COLLPLANT BIOTECHNOLOGIES REPORTS 2023 FULL YEAR FINANCIAL RESULTS AND PROVIDES CORPORATE UPDATE

In April 2023, CollPlant announced a joint development and commercialization agreement with Stratasys Ltd.   to collaborate on the development of a solution to bio-fabricate human tissues and organs using Stratasys' P3 technology-based bioprinter and CollPlant's rhCollagen-based bioinks. The first project under the agreement focuses on the development of a bioprinter specific to the creation of CollPlant's regenerative breast implants.  It is meant to be an industrial-scale production solution for CollPlant's regenerative breast implants program. CollPlant's state-of-the-art breast implants are being developed to regenerate an individual's natural breast tissue without eliciting immune response, providing a potentially revolutionary alternative for both aesthetic and reconstructive procedures. Under the agreement, both companies have agreed to cross-promote each other's bioprinting products.

CollPlant remains engaged in partnering discussions with several industry leaders in order to leverage its rhCollagen technology and expertise in 3D bioprinting with the mission to develop novel regenerative medical and aesthetics solutions and related applications.

Regenerative Breast Implants

Our regenerative breast implants are targeting the $2.9 billion global breast implant market.  The most common breast augmentation or reconstruction procedures today are based on synthetic silicone breast implantations, an artificial substitution for natural regenerated tissue with risks of complications.

Currently, there are no commercial products that allow regeneration of soft tissues such as the breast. In the U.S. alone, hundreds of thousands of people per year experience adverse events that range from autoimmune symptoms to the very serious breast implant-associated anaplastic large cell lymphoma (BIA-ALCL). CollPlant's rhCollagen-based, 3D-bioprinted breast implants that are comprised of CollPlant's proprietary plant-derived rhCollagen and other biomaterials, are expected to regenerate breast tissue without eliciting immune response, and therefore may provide a revolutionary alternative for aesthetic and reconstructive procedures, including postmastectomy for cancer patients.

In addition, CollPlant's regenerative breast implants can be a novel solution for women in the breast reconstruction and augmentation market, which is sizeable, as it is the second most common plastic surgery procedure that is performed worldwide today. 

In January 2023, CollPlant announced the successful completion of a large-animal study for its regenerative breast implants. This preclinical study demonstrated progressive stages of tissue regeneration after three months, as highlighted by the formation of maturing connective tissue and neovascular networks within the implants, with no adverse events reported. This study was followed by additional large-animal studies that were intended to further optimize the implant design and composition. New tissue formation and neovascularization with no adverse tissue reactions were demonstrated confirming previous results.

In December of 2023, CollPlant initiated a large-animal study to evaluate commercial-size, 3D-bioprinted, regenerative breast implants. This study will be used to obtain data that will be used to support subsequent human studies and future product commercialization. CollPlant expects to report topline data from this study in the fourth quarter of this year.

Intellectual Property

In November 2023, CollPlant announced that the U.S. Patent and Trademark Office granted the Company a patent that relates to its photocuring technology and serves as the basis of its photocurable dermal filler product candidate, being developed for the aesthetics market.

In addition, in March 2024, the same patent application received allowance in Brazil. Patents were also granted in Israel and Australia allowing for protection until 2039 in these regions.

This newly issued patent is related to CollPlant's photocuring technology within its photocurable dermal filler product candidate and represents an integral part of the Company's strategy to expand the uses for its novel, rhCollagen technology into new, high-value markets.

Gut-on-a-Chip Tissue Model

Given CollPlant's focus on the medical aesthetics area and its collaboration with AbbVie, it has decided to place its resources on hold directed toward its gut-on-a-chip program for the treatment of ulcerative colitis. The Company highly values this program, and the rationale for this relates to the extensive projected timing to progress the tissue model as it relates to cell collection, as well as other processes that must first be conducted before even beginning testing.   Therefore, in line with prioritizing its resources, CollPlant expects to reinitiate this program once its resources are commensurate with the projected timing of this program.   

Corporate Governance

In the second quarter of 2023, CollPlant announced that it hired a dedicated expert to lead its Environment, Social and Governance (ESG) effort.  CollPlant plans to file its first ESG report in the second quarter which will outline its ESG objectives.

In September 2023, CollPlant announced that it joined the United Nations Global Compact, the world's largest initiative for sustainable and responsible corporate governance.  As a new participant of this voluntary leadership platform, CollPlant strengthens its commitment to operate sustainably.

Year-Ended December 31, 2023 Financial Results

GAAP revenues for the year ended December 31, 2023, were $11.0 million and included mainly revenues from AbbVie, CollPlant's business partner. Revenues increased by $10.7 million, compared to $299,000 for the year ended December 31, 2022. The increase is mainly related to the achievement of a milestone under the AbbVie Agreement, which triggered a $10.0 million payment and a $600,000 increase in sales of rhCollagen products.

GAAP cost of revenues for the year ended December 31, 2023, was $2.0 million, compared to $400,000 for the year ended December 31, 2022. The increase in cost of revenues by approximately $1.6 million is mainly due to: (i) approximately $320,000 in royalty expenses to the IIA, mainly relating to the milestone achievement under the AbbVie Agreement, (ii) approximately $711,000 related to bioinks, VergenixFG, and rhCollagen sales, and (iii) approximately $570,000 related to inventory write offs.

GAAP gross profit for the year ended December 31, 2023, was $9.0 million, compared to gross loss of $101,000 for the year ended December 31, 2022.

GAAP operating expenses for the year ended December 31, 2023, were $16.5 million, compared to $17.0 million, for the year ended December 31, 2022. The decrease of $500,000 is mainly attributed to a decrease of $745,000 in general and administrative expenses, mainly comprised of: (i) a decrease of $224,000 in employees' salaries expense, (ii) a decrease of $364,000 in share-based compensation expenses and (iii) income of $140,000 for insurance indemnification, offset by an increase of $229,000 in research and development expenses. On a non-GAAP basis, the operating expenses for the year ended December 31, 2023 were $14.5 million, compared to $15.2 million in the year ended December 31, 2022. Non-GAAP measures exclude certain non-cash expenses.

GAAP financial income, net, for the year ended December 31, 2023, totaled $493,000, compared to $172,000 in the year ended December 31, 2022. The increase in financial income, net, is due to the increase in interest rates and interest received from the Company's short-term cash deposits.

GAAP net loss for the year ended December 31, 2023 was $7.0 million, or $0.62 basic loss per share, compared to a net loss of $16.9 million, or $1.53 basic loss per share, for the year ended December 31, 2022. Non-GAAP net loss for the year ended December 31, 2023, was $5.2 million, or $0.46 basic loss per share, compared to $15.2 million loss, or $1.37 basic loss per share, for the year ended December 31, 2022.

Balance Sheets and Cash Flow

The Company's cash and cash equivalents balance as of December 31, 2023, was $26.7 million.

Cash used in operating activities was $2.8 million during the year ended December 31, 2023, compared to $13.7 million for the year ended December 31, 2022. Cash used during the year ended December 31, 2023 includes the $10 million milestone payment from AbbVie.

Net cash used in investing activities was $1.2 million during the year ended December 31, 2023 compared to $28.9 million in net cash that was provided by investing activities during the year ended December 31, 2022. The decrease is mainly attributed to repayment and investment in short-term cash deposits during the year ended December 31, 2022.

Cash provided by financing activities was $1.1 million for the year ended December 31, 2023 compared to $1.9 million in the year ended December 31, 2022. Cash provided by financing activities is attributed to proceeds from the exercise of warrants and options into shares. 

 Conference call information

To participate in the conference call, please use the dial-in information below:

U.S. investors:  1-877-407-9716
Investors outside of the U.S.:  1-201-493-6779
Israel investors: 1-809-406-247

Conference ID:   13744114

Note, you can avoid long wait times for the operator by using the Call me™ feature and clicking the link below 15 minutes prior to the scheduled call start time:

https://callme.viavid.com/viavid/?callme=true&passcode=13728588&h=true&info=company&r=true&B=6

Webcast information

A live webcast will also be available in listen-only mode and  can be accessed here or via the link to be posted on the News & Events section of the CollPlant Investor relations website. A replay of the webcast will be available following the conclusion of the live broadcast and will be accessible on the Company's website for a limited time.

Submit questions to management in advance of the call and webcast

To ask management a question ahead of the call, please email Dan Ferry at LifeSci Advisors LLC up until 24 hours before the event at daniel@lifesciadvisors.com.

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