a wholly-owned subsidiary, and the advancement of TumorGenesis, the precision medicine focus for our company is in full flight. We stand at the forefront of the cutting-edge of personalized medicine in targeting individualized treatments for cancers and the development of drugs specific to a person's genetic propensity to respond the treatment.
The use of artificial intelligence in advanced analytics, the mechanism to fool cancer cells into responding to treatments as if they were still in the human body. These are the tools and methods we are employing in advancing our mission at Precision. While we're going about accomplishing our goals, we are creating important alliances with strong partners that we can work with and learn some.
We have accomplished much in the first quarter that bears fruit from our Helomics merger and positions us to gain opportunity to monetize our intellectual property and technological superiority. Some examples of these are our announced collaboration between Helomics and Viome to determine role of a gut microbiome in ovarian cancer. We also announced Helomics and National Alopecia Areata Foundation signing a service agreement to provide next generation patient registry for Alopecia Areata research.
TumorGenesis and its partner 48Hour Discovery received an Alberta Innovates grant for $250,000 for development of novel cancer treatments in Helomics. And SpeciCare announced the partnership with Helomics will provide CRO and Artificial Intelligence drug development services to SpeciCare for a precision medicine trial.
We were thrilled to announce TumorGenesis have identified three thyroid cancer types and has isolated the discovery biomarkers.
On the Skyline Medical front, Precision Therapeutics' Skyline Medical division widened its global reach through a new Taiwanese distribution agreement with Winner Scientific. And we entered the African continent, further expanding the company's global presence through the sale of four STREAMWAY units by our Saudi Arabian distributor.
As we look ahead to the coming quarters, we are truly excited about the prospects for further global expansion. And we're excited about developments in India, where health and government authorities have placed a - have used our device and its qualifications in their adoption of regulations that could encourage the use of the advanced STREAMWAY system in hospitals and clinics as a viable solution to addressing their evolving landscape of medical waste disposal. We look forward to reporting on those developments as they occur.
We also have a number of additional exciting developments in the pipeline that we will be reporting on in the coming weeks and quarters that will further strengthen our position as an emerging leader in the precision medicine space.
With that, I will turn the call over to Bob Myers, our CFO, who will discuss our financial results for the quarter. And I will return with some closing thoughts and then open the call to questions. Bob?
Thank you, Carl, and welcome, everyone. I will now discuss the financial results for the first quarter ended March 31, 2019. Revenue, our revenue for the first quarter of 2019 was $255,241 compared with $411,593 for 2018. This represents a 38% decrease year-over-year.
Our revenue included the sale of 7 STREAMWAY systems and disposable supplies. There were 7 sales of STREAMWAY units, 3 domestically and 4 internationally in the three months ended March 31, 2019 compared to 16 sales of STREAMWAY units in the comparable 2018 period.
Cost of sales, our cost of sales was $74,000 in the three months ended, March 31, 2019 and $117,000 in the three months ended March 31, 2018. The gross profit margin was approximately 71% in the three months ended March 31, 2019 compared to the same 71% in the prior year. Eventually, we expect increased sales to allow us to achieve volume purchasing. We'll get discounts on both equipment components and our cleaning solutions, which we expect to improve our margins.
Operating expense, our operating expenses increased by $179,000 in the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The largest increase in expenditure consisted of $101,000 in research and development, due to producing our next generation STREAMWAY system.
General and administrative expenses increased by $256,000 in the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The most significant increases were through legal and accounting expenses relevant to the merger and for audit fees. And our sales and marketing expenses were virtually the same over the comparable quarter period.
We turn to our balance sheet. As of March 31, 2019, our cash balance was $1.1 million. Please note that our cash and cash equivalents balance on January 31, 2019 was approximately $380,000. In February of 2019, the company received an additional loan and investment [in equaling $1.3 million] [ph] from the company's CEO, Dr. Carl Schwartz.
At March 2019, the company closed on two public offerings, receiving a total net of approximately $2.3 million. The Helomics merger closed on April 4 and the company expects that it will require additional financing to support the need to invest in the precision medicine business.
With that, I will turn the call back to Dr. Schwartz. Carl?
Thanks, Bob. We are excited about our continued transformation into a cutting-edge provider of personalized medicine solutions and drug discovery innovations. After much hard work by a totally dedicated team - a truly dedicated team, our job is to bringing these tools forward to get cancer patients more hope than ever.
We are pleased with our progress on the marketing and distribution of the STREAMWAY systems, both domestically and internationally. We believe this product can be a benefit to just about any facility [that issues] [ph] handling infectious wastes. We are off to a strong start in 2019 as we have already executed on a variety of business successes.
We expect our continued efforts will begin to delivery consistent and reliable performance that will enable us to create long-term dependable value.
I wish to thank our loyal shareholders for their continued support. Operator, let's open the call up for questions.
At this time, we have allotted 30 minutes to address questions from equity analysts. [Operator Instructions] Ladies and gentlemen, at this time, we will conclude our question-and-answer session. I'd like to turn the conference call back over to Dr. Schwartz for closing remarks.
Thank you, operator. I wish to thank everyone again for your time today. We are excited about the future and our focus on achieving the promise that Precision Therapeutics represents and to delivering lasting value for you, our loyal shareholders. Thank you again for your time and continued support. We will look forward to continuing to report on our achievements in the coming months.
The conference is now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.